Question 4 Ama, Baah and Cain are in partnership, providing management services, sharing profits in the ratio 5:3:2 after charging annual salaries of GH6,000 each. Current accounts are not maintained. On 30 June 2019, Ama retired and Doh was admitted into the partnership. Doh is entitled to 30% of the profits of the new partnership with the balance being shared equally between Baah and Cain. The old partnership trial balance as at 30 June 2019 was as follows: GHC GHC Capital Accounts: Ama 4,173 - Baah 21,948 - Cain 11,206 Trade receivables 46,205 Inventories 2,000 Operating Exepnses 139,722 Investment 100 Bank Overdraft 11,170 Trade Payables 17,406 Revenue 188,432 The following information is relevant: i. For the purposes of the accounts, inventory is to remain at GH2,000. ii. Full provision is required at 30 June 2019 against a bad debt of GH1,150. iii. It was agreed between the partners that the following adjustments are to be made: a. The investment is to be included in the books of the new partnership at a valuation of GH1,500. b. Goodwill, which is to be kept in the books of the new partnership, is to be valued at GH24,000. iv. On 1 July 2019, GH10,000 of the amount due to Ama from the old partnership was transferred to Doh. The balance due to Ama is to be repaid over three years, commencing on 1 July 2019. v. On 1 July 2019 Doh introduced cash of GH7,500 to the partnership. Required: Prepare the Statement of Profit or Loss account and appropriation account of the OLD partnership for the year ended 30 June 2019.

Question 9 Two accountancy firms, Augustine, Phillipa and Wilson of Wa, and Elliot and Sherifa of Ho agreed to merge their practices effective 1 January 2020. Both firms balanced their books and made up their accounts to 31 December, 2019. Their statements of financial position are as follows: Statement of financial Position as at 31st December, 2019 APW ES Non-current Assets GHC GHC Land and Building 35000 Equipment 5000 6000 40000 6000 Add: Current Assets Trade receivables 20000 14000 Unbilled work 8000 6000 Prepayments 400 200 Bank and Cash 2000 3000 30400 23200 Total Assets 70400 29200 Equity and Liabilities Capital Accounts 24000 Augustine 16000 Phillipa 13000 Wilson 16000 Elliot 9400 Sherrifa Augustine 1000 Phillipa 600 Wilson 300 Elliot 500 Sherrifa 54900 25900 Add: Liabilities 10 Loan from Augustine 10000 Trade Payables 5000 3000 Accruals 500 300 15500 3300 Total Equity and Liabilities 70400 29200 The profit/loss sharing ration of Augustine, Phillipa and Wilson is 2:2:1 respectively and that of Elliot and Sherrifa is 3:2 respectively. APW partnership agreement allows for 10% interest on capital and that of ES allows for salaries to partners at GHC 5,000 to Elliot and GHC 4,000 to Sherrifa per annum. The items of PPE were transferred at the following revalued figures at 1 January, 2020: APW ES Land and Buildings 54,100 Equipment 6,000 8,100 The premises of ES are rented and will be given up after the merger. All other identifiable assets will be taken over at book values. The total value of each of the merging firms at 31 december 2019, are to be computed at the present values of their projected net earnings for the three years ended 31 December, 2022 on assumption that they are not merged and that there is no inflation, discounted at 15% per annum (assume that earnings are received at year end). The resulting goodwill for the two firms should not be kept in the books of the new firm. The projected net earnings and the discounting factors(df) for the respective years are stated below: APW ES df Year ending 31 December, 2020 50,000 20,000 0.870 2021 55,000 25,000 0.756 2022 22,675 17,781 0.658 Profits/losses are to be shared in the new firm as follows: A = 25%; P = 20%; W = 20%; E = 20%; and S = 15%. As loan is to be recognized as a liability in the new firm. Required: Prepare the opening Statement of Financial Position of the new firm, APWES Accountancy, as at 01 January, 2020.