The following is the Balance Sheet of Mohammed and Hamed who share profits in the ratio of 5:4. Balance Sheet as at 31-12-2021 Liabilities Amount Assets (RO.) Amount (RO.) Sundry Creditors 30,000 Cash in Hand Capital Account Debtors Stock 90,000 Furniture 30,000 20,000 A 50,000 30,000 B 40,000 10,000 Plant and Machinery 30,000 Total 120,000 Total 120,000 On that date Marwan is admitted into the partnership on the following terms That Marwan is to bring in OMR 30,000 as capital and OMR 10,000 as premium for goodwill for 1/5th share. • That the value of stock is reduced by 10% while plant & machinery is appreciated by 10%. • That furniture is devalued at OMR 8,500 • That a provision for doubtful debt is to be created on sundry debtors at 7.5% and OMR 150 is to be provided for an electricity bill. • Investment worth OMR 5,000 (not mentioned in the balance sheet) is to be taken into account. • A creditor of OMR 300 is not likely to claim his money and is to be written off. Required: Record journal entries and prepare revaluation account and capital account of partners

The following is the Balance Sheet of Mohammed and Hamed who share profits in the ratio of 5:4. Balance Sheet as at 31-12-2021 Liabilities Amount Assets (RO.) Amount (RO.) Sundry Creditors 30,000 Cash in Hand Capital Account Debtors Stock 90,000 Furniture 30,000 20,000 A 50,000 30,000 B 40,000 10,000 Plant and Machinery 30,000 Total 120,000 Total 120,000 On that date Marwan is admitted into the partnership on the following terms That Marwan is to bring in OMR 30,000 as capital and OMR 10,000 as premium for goodwill for 1/5th share. • That the value of stock is reduced by 10% while plant & machinery is appreciated by 10%. • That furniture is devalued at OMR 8,500 • That a provision for doubtful debt is to be created on sundry debtors at 7.5% and OMR 150 is to be provided for an electricity bill. • Investment worth OMR 5,000 (not mentioned in the balance sheet) is to be taken into account. • A creditor of OMR 300 is not likely to claim his money and is to be written off. Required: Record journal entries and prepare revaluation account and capital account of partners

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Description: The following is the Balance Sheet of Mohammed and Hamed who share profits in the ratioof 5:4.Balance Sheet as at 31-12-2021LiabilitiesAmountAssets(RO.)Amount(RO.)Sundry Creditors30,000 Cash in HandCapital AccountDebtorsStock90,000 Furniture30,00020

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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Question

The following is the Balance Sheet of Mohammed and Hamed who share profits in the ratio
of 5:4.
Balance Sheet as at 31-12-2021
Liabilities
Amount
Assets
(RO.)
Amount
(RO.)
Sundry Creditors
30,000 Cash in Hand
Capital Account
Debtors
Stock
90,000 Furniture
30,000
20,000
30,000
10,000
Plant and Machinery
30,000
Total
120,000
Total
120,000
On that date Marwan is admitted into the partnership on the following terms
• That Marwan is to bring in OMR 30,000 as capital and OMR 10,000 as premium for
goodwill for 1/5th share.
• That the value of stock is reduced by 10% while plant & machinery is appreciated
by 10%.
• That furniture is devalued at OMR 8,500
• That a provision for doubtful debt is to be created on sundry debtors at 7.5% and OMR
150 is to be provided for electricity bill.
• Investment worth OMR 5,000 (not mentioned in the balance sheet) is to be taken into
account.
• A creditor of OMR 300 is not likely to claim his money and is to be written off.
Required: Record journal entries and prepare revaluation account and capital account of
partners
A 50,000
B 40,000

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