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
Fixed Costs Are costs such do not change along with of the level of output? It is also named as autonomous cost, as it stays the similar irrespective of the activity level as

raw an organization chart of any actual or hypothetical manufacturing organization to show the position of management/cost accounting department within an organization and discuss


In January, 2008, Sanford Corporation purchased a patent for a new product for $1,200,000. The patent was valid for fifteen years but it was estimated to have a useful life of ten

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

Break-Even Chart This is a diagrammatic presentation of the relationship among costs, prices, expenses and the sales volume. A break-even chart expresses revenue and expens

The budgeted and actual revenues and expenditures of Seaside Township for a recent year (in millions) were as presented in the schedule that follows: 1. Prepare journal entries

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: selling price $140 units in begining in

Prime Essentials Limited is a small private corporation. The owner plans to approach the bank for an additional loan or a line of credit to facilitate expansion. The company bookke