Mgungundlovu Plumbers, specialising in plumbing services and material supplies within the uMgungundlovu District Municipality, is a partnership originally established between Mkhuzeni and Akezwa. The partners have been shating profits and losses on an equal basis. On July 30, 2023, the following data was extracted from the partnership's financial records: EXTRACT of given information for Mgungundlovu Plumbers Capital-Mkhuzeni Current account-Mkhuzeni (Dr) Capital-Akezwa Current account- Akezwa (Cr) R 149,000 57,400 122,500 21,000 Additional information 1. The partners needed special skills and experience with the latest leak detection technology and went out to seek a suitable partner to join the business. After a long search and interactions with various individuals they resolved to welcome a new partner, Kahle, into the business commencing September 1, 2023. 2. To acquire a 20% interest in the net assets of Mgungundlovu Plumbers, Kahle is set to contribute: 1. Leak detection equipment worth ii. Nissan NP200 Bakkie valued at R 19 500 R 55 500 iii. Bespoke Analysis Software worth iv. Cash R 18 000 R25 300 3. Before Kahle's admission, the existing partners consented to cede a combined 20% of their entitlement to the partnership's profits or losses to Kahle, allocated in a 3:1 ratio between them. 4. A comprehensive revaluation of all other assets was conducted before Kahle joined the partnership and after the revaluation, a profit of R62 300 was accurately calculated. Which one of the following alternatives represents the new profit-sharing ratio after the admission of Kahle into the new partnership? O a 2:1:2 O b. 2:3:1 O c. 2:2:1 Od 3:2:1
Mgungundlovu Plumbers, specialising in plumbing services and material supplies within the uMgungundlovu District Municipality, is a partnership originally established between Mkhuzeni and Akezwa. The partners have been shating profits and losses on an equal basis. On July 30, 2023, the following data was extracted from the partnership's financial records: EXTRACT of given information for Mgungundlovu Plumbers Capital-Mkhuzeni Current account-Mkhuzeni (Dr) Capital-Akezwa Current account- Akezwa (Cr) R 149,000 57,400 122,500 21,000 Additional information 1. The partners needed special skills and experience with the latest leak detection technology and went out to seek a suitable partner to join the business. After a long search and interactions with various individuals they resolved to welcome a new partner, Kahle, into the business commencing September 1, 2023. 2. To acquire a 20% interest in the net assets of Mgungundlovu Plumbers, Kahle is set to contribute: 1. Leak detection equipment worth ii. Nissan NP200 Bakkie valued at R 19 500 R 55 500 iii. Bespoke Analysis Software worth iv. Cash R 18 000 R25 300 3. Before Kahle's admission, the existing partners consented to cede a combined 20% of their entitlement to the partnership's profits or losses to Kahle, allocated in a 3:1 ratio between them. 4. A comprehensive revaluation of all other assets was conducted before Kahle joined the partnership and after the revaluation, a profit of R62 300 was accurately calculated. Which one of the following alternatives represents the new profit-sharing ratio after the admission of Kahle into the new partnership? O a 2:1:2 O b. 2:3:1 O c. 2:2:1 Od 3:2:1
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text:Mgungundlovu Plumbers, specialising in plumbing services and material supplies within the uMgungundlovu District Municipality, is a partnership originally established between Mkhuzeni and Akezwa. The partners
have been sharing profits and losses on an equal basis. On July 30, 2023, the following data was extracted from the partnership's financial records:
EXTRACT of given information for Mgungundlovu Plumbers
Capital-Mkhuzeni
Current account- Mkhuzeni (Dr)
Capital-Akezwa
Current account-Akezwa (Cr)
R
149,000
57,400
122,500
21,000
Additional information
1. The partners needed special skills and experience with the latest leak detection technology and went out to seek a suitable partner to join the business. After a long search and interactions with various individuals,
they resolved to welcome a new partner, Kahle, into the business commencing September 1, 2023.
2. To acquire a 20% interest in the net assets of Mgungundlovu Plumbers, Kahle is set to contribute:
1. Leak detection equipment worth
ii. Nissan NP200 Bakkie valued at
R 19 500
R 55 500
iii. Bespoke Analysis Software worth
iv. Cash
R 18 000
R25 300
3. Before Kahle's admission, the existing partners consented to cede a combined 20% of their entitlement to the partnership's profits or losses to Kahle, allocated in a 3:1 ratio between them.
4. A comprehensive revaluation of all other assets was conducted before Kahle joined the partnership and after the revaluation, a profit of R62 300 was accurately calculated.
Which one of the following alternatives represents the new profit-sharing ratio after the admission of Kahle into the new partnership?
O a 2:1:2
Ob. 2:3:1
O c. 2:2:1
Od 3:2:1
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