Question
Assume that Jennifer and David have $640,000 in their bank account on 1 January 2022.They decided to admit a new partner Rose, who will contribute
Assume that Jennifer and David have $640,000 in their bank account on 1 January 2022.They decided to admit a new partner Rose, who will contribute a capital of $700,000 into the bank account of the partnership. Rose is unwilling to pay a premium for goodwill so the old partners have decided to open a goodwill account and place a value of $840,000 on goodwill which they then share between themselves. REQUIRED: (a) Based on the account balances for Jennifer and David at the 31 December 2021, show the ledger accounts to record the admission of Rose.
Statement of Financial Position Extract as at 31 December 2021 | |||
$ | $ | $ | |
Finance by: | |||
Capital Accounts | |||
Jennifer | 700,000 | ||
David | 200,000 | 900,000 | |
Current Accounts | |||
Jennifer | 631,812 | ||
David | 1,047,588 | 1,679,400 | 2,579,400 |
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