... sharing
ratio 3:2. The following statement of financial position appears in their books on 30 June 20.4:
R
Capital 3 000
Fourie 18 000
Fouche 12 000
Assets 30 000
Land and building at cost 10 000
Furniture at carrying value 2 000
Goodwill 2 000
Inventory 1 400
Debtors (after allowance for credit losses of R 1000) 3 000
Bank 1 000
Liabilities (creditors) 2 000
It was agreed on 30 June 20.4 to admit Van Romburg as partner on the following conditions:
a) The goodwill that is currently shown in the partnership must be written off.
b) The allowance for credit losses must be increased to R 2000.
c) Land and building must be re-valued to the market value of R90 000.
d) Van Romburg will receive 1/5 of the future profits, which will be surrendered in equal
parts by the current partners.
e) Van Romburg must bring in R120 000 in cash of which R26 750 is for capital and the
rest for goodwill.
f) Goodwill must be shown in the books of the new partnership.
g) Fourie and Fouche have to pay in or withdraw cash so that their capital contribution are
in comparison with Van Romburg in the ratio 5/10 and 2/10 respectively.
Required
1. Show the capital accounts of the partners to carry out the above mentioned. (15 marks)
2. Show what the realization account would look like in the ledger, should the partnership
be liquidated prior to Van Romburg’s joining. (5 marks)
Assume that the asset would realize as follows;
Land and buildings, R90 000.
Other assets, R10 000