Illustrative Question 2 (Admission of a New Partner) Eben and Baaba are in partnership business sharing profits and losses in the ratio of 2:1. The statement of financial position of the firm as at 31st December 2010 is shown below: Eben and Baaba Partnership Statement of Financial Position as at 31st December, 2010 GH GHe Non-Current Assets Land and Buildings 99,000 Plant and Machinery 47,000 Motor Vehicles 69.000 215,000 Current Assets: Inventory Trade Receivables 19,000 13,000 Total Assets 32.000 247,000 Capital and Liabilities: Capital: Eben Baaba 61,500 71.000 132,500 Current Accounts: Eben Baaba 15.000 7.000 22.000 Current Liabilities: Trade Payables Bank Overdraft 72.500 19.000 Capital and Liabilities 91.500 247,000 On 1" January 2011, the partners agreed to admit Paul into the firm in order to open another sales outlet. Paul was to contribute GH107,000 as capital. He agreed to contribute his capital as follows: GH Cash paid into bank 29,000 Moto vehicles 59.000 Computers 19.000 The three partners agreed to share profits and losses equally and Current Account balances are to be transferred to Capital Accounts before the new agreement takes effect. The following adjustments are to be made in the asset values. (i) (iii) Inventory should be written down by 10% Land and buildings should be valued at GH119,000 and plant and machinery at GH99,000. The carrying value of the motor vehicles approximates the fair value. In addition to the revaluation of the tangible non-current assets, internally generated goodwill prior to the admission of Paul was valued at GH 12,000. Goodwill was to be adjusted through the partners' capital accounts, and goodwill is to be maintained in the books of the firm. You are required to prepare the: (a) Revaluation Account (b) Partners' Capital Accounts. (c) Statement of Financial Position for the new firm as at 1" January 2011