TWO Asante, Opoku, and Okai were in partnership sharing profits and losses in the ratio 5:3:2 respectively. The draft Statement of Financial Position as at 30th June, 2007 was as follows: Non-current assets Freehold premises Plant & equipment Motor vehicles GH GH 8,000 4,200 2,100 14,300 Current assets Inventories 3,600 Trade receivables 5,200 Less provision for doubtful debts Bank balance (400) 4,800 8.300 16.700 31.000 Capital and liabilities Loan - Asante 3,000 Provision for repainting of premises 1,400 Trade payables 4.600 9,000 Capital balances Asante Opoku Okai 12,000 6,000 4,000 22.000 31.000 Asante retired on the 30th of June 2007 and Opoku and Okai continued in partnership sharing profits and losses in the ratio 60% and 40% respectively. Asante's loan was repaid on 1st July 2007 and it was agreed that 10% of the outstanding balance due him should be paid as soon as the amount was computed, the remaining on loan to the partnership. It was agreed that the following adjustments should be made to the Statement of Financial Position as at 30th June 2007: i) ii) iii) iv) v) vi) The freehold premises to be revalued at GH15,000 and the plant and equipment t GH3,500 Asante to be charged GH6400 for one of the motor vehicles taken over by him, this vehicle having a book value of GH450 The provision for repainting of the premises to be increased to GH2000 GH 400 to be written off the inventories in respect of damaged and obsolete items included therein The provision for doubtful debts to be increased by GH200 The provision of GH 250 included in the trade payables to be written back partnership deed provided that on the retirement of a partner, goodwill was to be valued at an amount equal to or lower of the average annual profits of either the three or five years on the date of retirement. The relevant profits were: Year ended 30 June 2003 GH6,420 Year ended 30 June 2004 Year ended 30 June 2005 GH5,360 GH8,180 Year ended 30 June 2006 GH7,840 Capital and liabilities Loan Asante 3,000 Provision for repainting of premises 1,400 Trade payables 4.600 9,000 Capital balances Asante Opoku Okai 12,000 6,000 4,000 22.000 31.000 Asante retired on the 30th of June 2007 and Opoku and Okai continued in partnership sharing profits and losses in the ratio 60% and 40% respectively. Asante's loan was repaid on 1st July 2007 and it was agreed that 10% of the outstanding balance due him should be paid as soon as the amount was computed, the remaining on loan to the partnership. It was agreed that the following adjustments should be made to the Statement of Financial Position as at 30th June 2007: i) ii) iii) iv) v) vi) The freehold premises to be revalued at GH15,000 and the plant and equipment t GH3,500 Asante to be charged GH6400 for one of the motor vehicles taken over by him, this vehicle having a book value of GH450 The provision for repainting of the premises to be increased to GH2000 GH 400 to be written off the inventories in respect of damaged and obsolete items included therein The provision for doubtful debts to be increased by GH200 The provision of GH#250 included in the trade payables to be written back partnership deed provided that on the retirement of a partner, goodwill was to be valued at an amount equal to or lower of the average annual profits of either the three or five years on the date of retirement. The relevant profits were: Year ended 30 June 2003 GH6,420 Year ended 30 June 2004 GH5,360 Year ended 30 June 2005 GH8,180 Year ended 30 June 2006 GH 7,840 2 Year ended 30 June 2007 GHe8,150 (as shown by draft accounts) It was agreed that, for the purpose of valuing goodwill only the adjustments in respect of the provision for repainting and doubtful debts, trade payables, and inventories should be regarded as affecting income. No account for goodwill was to be maintained in the books, and adjusting entries for the transactions between the partners being made in the capital accounts. Required: a. Prepare the revaluation account b. Prepare the partners' capital accounts c. Prepare Asante's account, showing the balance due him d. The Statement of Financial Position of Opoku and Okai as on 1 July 2007. (15 marks)