Peter, James and John are in the partnership business sharing profit in ratio 3:2:1 on Dec

2019, peter decided to retired from the partnership business to the established his own
personal business, the statement of financial position of the partnership business as at 31 st
Dec 2019 as stated below.
N N N
Non-current asset:
Land and building 5,000,000
Plant and machinery 3,500,000
Office equipment 2,000,000
Motor vehicle 2,500,000
Furniture and fitting 1,000,000
14,000,000
Current Asset:
Inventory 2,000,000
Trade receivables 1,500,000
Other receivables 500,000
Cash at bank 1,500,000
Cash in hand 500,000
6,000,000
20,000,000
Equity and liabilities
Equity
Capital:
-Peter 5,000,000
-James 3,000,000
-John 2,000,000 10,000,000

Current account:
-Peter 1,500,000
-James 1,500,000
-John 500,000
3,500,000

Non-current liabilities:
Loan from John 2,000,000
Loan from Paul 1,500,000 3,500,000

Current liabilities:
Trade payables 2,000,000
Other payables 1,000,000 3,000,000
20,000,000
Additional Information
1. The company generator was installed in Peter’s house as a managing partner. The
NBV of the generator was N450,000. The partners agreed to allow peter to take
over the generator at a value of N500,000.
2. Peter agreed to take over 40% of his entitlement as cash and balance converted to
loan account at an agreed interest rate of 5% and payable annually for the next five
years.
3. For the purpose of retirement of peter, the following transactions took place:
a. Partners to introduce Goodwill of N2million.
b. The Non-Current Asset of the partner to be revalued as follows:

Land and Building N6,000,000

The remaining Plant and Machinery N3,500,000
Office Equipment N1,800,000
Motor Vehicle N2,400,000
Furniture and Fittings N950,000

During retirement of Peter, it was observed that there is an obsolete stock of N200,000.
A customer with N150,000 refuse to pay of which Peter guarantee the customer.
4. After retirement of Peter, other partners decided to admit Samuel to replace Peter
under the following conditions:
a. Goodwill will be written off
b. All other assets to remain at old value except Plant and Machinery to be
revalued back to N3,200,000.
c. Partners decided to change their ratio of sharing profit to:
 James 4
 John 2
 Samuel 2
d. Samuel to introduce capital as follow:
 Cash N2,000,000
 Plant and Machinery N2,000,000

You are required to prepare the necessary ledger to record the above transaction and to
prepare revised statement of financial position as at 31st December, 2019.