Financial Accounting

Section B Partnership Question No. 02 - Compulsory Land M are partners of LM Partnership and M and N are partners of MN Partnership sharing profits and losses in the ratio of 1:1 and 2:3 respectively. On 31.03.2019 they decided to amalgamate the two partnerships and form a new firm. LMN Partnership where the L. M and N will share the profits and losses in the ratio of 3: 2: 1 respectively. The Statement of Financial Positions of the two firms are as follows as at 31.03.2019 were as follows. LM MN Partnership Partnership LM Partnership MN Partnership Non - current Capital Assets 175,000 250,000 105,000 160,000 55,000 85,000 Building 120,000 Office Furniture 175,000 100,000 Current Assets Inventory Debtor Reserves 125,000 95.000 75,000 87,000 110,000 15,000 Due from MN 15,000 Liabilities Due to LM Partnership Creditors Accrued Expenses 70,000 10,000 80,000 19,000 60.000 55,000 95,000 Cash in Bank 6,000 Cash in Hand 511,000 560,000 511,000 560,000 The new firm took over the partnerships on the following terms. Buildings of LM Partnership and MN Partnership were valued at Rs.120,000 and Rs.240,000 respectively. . All the inventory in the trade to be appreciate by 13%. Office furniture of MN Partnership was valued at Rs.70,000. Goodwill value of LM partnership at Rs.156,000 and MN Partnership at R90.000, but new firm's policy is to not to record he goodwill in books of LMN Partnership Partners of the new firm need to bring the necessary cash to pay other partners to adjust their capitals according to the profit-sharing ratio, taking highest capital relative as the base Partner L paid Rs. 250,000 after the capital adjustment and promised to settle the balance on 30.09.2019 Note: Working should be to nearest whole number. Required: 1. Prepare the Statement of Financial Position of LMN Partnership as at 31.03.2019. 2. Prepare the capital accounts of the partners in the books of old firm using revaluation method. (Total 20 Marks)