Question

Additional information: Upon retirement the following transactions declaration has been agreed: • David took over machineries valued at RM340,000 • The partnership will settle the capital balance to David in cash and the current account remained as a loan to the partnership at an interest rate 10% per year. The revaluation of assets: Building RM1,300,000 Inventories RM 140,000 Account Receivables RM 150,000 • For the purpose of David's retirement, the amount of goodwill has been determined as RM200,000 based on average of annual profit for the last five years. Required: a) Prepare the following accounts: i. Revaluations ii. Goodwill iii. Partners' Current Account iv. Partners' Capital Account b) Prepare the Statement of Financial Position as at 31 December 2018,

Answer 1

Machinery account
	Particulars	Amount		Particulars	Amount
To	Balance B/d	400000	By	David Account	340000
			By	Loss on sale of Assets	60000
		400000			400000
Revaluation Account
	Particulars	Amount		Particulars	Amount
To	Inventories	40000	By	Building A/c	300000
To	Accounts Receivable	30000
To	Profit Trf to Partners
	Alam	46000
	David	138000
	Ridza	46000
		300000			300000
Goodwill Account
	Particulars	Amount		Particulars	Amount
			By	Capital A/c	200000
To	Trf to Partners
	Alam	40000
	David	120000
	Ridza	40000
		200000			200000

Partners Current Account
	Particulars	Alam	David	Ridza		Particulars	Alam	David	Ridza
					By	Balance B/d	120000	120000	240000
To	Loan Account		120000
To	Balance C/f	120000		240000
		120000	120000	240000			120000	120000	240000
Partners Capital Account
	Particulars	Alam	David	Ridza		Particulars	Alam	David	Ridza
					By	Balance B/d	400000	600000	400000
To	Machinery Account	0	340000	0	By	Revaluation Account	46000	138000	46000
To	Loss on sale of Machinery	12000	36000	12000	By	Goodwill Account	40000	120000	40000
To	Cash	0	482000	0
To	Balance C/f	474000		474000
		486000	858000	486000			486000	858000	486000

Balance Sheet as on 31/12/2018
Liabilities	Amount		Assets	Amount
Capital			Goodwill	200000
Alam	474000
Ridza	474000		Building	1300000
Current A/c			Inventories	140000
Alam	120000
Ridza	240000		Account Receivable	150000
Loan Account			Bank Account	618000
David	120000
Rich Bank	800000
Accounts Payable	180000
Total	2408000		Total	2408000