P, Q & R were partners sharing profits and losses in the ratio of 5:3:2. On 31st Dec. 2012 their Balance Sheet stood as follows:
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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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- A and B were partners sharing profit and losses in the ratio of 3/4 and 1/4 showed the following Balance Sheet at 31 st Dec 2014: BALANCE SHEET as at 31.12.2014 Liabilities $ Assets Creditors 30,000 Cash in Hand 25,000 General Reserve 16,000 Debtors 50,000 Capitals: Less: Provision 5,000 45,000 A 50,000 Bill Receivable 30,000 54,000 1,04,000 Stock 30,000 Fixtures 20,000 1,50,000 1,50,000 They admit C for th share on 1st Jan 2015, on the following terms: 5 (a) C was to introduce $ 40,000 as his capital. (b) C would pay cash for goodwill which would be based on 4 years' purchase of past profits of 5 years. (c) Assets were revalued as under : Fixtures at $ 15,000; Bills Receivables at $ 40,000; Stock at $ 20,000; Debtors at book value less a Provision of 20%. (d) Outside Liabilities were proved at $ 35,000, one Bill for goods purchased having been omitted from books. Profits for the last five years were as under: 2010 20,000 2011 15,000 2012 25,000 2013 10,000 2014 15,000 Prepare…The following information relates to Basic Lid. for the year ended 31" December 2021: Net working capital RO. 1.200.000 Fixed assets to proprietor's fund ratio 0.75 Working capital turnover ratio 5 timeg Return on Equity 15% Current liabilities RO. 400.000 Long term Debts 0 You are required to calculate: Proprietor's funds Fixed Assets Current assets Net profit ratio Current ratioThe accounting records of Nettle Distribution show the following assets and liabilities as of December 31,2018 and 2019.December 31 2018 2019Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 64,300 $ 15,640Accounts receivable . . . . . . . . . . . 26,240 19,100Office supplies . . . . . . . . . . . . . . . . 3,160 1,960Office equipment . . . . . . . . . . . . . . 44,000 44,000Trucks . . . . . . . . . . . . . . . . . . . . . . . 148,000 157,000December 31 2018 2019Building . . . . . . . . . . . . . . . . . . . . . $ 0 $80,000Land . . . . . . . . . . . . . . . . . . . . . . . . 0 60,000Accounts payable . . . . . . . . . . . . . 3,500 33,500Note payable . . . . . . . . . . . . . . . . . 0 40,000Required1. Prepare balance sheets for the business as of December 31, 2018 and 2019. Hint: Report only total equityon the balance sheet and remember that total equity equals the difference between assets and liabilities.2. Compute net income for 2019 by comparing total equity amounts for these…
- The following information is available in respect of A Ltd Particulars As on 31.3.2019 (Rupees. In Lacs) As on 31.3.2020 (Rupees. In Lacs) Investment in Financial Assets - 100 Equity Share Capital 150 160 Long term Loans taken 100 200 Dividend paid - 26 Dividend received - 10 Interest received - 15 b. Calculate the relationship between the debt and equity for the year 2019 and 2020 and commentChapter 5, page 344 and 349: EA12. 5.3 Using the following Balance Sheet summary information, calculate for the two years presented: A. working capital B. current ratio 12/31/2018 12/31/2019 $76,000 48,000 Current assets $295,000 Current liabilities 163,500 After computing liquidity ratios, comment on the performance of an entity using acceptable standards of liquidity performanceThe following is the statement of financial position of PQR sharing profits and losses in the ratio of 3:2:1 as on 31st Dec 2010 Liabilities RO Assets RO Creditors Outstanding Expenses Bills Payable Capitals: P 28,000 Q 20,000 R 30,000 25,800 200 6,000 78,000 110,000 Cash Debtor and Stock Furniture Computer Building Patents 8,000 42,000 15,000 10,000 30,000 5,000 110,000 They admit S into the partnership on the following terms: - 1. The value of computer reduced by 10% 2. A part of value of Patents for RO 1000 became useless and it has to be reduced. 3. Buildings to be revalued at RO 55,000 4. Furniture was depreciated by 10% 5. S shall bring RO 25,000 as capital for ¼ share of future profits a) Calculate New Profit Sharing Ratio and Sacrificing Ratio b) Prepare Revaluation Account, Partner’s Capital Account and redraft the Statement of financial position after the admission.
