Lec-20 - Advanced Financial Accounting FIN-611 Mian Ahmad...

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Advanced Financial Accounting FIN-611 Mian Ahmad Farhan Lecture-20 Partnership
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Question Laiquee, Imran and Ishtiaq are in partnership. They shared profit in the ratio 2:5:3. It is decided to admit Amir. Amir will bring Rs. 4,000 cash into the business for capital. It is agreed that goodwill was worth Rs. 10,000, but that is not to be brought into business record. The new profit sharing ratio is to be 3:4:2:1.
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Question The balance sheet before Amir was introduced as a new partner was as follow: Assets Building 8,000 Machinery 3,000 Stock 2,000 Cash 2,500 15,500 Less Creditors 3,500 Net Assets 12,000 Capital Laiquee 3,000 Imran 5,000 Ishtiaq 4,000 12,000
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Question After the admission of Amir Assets are revalued : Assets Building 10,000 Machinery 2,500 Stock 1,800 Required: 1. Record necessary accounting entries 2. Prepare capital Accounts 3. Post admission balance sheet
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Solution Introduced capital by Amir Cash A/c 4,000 Amir’s capital 4,000 Goodwill raised Goodwill A/c 10,000 Laiquee capital A/c 2,000 Imran capital A/c 5,000 Ishtiq capital A/c 3,000
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Solution Revaluation of Assets Building A/c 2,000 Revaluation A/c 2,000 Revaluation A/c 700 Machine A/c 500 Stock A/c 200 Transfer of revaluation balance Revaluation A/c 1,300 Laiquee capital A/c 260 Imran capital A/c 650 Ishtiq capital A/c 390
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Revaluation Account Particulars Amount Particulars Amount Machine Stock Balance 500 200 1,300 Building 2,000 2,000 2,000
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Working Laiquee 1,300 x 2/10= 260 Imran 1,300 x 5/10 = 650 Ishtiq 1,300 x 3/10 = 390 1,300
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This note was uploaded on 05/15/2010 for the course ACCOUNTING B97702031 taught by Professor Lyz during the Spring '09 term at Punjab Engineering College.

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Lec-20 - Advanced Financial Accounting FIN-611 Mian Ahmad...

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