V. Evans and T. Taylor are partners in a coal business, sharing profits and losses equally. On 31st December, their capitals stood at BDT 3,500 and BDT 3,000 respectively. The firms assets and liabilities on the same date were as follows: BDT Coal Trucks 756 Furniture 260 Creditors 1,140 Cash at Bank 1,325 Plant 840 Bills payable 1,068 Debtors 4740 Cash in hand 52 Stock of Coal 735 They agree to take into partnership P. primrose, a colliery agent, as and form 1st January, on the following terms: Profits and loss to be shared , Evans two-fifths, Taylor two-fifths and Primrose one-fifth. Primrose is to bring into the business Sundry Debtors amounting to BDT 720 ( less a reserve of 5% for Bad bebts), and the Goodwill of his connection estimated BDT 400. His capital in the new business is to be BDT 1,800, the balance of which he is to pay in cash on 1st January. It was also agreed between them that the following adjustments should be made as regards the business of Evans and Taylor: Coal trucks to be taken at BDT 955, Plant BDT 950, 5% bad debts on Debtors, Goodwill to be valued at BDT 1,250, and Evans to be paid out from the bank balance such a sum as will reduce his capital to the same amount as Taylors. Instructions: Make the necessary entries as per above agreement and show the new Balance Sheet.
V. Evans and T. Taylor are partners in a coal business, sharing profits and losses equally. On 31st December,
their capitals stood at BDT 3,500 and BDT 3,000 respectively. The firms assets and liabilities on the same date were as follows:
BDT
Coal Trucks 756
Furniture 260
Creditors 1,140
Cash at Bank 1,325
Plant 840
Bills payable 1,068
Debtors 4740
Cash in hand 52
Stock of Coal 735
They agree to take into
business Sundry Debtors amounting to BDT 720 ( less a reserve of 5% for Bad bebts), and the
connection estimated BDT 400. His capital in the new business is to be BDT 1,800, the balance of which he is to pay in cash on 1st January.
It was also agreed between them that the following adjustments should be made as regards the business of Evans and Taylor:
Coal trucks to be taken at BDT 955, Plant BDT 950, 5%
from the bank balance such a sum as will reduce his capital to the same amount as Taylors.
Instructions:
Make the necessary entries as per above agreement and show the new
Step by step
Solved in 3 steps with 6 images
