X and Y PartnershipX and Y are in partnership and divide profits and losses in the ratio of 2:1 respectively. Z was admitted as a partner on 1 March 2020. The new profit-sharing ratio between X, Y and Z will be 4:2:1 respectively.X AND Y PARTNERSHIPSTATEMENT OF FINANCIAL POSITION AT 29 FEBRUARY 2020RASSETSNon-current assetsProperty, plant and equipment 60 000Current assets 180 000Inventories 88 000Trade and other receivables 52 000Cash and cash equivalents 40 000Total assets 240 000EQUITY AND LIABILITIESCapital & Reserves 200 000Capital X 127 500Capital Y 67 500General Reserve 5 000Current liabilitiesTrade and other payables 40 000Total equity and liabilities 240 000Additional information:For the purpose of the change in ownership the following agreement was reached:1. Provision would be made for credit losses at 10% of the outstanding (carrying) amount of the accounts receivable.2. Inventories would be valued at R90 000.3. Land and buildings would be valued at the market value of R115 000.4. Partner Z would bring R42 500 into the business in cash.5. Other tangible assets would be shown at the valued amounts.6. Partners X and Y would withdraw or pay in sums of money so that their net interest in the old the partnership would be the same as the profit-sharing ratio.RequiredPrepare the valuation entries in the general journal of X and Y partnership. You do not need to show any entries regarding the valuation of goodwill.
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.
X and Y
X and Y are in partnership and divide
X AND Y PARTNERSHIP
R
ASSETS
Non-current assets
Property, plant and equipment 60 000
Current assets 180 000
Inventories 88 000
Trade and other receivables 52 000
Cash and cash equivalents 40 000
Total assets 240 000
EQUITY AND LIABILITIES
Capital & Reserves 200 000
Capital X 127 500
Capital Y 67 500
General Reserve 5 000
Current liabilities
Trade and other payables 40 000
Total equity and liabilities 240 000
Additional information:
For the purpose of the change in ownership the following agreement was reached:
1. Provision would be made for credit losses at 10% of the outstanding (carrying) amount of the
2. Inventories would be valued at R90 000.
3. Land and buildings would be valued at the market value of R115 000.
4. Partner Z would bring R42 500 into the business in cash.
5. Other tangible assets would be shown at the valued amounts.
6. Partners X and Y would withdraw or pay in sums of money so that their net interest in the old the partnership would be the same as the profit-sharing ratio.
Required
Prepare the valuation entries in the general journal of X and Y partnership. You do not need to show any entries regarding the valuation of
Step by step
Solved in 2 steps with 1 images
