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Atieno, Babu and Chesire have been trading in partnership sharing profits/losses in the ration of 5:3:2 respectively. On 1 April 2000 they admitted their manager, Dagana...

      

Atieno, Babu and Chesire have been trading in partnership sharing profits/losses in the ration of
5:3:2 respectively. On 1 April 2000 they admitted their manager, Dagana as a partner and the
profit sharing ratio was changed to 4:3:2:1 FOR Atieno, Babu, Chesire and Dagana respectively.
The partners valued the goodwill at Sh.510,000. Dagana paid Sh.200,000 as capital and his share
of goodwill, which should be based on capital contributions.
The partners do not wish to retain the goodwill account after admission of Dagana. The
admission of Dagana has not been fully recorded other than the cash receipt of Sh.376,500.
The following is the trial balance of the partnership as at 31 March 2001:
famay2009.png
Notes:
1) Depreciation on furniture and fittings and motor vehicles is at 10% and 20% on reducing
balance respectively.
2) The closing stocks were valued at Sh.560,000.
3) Accrued salaries and wages and telephone bills amounted to Sh.24,000 and Sh.14,000
repectively.
4) Prepaid subscriptions and rates amounted to Sh.5,000 and Sh.25,000 respectively.
5) The partners decided that Dagana should be given a monthly salary of Sh.20,000 for the
whole year from 1 April 2000 to 31 March 2001.
6) Dagana took goods for own use at cost amounting to Sh.185,000. No entry has been made
in the books.
7) The old partners shared the cash paid by Dagana for part of his goodwill.

Required:
a) Trading, profit and loss account for the year ended 31 March 2001. (10 marks)
b) Partners capital accounts.
c) Partners current accounts.
d) Balance sheet as at 31 March 2001.

  

Answers


Mutiso
famay2009i.png
famay2009ii.png
famay2009iii.png
1) The goodwill is passed through the current account as the partners are to withdraw cash
paid in for the goodwill. The cash withdrawn by the partners is included in the drawings
figure shown in the trial balance.
Mutiso answered the question on November 16, 2018 at 13:52


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