Accounting $ Ajax and Rufus agreed to combine their businesses and form a partnership to trade as A&R Trading Ltd. The Balance Sheets for their respective individual trading operations are shown below.

 

The following terms were agreed to on formation of the partnership:

• Ajax's Accounts Receivable were expected to realise $12,000 and the van had an agreed value of $13,000

• Rufus's premises were taken into the partnership accounts valued at $80,000 and Rufus is to settle the bank overdraft herself.

• Capital accounts are to be fixed at Ajax $30,000 and Rufus $60,000 respectively

• Any excess is to be transferred to a Retained earnings account and any deficit is to be made up by a cash contribution by the partner

Required;

i. Prepare general journal entries to give effect to the above

ii. Prepare the balance sheet of A&R Trading Ltd. as at October 1, 2019

QUESTION 3

Part Bi. 1/10/17

• Business of Ajax introduced as capital

• Business of Rufus introduced as capital

 

Ajax Trading Co. Rufus Trading Co. Balance Sheet Balance Sheet As at October 1, 2019 As at October 1, 2019 Assets Assets Bank 6,000 Accounts Receivable 8,000 Accounts Receivable 13,000 Inventory 12,000 Inventory 23,000 Premises 70,000 90,000 Van 15,000 57,000 Total Assets 57,000 Total Assets 90,000 Liabilities Liabilities Accounts payable 17,000 Accounts payable 7,000 Loan 10,000 27,000 Bank overdraft 3,000 Mortgage 30,000 40,000 Owners Equity 30,000 Owners Equity 50,000