Yaw, Mary, and Hanna have been in partnership for a number of years sharing profit in the ratio 6:5:3. Work-in-progress was not brought into the accounts. The balance sheet of the partnership as at 31 March 2020 showed the following position: GH CO00 GH c000 Tangible Assets 25,000.00 Goodwill 18,000.00 D ebto rs 8,700.00 balance at bank Capital account: 22,400.00 Y aw 12,950.00 Mary 73,500.00 Hanna 10,450.00 Sundry C reditors 67,600.00 119,300.00 119,300.00 On 31" March 2020, Yaw retired from the partnership, and it was agreed to admit Osei as a partner on the following terms: i. Goodwill in the old partnership was to be revalued to two years purchase of the average profit over the last three years. The profit of the last three years have been GHC12,400,000; GHC13,600,000; GHC14,005,000. Goodwill was to be written off in the new partnership. ii. Yaw is to take his car out of the partnership assets at an agreed value of GHC1,000,000. The car had been included in the accounts as at 31“ March 2020 at a written down value of GHC594,000. iii. Although work-in-progress had not been, and will not be included in the partnership account, the new partners were to credit Yaw with his share based on an estimate that, work-in-progress was equivalent to 20% of the debtors. iv. The new partnership of Mary, Hanna, and Osei were to share profit in the ratio 5:3:2. The initial capital is to be GHC25,000,000 subscribed in the profit sharing ratio. Mary, Hanna, and Osei were each to pay to Yaw the sum of GHC5,000,000 out of their personal resources in part payment of his share in the partnership. V. vi. Yaw was to lend to Osei any amount required to make up his capital in the firm from the monies due him and any further balances due to Yaw was to be left in the partnership as a loan bearing interest of 20% per annum. Any adjustments required to the capital accounts of Mary, and Hanna were to be paid into or withdrawn from the partnership bank account. You are required to prepare the appropriate accounts to complete the retirement and the admission processes.
Yaw, Mary, and Hanna have been in partnership for a number of years sharing profit in the ratio 6:5:3. Work-in-progress was not brought into the accounts. The balance sheet of the partnership as at 31 March 2020 showed the following position: GH CO00 GH c000 Tangible Assets 25,000.00 Goodwill 18,000.00 D ebto rs 8,700.00 balance at bank Capital account: 22,400.00 Y aw 12,950.00 Mary 73,500.00 Hanna 10,450.00 Sundry C reditors 67,600.00 119,300.00 119,300.00 On 31" March 2020, Yaw retired from the partnership, and it was agreed to admit Osei as a partner on the following terms: i. Goodwill in the old partnership was to be revalued to two years purchase of the average profit over the last three years. The profit of the last three years have been GHC12,400,000; GHC13,600,000; GHC14,005,000. Goodwill was to be written off in the new partnership. ii. Yaw is to take his car out of the partnership assets at an agreed value of GHC1,000,000. The car had been included in the accounts as at 31“ March 2020 at a written down value of GHC594,000. iii. Although work-in-progress had not been, and will not be included in the partnership account, the new partners were to credit Yaw with his share based on an estimate that, work-in-progress was equivalent to 20% of the debtors. iv. The new partnership of Mary, Hanna, and Osei were to share profit in the ratio 5:3:2. The initial capital is to be GHC25,000,000 subscribed in the profit sharing ratio. Mary, Hanna, and Osei were each to pay to Yaw the sum of GHC5,000,000 out of their personal resources in part payment of his share in the partnership. V. vi. Yaw was to lend to Osei any amount required to make up his capital in the firm from the monies due him and any further balances due to Yaw was to be left in the partnership as a loan bearing interest of 20% per annum. Any adjustments required to the capital accounts of Mary, and Hanna were to be paid into or withdrawn from the partnership bank account. You are required to prepare the appropriate accounts to complete the retirement and the admission processes.
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.
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Transcribed Image Text:Yaw, Mary, and Hanna have been in partnership for a number of years sharing profit in the ratio 6:5:3.
Work-in-progress was not brought into the accounts.
The balance sheet of the partnership as at 31" March 2020 showed the following position:
GH c000
GH c000
Tangible Assets
25,000.00 G oodwill
Capital account:
22,400.00
Y aw
12,950.00
Maгy
18,000.00 D ebto rs
73,500.00
Hanna
8,700.00 balance at bank
10,450.00
Sundry C reditors
67,600.00
119,300.00
119,300.00
On 31" March 2020, Yaw retired from the partnership, and it was agreed to admit Osei as a partner on
the following terms:
i. Goodwill in the old partnership was to be revalued to two years purchase of the average profit
over the last three years. The profit of the last three years have been GHC12,400,000;
GHC13,600,000; GHC14,005,000. Goodwill was to be written off in the new partnership.
ii.
Yaw is to take his car out of the partnership assets at an agreed value of GHC1,000,000. The car
had been included in the accounts as at 31 March 2020 at a written down value of GHC594,000.
iii. Although work-in-progress had not been, and will not be included in the partnership account, the
new partners were to credit Yaw with his share based on an estimate that, work-in-progress was
equivalent to 20% of the debtors.
iv. The new partnership of Mary, Hanna, and Osei were to share profit in the ratio 5:3:2. The initial
capital is to be GHC25,000,000 subscribed in the profit sharing ratio.
Mary, Hanna, and Osei were each to pay to Yaw the sum of GHC5,000,000 out of their personal
resources in part payment of his share in the partnership.
V.
Yaw was to lend to Osei any amount required to make up his capital in the firm from the monies
due him and any further balances due to Yaw was to be left in the partnership as a loan bearing
interest of 20% per annum. Any adjustments required to the capital accounts of Mary, and
Hanna were to be paid into or withdrawn from the partnership bank account.
vi.
You are required to prepare the appropriate accounts to complete the retirement and the admission
processes.
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