You are required to prepare the appropriate accounts to complete the retirement and the admission processes
Yaw, Mary, and Hanna have been in
The
On 31st March 2020, Yaw retired from the partnership, and it was agreed to admit Osei as a partner on the following terms:
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 31st March 2020 at a written down value of GHc594,000.
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.
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.
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 Any adjustments required to the capital accounts of Mary, and Hanna were to be paid into or withdrawn from the partnership bank account.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.
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