Question 2

Shah, Fadli and Amer have been in partnership, sharing profits and losses at a ratio of 3:4:3 respectively. The following are the balances in the book of partnership as at 30 June 2019:

	RM
Building (at cost)	40,000
Motor vehicles	54,000
Machinery	14,000
Inventories	15,000
Accounts Receivable	13,000
Bank	13,000
Capital account:
Shah	32,000
Fadli	48,000
Amer	30,000
Current account:
Shah	16,000
Fadli	10,000
Amer	(4,000)
Accounts Payable	17,000

Fadli decided to retire from the business on 1 July 2019 and Ariana is admitted as a partner on that date. The partners have agreed on the following matters.

1. The value of building was increased to RM70,000 determine by professional valuer who will be paid RM15,000 for his professional charges.

2. Motor vehicles were to be revalued at RM40,000.

3. Machinery value was to be revalued at RM8,000.

4. The inventories were to be revalued at RM13,000.

5. Revaluation expenses amounting to RM3,000 were paid by cheque.

6. The balance in Fadlis capital account will remain as a loan to the partnership at an interest rate of 10% per annum.

7. Shah, Amer and Ariana are to share profits and losses in the ratio 2:2:1 respectively.

8. Ariana will bring in RM50,000 cash into the partnership as her capital.

9. The value of goodwill was agreed to be RM22,000. The goodwill is not to be maintained in the books.

Required:

1. Prepare the following accounts:

1. Goodwill account.

(Show the computation of goodwill)

2. Revaluation account.

3. Partners Capital account.

(3 marks)

(4 marks)

(7 marks)

4. Statement of Financial Position of the partnership as at 1 July 2019.

2. Explain briefly ONE (1) characteristic of the followings:

1. General partner.
2. Sleeping partner.

(9 marks)

(2 marks)