Kamal, Teoh and Mohan are in a legal partnership The following balances were extracted from the partnership books of account as at 31 March 2018 RM RM Capital account as at 1 April 2017 Kamal 72,000 Teoh 62,000 Mohan 52,000 Current account as at 1 April 2017 Kamal 45,000 Teoh 44,000 Mohan 43,000 Land and building 102,000 Accumulated depreciation 66,000 Fixtures and fittings 52,000 Accumulated depreciation 46,000 Inventories 45,500 Accounts receivable (net) 67,000 Bank 83,500 Accounts payable 54,000 Revaluation surplus 63,500 Net profit for the year 66,500 482,000 482,000 Additional information The partnership profit sharing ratio is 3 2 1 The partners will be entitled to 15 percent interest per annum on capital account balances Kamal retired on 31 December 2017 Upon his retirement the assets are revalued resulting a revaluation surplus of RM63,500 Goodwill was valued at two years purchase of the average profit for the last three years The profit for the last three years were RM 31 March 2017 90,000 31 March 2016 56,000 31 March 2015 52,000 Due to his retirement, Kamals current account is to be transferred to his capital account The partnership agreed to pay the amount due to Kamal, except for RM92,000 which remain as a loan to the partnership Following Kamals decision to retire, Teoh and Mohan invited Salim to join the partnership on 1 January 2018 Salim agreed to pay RM57,000 into the new partnership as his capital contribution and RM49,000 for his share of goodwill This entry has not been recorded in the books upon admission of Salim The new partnership profit sharing ratio is 2 1 1 The net profit for the year is deemed to have been earned evenly throughout the year REQUIRED Compute the goodwill for the partnership Prepare the partnership appropriation account incorporating the pre and post period for the year ended 31 March 2018 Prepare the partners current account in a columnar form Prepare the partners capital account in a columnar form

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Posted on Aug 31, 2024

Additional information:

1. The partnership profit sharing ratio is 3:2:1.
The partners will be entitled to 15 percent interest per annum on capital account balances.
Kamal retired on 31 December 2017. Upon his retirement the assets are revalued resulting a revaluation surplus of RM63,500.
Goodwill was valued at two years purchase of the average profit for the last three years. The profit for the last three years were:

Due to his retirement, Kamals current account is to be transferred to his capital account. The partnership agreed to pay the amount due to Kamal, except for RM92,000 which remain as a loan to the partnership.
Following Kamals decision to retire, Teoh and Mohan invited Salim to join the partnership on 1 January 2018. Salim agreed to pay RM57,000 into the new partnership as his capital contribution and RM49,000 for his share of goodwill. This entry has not been recorded in the books upon admission of Salim.
The new partnership profit sharing ratio is 2:1:1.
The net profit for the year is deemed to have been earned evenly throughout the year.

REQUIRED:

Compute the goodwill for the partnership.
Prepare the partnership appropriation account incorporating the pre and post period for the year ended 31 March 2018.
Prepare the partners current account in a columnar form.
Prepare the partners capital account in a columnar form.