No. 2(a): Completed table showing which characteristics are applicable to each type of business structure: No. 2(b) (i): Below are the necessary double entries related to the preparation of the Capital Adjustment Account for the partnership before the admittance of Janet: **Note that the balance on the revaluation account would now be $34,000, as there are two credit entries, $18,000 and $20,000 and a debit entry of $4,000, (18,000+20,000-4,000). The balance of the revaluation account will be split between both partners using the old profit sharing ratio. Therefore: Kendal’s portion will be ½ x $34,000 = $17,000 and Kwame’s portion will be ½ x $34,000 = $17,000. Now that all the necessary entries has been identified the Capital Adjustment Account can be prepared. Note that the $80,000 brought in by Janet will be entered as follows: Debit: Cash at Bank $80,000 Credit: Janet’s Capital $80,000 No. (b) (ii): Preparation of the Balance Sheet to show the opening position of the new partnership of Kendal, Kwame and Janet: I hope that you found this proposed solution helpful! If you did please share it! Also, feel free to ask any questions or to comment below. Best of luck!
2 Comments
Lilia Browne
8/2/2018 03:24:49 pm
Thanks for sharing!! One observation, in the Capital Adjustment Account, the balance B/F for Kendal and Kwame was switched.
Reply
Krystal
8/14/2018 08:46:13 pm
Hi Lilia,
Reply
Your comment will be posted after it is approved.
Leave a Reply. |
AuthorThe author holds a Bsc (Hons) Degree in Applied Accounting from Oxford Brookes University, England and enjoys a successful career as an Accounting Supervisor and a private tutor. Archives
May 2018
Categories
All
|