- The comparative balance sheet of Merrick Equipment Co. for Dec. 31, 20Y9 and 20Y8, is:Dec. 31, 20Y9 Dec. 31, 20Y8AssetsCash $70,720 $47,940Accounts receivable (net) 207,230 188,190Inventories 298,520 289,850Investments 0 102,000Land 295,800 0Equipment 438,600 358,020Accumulated depreciation—equipment (99,110) (84,320)Total assets $1,211,760 $901,680Liabilities and Stockholders' EquityAccounts payable (merchandise creditors) $205,700 $194,140Accrued expenses payable (operating expenses) 30,600 26,860Dividends payable 25,500 20,400Common stock, $1 par 202,000 102,000Paid-in capital: Excess of issue price over par—common stock 354,000 204,000Retained earnings 393,960 354,280Total liabilities and stockholders' equity $1,211,760 $901,680The income statement for the year ended December 31, 20Y9, is as follows:Sales $2,023,898Cost of goods sold 1,245,476Gross profit $778,422Operating expenses:Depreciation expense $14,790Other operating expenses 517,299Total operating expenses 532,089Operating…The following is the statement of financial position of PQR sharing profits and losses in the ratio of 3:2:1 as on 31st Dec 2010 Liabilities RO Assets RO Creditors Outstanding Expenses Bills Payable Capitals: P 28,000 Q 20,000 R 30,000 25,800 200 6,000 78,000 110,000 Cash Debtor and Stock Furniture Computer Building Patents 8,000 42,000 15,000 10,000 30,000 5,000 110,000 They admit S into the partnership on the following terms: - The value of computer reduced by 10% A part of value of Patents for RO 1000 became useless and it has to be reduced. Buildings to be revalued at RO 55,000 Furniture was depreciated by 10% S shall bring RO 25,000 as capital for ¼ share of future profits Calculate New Profit Sharing Ratio and Sacrificing Ratio Prepare Revaluation Account, Partner’s Capital Account and redraft the Statement of financial position after the admission.The summarized Statement of Financial Position of P Bhd. and S Bhd. as at 31December 2016 is shown below: P Bhd.RM ‘000 S Bhd.RM ‘000 Non – current assetsProperty, plant &equipment 720 160 Investment in SBhd. 185 Current assets 175 951,080 255Share capital 400 100Retained earnings b/f 500 60Retained earnings –current year 60 12Current liabilities 120 831,080 255 Additional information:(i) P Bhd. acquired 60% of S Bhd. on the date of acquisition (1/7/2016) (ii) P Bhd. adopts the proportional net assets value method in valuation of non-controlling interest. (iii) At date of acquisition, fair value of NCI was RM 50,000Prepare the Consolidated Statement of Financial Position as at 31/12/2016.
- The following is the statement of financial position of PQR sharing profits and losses in the ratio of 3:2:1 as on 31st Dec 2010 Liabilities RO Assets RO Creditors Outstanding Expenses Bills Payable Capitals: P 28,000 Q 20,000 R 30,000 25,800 200 6,000 78,000 110,000 Cash Debtor and Stock Furniture Computer Building Patents 8,000 42,000 15,000 10,000 30,000 5,000 110,000 They admit S into the partnership on the following terms: - 1. The value of computer reduced by 10% 2. A part of value of Patents for RO 1000 became useless and it has to be reduced. 3. Buildings to be revalued at RO 55,000 4. Furniture was depreciated by 10% 5. S shall bring RO 25,000 as capital for ¼ share of future profits a) Calculate New Profit Sharing Ratio and Sacrificing Ratio b) Prepare Revaluation Account, Partner’s Capital Account and redraft the Statement of financial position after the admission. Answer: Revaluation Account…Use the following information for the next three questions:The ledger of COLTISH UNDISCIPLINED Co. in 20x1 includes the following:Jan. 1, 20x1 Dec. 31, 20x1Current assets 1,200,000 ? Noncurrent assets 4,000,000 ? Current liabilities 900,000 1,000,000Noncurrent liabilities ? 3,000,000 Additional information:- COLTISH’s working capital as of December 31, 20x1 is twice as much as the working capital as of January 1, 20x1. - Total equity as of January 1, 20x1 is ₱1,700,000. Profit for the year is ₱2,400,000 while dividends declared amounted to ₱1,000,000. There were no other changes in equity during the year.How much is the total noncurrent liabilities as of January 1, 20x1?a. 2,600,000b. 2,800,000c. 3,200,000d. 3,400,000Use the following information for the next three questions:The ledger of COLTISH UNDISCIPLINED Co. in 20x1 includes the following:Jan. 1, 20x1 Dec. 31, 20x1Current assets 1,200,000 ?Noncurrent assets 4,000,000 ?Current liabilities 900,000 1,000,000Noncurrent liabilities ? 3,000,000 Additional information:- COLTISH’s working capital as of December 31, 20x1 is twice as much as the working capital as of January 1, 20x1.- Total equity as of January 1, 20x1 is ₱1,700,000. Profit for the year is ₱2,400,000 while dividends declared amounted to ₱1,000,000. There were no other changes in equity during the year. How much is the total current assets as of December 31, 20x1?a. 1,600,000b. 800,000c. 300,000d. 2,200,000