Partnership Changes

Admission of a partner:

Q1
Cat and dog were in partnership sharing profits and losses equally. At 31 st March 2013 their
capital balances were Cat $100,000 and Dog $80,000. On 1 st April 2013 Rat was admitted as a
new partner and the new profit sharing ratio would be 2:2:1. Rat brought into the partnership a
capital of $50,000 in cash. Goodwill on that date was valued at $30,000 but it was decided that
goodwill will not be maintained in the accounts. Prepare the partner’s capital account at 1st
April 2013?

Q2
Husband and wife were in partnership sharing profits and losses equally. At 31 st December 2014
their capital balances were Husband $120,000 and wife $90,000. On 1 st January 2015 they
decided to admit son into the partnership sharing profits and losses equally. Son brought into
the partnership a capital in cash of $45,000 and inventories worth $15,000. Goodwill on that
date was valued at $45000 but it should not be maintained in the accounts. Prepare the
partner’s capital account at 1st January 2015?

Q3
Cough and sneeze were in partnership sharing profits and losses in the ratio 2:1. On 30 th April
2012 their statement of financial position was as follows:

Non-current assets $
Land and buildings 120,000
Plant and machinery 130,000
Motor vehicles 60,000

Current assets
Inventory 48,000
Trade receivables 38,000
Cash and cash equivalent 32,000
Total assets 428,000

Capital account:
Cough 200,000
Sneeze 180,000
Current liabilities
Trade payables 48,000
428,000

Rimas Eesa (ACCA Affiliate) 0774 622 742

On 1st May 2012 they decided to admit cold into the partnership sharing profits and losses in
the ratio 2:2:1. Cold brought into the partnership a capital in cash of $80,000 and inventories
valued at $25,000. On the admission of the new partner the following revaluations were also
made:

1. Land and buildings were revalued to $180,000

2. Plant and machineries were revalued to 110,000
3. Inventories were written off by $10,000

Goodwill was valued at $60,000 and it was decided not to maintain goodwill in the accounts.

Required:
Prepare the statement of financial position of the partnership immediately after the admission
of the new partner.

Q4
Jack and Jill were in partnership sharing profits and losses in the ratio 3:2. Their SOFP at 30 th
September 2013 were as follows:

Non-current assets $
Land and buildings 290,000
Plant and machinery 210,000
Motor vehicles 100,000
Current assets
Inventory 80,000
Trade receivables 50,000
Cash and cash equivalent 40,000
Total assets 770,000
Capital account:
Jack 400,000
Jill 200,000

Non-Current liabilities
10% Bank loan 100,000

Current liabilities
Trade payables 70,000
770,000

Rimas Eesa (ACCA Affiliate) 0774 622 742

On 1st October 2013 they decided to admit Bill into the partnership sharing profits and losses in
the ratio 2:2:1. Bill brought into the partnership a capital in cash $40,000 and settled the bank
loan of $100,000. On that date the following revaluations were made:

1. Land and buildings were revalued at $390,000

2. Plant and machineries needs to be written down by $30,000
3. A bad debt of $10,000 needs to be written off.

Goodwill on that date was valued at $80,000 but goodwill should not be maintained in the
books.

Required:
Prepare the SOFP at 1st October 2013 immediately after the admission of the new partner.

Retirement of a Partner:

Q1
Fat, Thin and Ugly were in partnership sharing profits and losses equally. At 31 st December 2013
their capital and current account balances were as follows:

Capital: Fat $125,000

Thin $165,000
Ugly $100,000

Current account: Fat $12000 credit

Thin $8000 credit
Ugly $6000 debit

On 1st January 2014 Ugly decided to retire from the partnership. Ugly will take with him a motor
vehicle at a book value of $20,000 and cash for the balance that is owed to him. On that date
the following revaluations were also made:

1. Land and buildings were revalued upwards by $45,000

2. Machineries were written down by $10,000
3. Bad debt of $5000 was written off.

Goodwill on that date was valued at $30,000 and it was decided that goodwill will not be
maintained in the accounts.

It was decided that Fat and Thin will be sharing profits and losses in the ratio 3:2.

Required:
Prepare the partner’s capital account on 1st January 2014.

Rimas Eesa (ACCA Affiliate) 0774 622 742

Q2
Tom, Dick and kock were in partnership sharing profits and losses in the ratio 2:2:1. Their
statement of financial position at 31st December 2014 was as follows:

Non-current assets $
Land and buildings 190,000
Plant and machinery 210,000
Motor vehicles 100,000

Current assets
Inventory 60,000
Trade receivables 45,000
Cash and cash equivalent 55,000
Total assets 660,000

Capital account:
Tom 250,000
Dick 200,000
Kock 100,000

Current account:
Tom 40,000
Dick 20,000
Kock (10,000)

Current liabilities
Trade payables 60,000
660,000

On 1st January 2015 Kock decided to retire from the partnership. He would take with him cash
of $40,000 and the remainder will be left as a loan to the partnership. On that date the
following revaluations were also made:

Land and buildings were revalued upwards by $35,000, Plant and machinery were revalued
downwards by $10,000 and inventories were written down by $5000. Goodwill was valued at
$50,000. However it will not be maintained in the accounts.

Required:
The statement of financial position of the partnership immediately after the retirement of Kock.

Rimas Eesa (ACCA Affiliate) 0774 622 742