Question 1 (20 marks, 30 minutes) Ndiovu Attorneys is a partnership between Nomthemba, Nandi, Njabulo and Ndumiso. The partners share profits in the ratio 1:2:4-5 respectively. The partnership has a 31 May 2021 year end. On 31 May 2021. Nandi approached the partners, as she had decided due to her ill health, to retire from the legal profession and as a result from the partnership, The trial balance of Ndlovu Attorneys on 31 May 2021 is shown below. Ndlovu Attorneys Trial balance as at 31 May 2021 DR CR R R Capital Account - Nomthemba 20 000 Capital Account - Nandi 40 000 Capital Account - Njabulo 80 000 Capital Account - Ndumiso 100 000 Current Account - Nomthemba 10 000 Current Account - Nandi 6 000 Current Account - Njabulo 2 000 Current Account - Ndumiso 10 000 Land and Buildings 900 000 Plant and equipment 150 000 Furniture and Fittings 12 000 Trade Receivables 16 000 Trade Payables 28 000 Bank Overdraft 5 000 Sales 1 299 000 Cost of Sales 475 000 Stationery 1 500 Interest Expense 1 500 1 578 000 1 578 000 The partnership decided that Goodwill should not be recorded as an asset in the accounts of the partnership and that no private cash settlement will take place between the partners either. Upon Nandi's retirement from the partnership on 31 May 2021, the following information is deemed important 1. Land and buildings have a fair market value of R1 250 000 2. Plant and equipment are considered to be valued at R120 000 3. Nomthemba, Njabulo and Ndumiso will share profits/fosses in the ratio of 2.2:1 4. The partnership is considered to be worth R750 000 5. Nandi will be paid out in cash upon leaving the partnership 6. Nonthemba will contribute R150 000 more cash to the partnership after Nandi retires Required Marks 1. Calculate the value of goodwill of the existing partnership before 8 Nandi retires 2. Calculate the partner's capital account balances that the new partnership (i.e. after Nandi's retirement) will reflect on the Statement of Financial Position on 31 May 2021 and provide the goodwill 12 ledger account N.B. Round all answers off to the nearest rand Total 20 DR R 80 000 Question 1 (20 marks, 30 minutes) Ndlovu Attorneys is a partnership between Nomthemba, Nandi, Njabulo and Ndumiso. The partners share profits in the ratio 1:2:4:5 respectively. The partnership has a 31 May 2021 year end. On 31 May 2021, Nandi approached the partners, as she had decided due to her ill health, to retire from the legal profession and as a result from the partnership The trial balance of Ndlovu Attorneys on 31 May 2021 is shown below. Ndlovu Attorneys Trial balance as at 31 May 2021 CR R Capital Account - Nomthemba 20 000 Capital Account - Nandi 40 000 Capital Account - Njabulo Capital Account - Ndumiso 100 000 Current Account - Nomthemba 10 000 Current Account - Nandi 6 000 Current Account - Njabulo 2 000 Current Account - Ndumiso 10 000 Land and Buildings 900 000 Plant and equipment 150 000 Furniture and Fittings 12 000 Trade Receivables 16 000 Trade Payables 28 000 Bank Overdraft 5 000 Sales 1 299 000 Cost of Sales 475 000 Stationery 1 500 Interest Expense 1 500 1 578 000 1 578 000 The partnership decided that Goodwill should not be recorded as an asset in the accounts of the partnership and that no private cash settlement will take place between the partners either. Upon Nandi's retirement from the partnership on 31 May 2021, the following information is deemed important 1. Land and buildings have a fair market value of R1 250 000 2. Plant and equipment are considered to be valued at R120 000 3. Nomthemba, Njabulo and Ndumiso will share profits/losses in the ratio of 2:2:1 4. The partnership is considered to be worth R750 000 5. Nandi will be paid out in cash upon leaving the partnership 6. Nonthemba will contribute R150 000 more cash to the partnership after Nandi retires Required Marks 1. Calculate the value of goodwill of the existing partnership before Nandi retires 8 2. Calculate the partner's capital account balances that the new partnership (i.e. after Nandi's retirement) will reflect on the Statement of Financial Position on 31 May 2021 and provide the goodwill ledger account 12 N.B. Round all answers off to the nearest rand Total 20
