Reference no: EM132538836
Croissant, Muffin and Crème Danish are in partnership and share profits in the ratio 3:2:1. On 30 April 2020 Croissant decides to withdraw from the partnership. At this stage the balance sheet of the partnership is as follows: CROISSANT, MUFFIN AND CRÈME DANISH Statement of Financial position as at 30 April 2020
ASSETS N$ NON-CURRENT ASSETS:
Land and buildings 42 000
Equipment 12 000
Goodwill 6 000
CURRENT ASSETS 158 000
TOTAL ASSETS 216 000
EQUITY: CAPITAL AND RESERVES Capital:
Croissant 100 000 Muffin 40 000
Crème Danish 60 000 General Reserves 18 000
TOTAL EQUITY 216 000
For the purpose of Croissant's withdrawal, the following was decided:
1. Land and buildings are worth N$78 000.this valuation is only for the purpose of Croissant's withdrawal from the partnership.
2. Goodwill is valued at N$96 000 for the purpose of Croissant's withdrawal from the partnership but it must be retained at N$ 6 000 in the books of the new partnership.
3. The general reserve must be retained in the books.
4. The new profit-sharing ratio between Muffin and Crème Danish will be 4:1
5. Croissant will, as a repayment of his loan account, take equipment with a caring amount of N$ 8 000 as well as a cash amount of N$ 40 000. The remaining balance will be taken over by Muffin and Crème Danish in their personal capacities and will be paid according to the new profit-sharing ratio.
YOU ARE REQUIRED TO:
Question 1: Prepare the capital accounts of the partners in column format and balance the accounts properly.
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