Equity adjustment account, Cost Accounting

Partner A (50%)

Partner B (50%) sharing profits equally

New partner introduced $13,000 total cash including $3000 as goodwill which is raised to its full value. Partner C

Balance Sheet @ 31 Dec 2009 Partners A & B

Capital A - 20,000

Capital B - 25,000

Current Liabilities

Bank overdraft $16650, Accounts Payable $15210, Bills Payable $8140

Total $85,000 above

Non-current assets

Plant $35000 less accumdepn $17500 = $17500

Freehold premises $80,000 less accumdepn $30,000 = $50,000

Advertising prepaid $5,000

Current assets

Prepayments $2,500, Accounts receivable $10,000

Total above $85,000

Adjustments before admitting Partner C:

1. Plant depn to be adjusted to 7.5% pa fixed instalment method as from commencement 5 years ago.

2. Freehold to be adjusted to its full value of $80,000 net

3. Advertising to be written off and not capitalised

4. Accounts payable should be $16,509

5. $1,000 in goods was taken from business by Partner B and was never recorded

6. Office equipment has been charged to profit and loss account each year as purchases, and should be now valued at $5000, less accumdepn of $1200

Partners capital accounts are to be adjusted by cash contribution or withdrawal, to the ratio in which they share profits.

Required:

Taking Partner C capital as the basis, show:

A  journal entries required to effect the necessary adjustments and admission of partner C

B  the equity adjustment account

C  partners' capital accounts, and

D  a balance sheet of the new partnership

Note:  you may assume that any additional overdraft facility required is available

Net assets should = $65,000

Equity adjustment credit $47,876

Posted Date: 3/20/2013 1:00:39 AM | Location : United States







Related Discussions:- Equity adjustment account, Assignment Help, Ask Question on Equity adjustment account, Get Answer, Expert's Help, Equity adjustment account Discussions

Write discussion on Equity adjustment account
Your posts are moderated
Related Questions
Traditional income statement: The DU Inn is an 80-room hotel located on some mountaintop in Colorado. It has no bar or restaurant and is positioned as a mid-priced, good quality

1) Please elaborate on the attached performance report by preparing a presentation to "management" which incorporates the information presented in the performance report. Present t

This can be explained as the process of accumulating, calculating, analyzing, interpreting and reporting cost information that is both helpful and relevant to the internal and exte

CVP for Multiple Products What number of businesses sells only one manufactured goods? The reality is that firms usually give us the diverse product line, and the individual pr

1.    The following table summarizes the short-run production function for your firm. Your product sells for $5 per unit, labor costs $5 per unit, and the rental price of capital i

Bubba's Crawfish Processing Company uses a traditional overhead allocation based on direct labor hours. For the current year, overhead is estimated at $1,150,000, and direct labor


Does Manufacturing Overhead include the following:1)Material Handling - labour for Purchasing Material, Shipping (inbound for raw materials and outbound for finished product - also

A Market Value Schedule (in one report),for the complex. This schedule should show the market value of the complex at the end of each year of the project.  Valuation method and oth

“The statement of cash flows is the easiest of the basic financial statements to prepare because you know the answer before you start. You compare the beginning and ending balances