ESTION THREE In similar type of business, A and B are in partnership as A B and Co. and C and D as C D and Co. It was mutually agreed that as January 1, 2021 the partnerships be amalgamated into one firm, ABCD Co. The profit and loss sharing ratios in the various firms were and are to be as follows: A B C D Old firms 4 New firm 3 3 2 6 5 4 3 As on December 31 2020, the statements of financial position of the firms were as follows: CD and Co A B and Co Non-current Assets Property Vehicles Fixtures GH'000 GH'000 29,600 40,000 12,000 7,200 7,200 5.600 48,800 56,800 Current Assets Inventory 33,200 26,400 Investment 3,200 Trade Receivables 27,200 23,200 Cash and Bank 13,600 126,000 102400 3 Capital and Liabilities Capital Accounts A B C D Current Liabilities Trade Payables Bank overdraft 61,200 44,000 45,200 29,600 20,800 24,000 3,600 126,000 102400 The agreement to amalgamate contains the following provisions: a. Provision for doubtful debts at the rate of 5% be made in respect of Receivables and a provision for discount receivable at the rate 2% be made in respect of Payables. b. ABCD Co. to take over the old partnership assets at the following values: A B and Co GH'000 CD and Co GH'000 25,560 Inventory Vehicles 33,600 11,200 5,200 Fixtures 6,400 Property 40,000 Goodwill 25,200 18000 Vehicles Fixtures 12,000 7,200 7,200 5.600 48,800 56,800 Current Assets Inventory 33,200 26,400 Investment 3,200 Trade Receivables 27,200 23,200 Cash and Bank 13,600 126,000 102400 3 Capital and Liabilities Capital Accounts A 61,200 B C D Current Liabilities Trade Payables Bank overdraft 44,000 45,200 29,600 20,800 24,000 3,600 126,000 102400 The agreement to amalgamate contains the following provisions: a. Provision for doubtful debts at the rate of 5% be made in respect of Receivables and a provision for discount receivable at the rate 2% be made in respect of Payables. b. ABCD Co. to take over the old partnership assets at the following values: A B and Co GH'000 CD and Co GH'000 Inventory Vehicles Fixtures Property Goodwill 33,600 25,560 11,200 5,200 6,400 40,000 25,200 18000 c. The property and fixtures of C, D & Co., not to be taken over by ABCD Co. (These assets were sold for GH54,000,000 cash on January 1, 2021.) d. B to take over his firm's investment at a value of GH3,040,000. e. The capital of ABCD Co. to be GH216,000,000 and to be contributed by the partners in profit and loss sharing ratios, any adjustments to be made in cash. Required: Prepare Realisation Account in the books of each of the old firms as at 30 December 2020. i) ii) Prepare Partners' Capital Account for the period to 1 January 2021. iii) Prepare Statement of Financial Position as at 1 January 2021