Illustration of retirement of a partner, Financial Accounting

Illustration of Retirement of a partner

A, B and C have been trading as equal partners having capital contributions of £500,000 and £400,000 and £300,000 respectively as at 1st January 2005.  On the same date, B Deared to leave the partnership and A and C were to continue trading as partners sharing profits in the ratio of 2:1.  The total amounts due to B could not be paid immediately and thus the remaining partners agreed with B that they will pay 25% of the total due in cash and the balance will be left as a loan earning interest at a rate of 8% per annum. 

Meanwhile, goodwill has agreed at £180,000 and B had a credit balance on his current account of £40,000.  Goodwill was not to be retained in the books.

Required:

Prepare partners capital accounts record the retirement of B

Capital account

 

A

B

C

 

A

B

C

Goodwill written off

120,000

-

60,000

Bal. b/d

500,000

400,000

300,00

Cash book

-

125,000

-

Goodwill

60,000

60,000

60,000

8% loan a/c

 

375,000

 

Current a/c

 

40,000

 

Bal c/d

440,000

           -

300,000

 

______

______

______

 

560,000

500,000

360,000

 

560,000

500,000

360,000

Posted Date: 12/11/2012 6:21:40 AM | Location : United States







Related Discussions:- Illustration of retirement of a partner, Assignment Help, Ask Question on Illustration of retirement of a partner, Get Answer, Expert's Help, Illustration of retirement of a partner Discussions

Write discussion on Illustration of retirement of a partner
Your posts are moderated
Related Questions
What are the positive and negative critiques of investment property

Mr. Inherits 30000. Decides to open a salon jj salon. On 1/4/2016 commits 10000 to the business Opens an a/c in the bank What will be the money under capital in his books on 1/4/10

Moore Corporation follows a policy of a 10% depreciation charge per year on all machinery and a 5% depreciation charge per year on buildings (the corporation uses the nearest full

$in million Pepsi Coca cola Net cash provided by operating activities $6,796 $8,186 Average current liability 8,772 13,355 Average total liability 22,909 21,491

Q. Evaluate Equivalent annual cost? There are a number of techniques to answering this question and two are presented. The first difficulty is in deciding which broad approach

Red Lake Mines, Inc. is considering adoption of a new project requiring a net investment of $10 million. The project is expected to generate 5 years of net cash inflows of $5 milli

PURPOSE The purpose of this assignment is to provide learners opportunity to discuss the significance of the significance of the accounting principles and the qualitative chara

During 2011, Lavina Corporation had cash and credit sales of $94,000 and $91,000, respectively. The company also collected accounts receivable of $53,400 and incurred expenses of $

Effects of the appointment of the receiver Floating charges: these crystallise on the appointment of a receiver and become fixed on the assets then in the hands of the compan

Balance Sheet Classifications and Relationships: Shelley and Co. has the following balance sheet elements as of December 31, 2012. Land. . . . . . . . . . . . . . . . . . . . . . .