PARTNERSHIP

Q#1. Record the following in the necessary journals and show the relevant proprietorship
accounts.
a. H Nelson and R Watts agree to enter into a partnership sharing profits and losses equally.
Each person is to contribute $20000 cash as her share of capital.
b. G Gadsen agrees to contribute $15000 cash and M Wilson to contribute inventories
$2000; accounts receivable $1300; land $6000; furniture $1000 accounts payable $300.
Q#2. G Simon and H Archer agree to merge their existing businesses into a partnership. On 1
March 1988 the assets, liabilities and proprietorship of G Simon and H Archer appear as follows.
a. Record the amalgamation in the appropriate journal
b. Prepare the balance sheet of the new firm as at 1 March 1988.

G Simon

Assets $ Liabilities $
Cash at Bank 3200 Accounts Payable 1750
Accounts receivable 2400
Less Provision for doubtful debts 50 2350 Proprietorship
Inventories 14000 Capital 25800
Furniture and Fittings 8000 --
$27550 $ 27550

G Archer

Assets $ Liabilities $
Accounts receivable 1400 Accounts Payable 870
Less Provision for doubtful debts 30 1370 Proprietorship
Inventories 2500 Capital 63000
Land 20000
Buildings 40000 --
$63870 $ 63870
Q#3. S Gower and H Silks agree to merge their existing businesses into a partnership. On 15
September 1988 the assets, liabilities and proprietorship of S Gower and H Silks appear as
follows.
a. Show the journal entries necessary to record the amalgamation.
b. Prepare the balance sheet of S Gower and H Silks at 15 September 1988.

S Gower

Assets $ Liabilities $
Petty Cash 20 Bank overdraft 2300
Accounts receivable 1490
Less Provision for doubtful debts 90 1400 Proprietorship
Inventories 6000 Capital 24120
Plant and Equipment 16000
Goodwill 3000 --
$26420 $ 26420

G Archer

Assets $ Liabilities $
Cash at Bank 2500 Accounts Payable 2000
Accounts receivable 2150 Mortgage on Buildings 15000
Less Provision for doubtful debts 150 2000 Proprietorship
Inventories 4500 Capital 44000
Land 15000
Buildings 35000
Goodwill 2000 --
$61000 $ 61000
Q#4. On 1 July 1988, A Benson and G Turner agree to enter into a partnership. Benson is to
contribute cash of $30000 and Turner her existing business at an agreed value of $25000.
Turner’s assets, liabilities and proprietorship are shown below.
Record the information in the relevant journals, show the proprietorship accounts and prepare the
balance sheet of the partnership on 1 July 1988.

G Turner

Assets $ Liabilities $
Cash at Bank 5250 Accounts Payable 2300
Accounts receivable 2500
Less Provision for doubtful debts 500 2000 Proprietorship
Inventories 3750 Capital 23700
Land and Building 15000 --
$26000 $ 26000

Q#5. A Sinclair and G Wattle agree to enter into a partnership on 1 September 1988. A Sinclair
is to contribute cash of $30,000 and G Wattle is to contribute his existing business at an agreed
value of $40,000. The assets, liabilities and proprietorship are shown below.
The partnership agrees that the values of the individual assets and liabilities are appropriate;
a. Record the information in the relevant journals.
b. Prepare the balance sheet of the new partnership on 1 September 1988.

G Wattle

Assets $ Liabilities $
Cash at Bank 4000 Accounts Payable 700
Accounts receivable 2820 Mortgage on Land 1000
Less Provision for doubtful debts 120 2700 Proprietorship
Inventories 9000 Capital 34000
Land 20000 --
$35700 $ 35700
Q#6. On 1 July 1988, M Ray and G Care agree to enter into a partnership. M Ray assets and
liabilities were to be taken over at book values. G Care’s assets and liabilities were to be taken
over at book values except for debtors, which are to be subject to a provision for doubtful debts
of $200, and land to be valued at $22000. Care’s contribution is to be $23500.
Record the information in the relevant journals, show the proprietorship accounts and prepare the
balance sheet of the partnership on 1 July 1988.

M Ray

Assets $ Liabilities $
Cash at Bank 550 Accounts Payable 1000
Accounts receivable 820
Less Provision for doubtful debts 120 800 Proprietorship
Inventories 3250 Capital 28600
Building 25000 --
$29600 $ 29600

G Care

Assets $ Liabilities $
Cash at Bank 20 Accounts Payable 700
Debtors 1800 Bank overdraft 1200
Stock 780 Mortgage on Land 500
Furniture 8500 Proprietorship
Land 15000 Capital 23700
$26100 $26100
Q#7. On 1 August R Palmer and J Marshall agree to enter into a partnership. The assets and
liabilities of R Palmer’s were to be taken over at book values and the business is to have agreed
values of $24500. J Marshall’s assets and liabilities were to be taken over at book values except
that accounts receivables are to be subject to a provision for doubtful debts of 3 percent, and land
to be revalued at $25000 and buildings are to be valued at $32000. The agreed value of the
business is $65000.
Record the information in the relevant journals, show the proprietorship accounts and prepare the
balance sheet of the partnership on 1 August 1988.

R Palmer

Assets $ Liabilities $
Cash at Bank 1970 Accounts Payable 550
Accounts receivable 1920
Less Provision for doubtful debts 120 1800 Proprietorship
Inventories 6280 Capital 23500
Office Equipment 8000
Less: Acc. Dep. 2000 6000
Lease- Premises 8000 --
$24050 $ 24050

J Marshall

Assets $ Liabilities $
Cash at Bank 5800 Accounts Payable 980
Accounts Receivable 2500 Mortgage on Land 5000
Inventories 4900
Building 35000
Land 18000 Proprietorship
Building 15000 Capital 60320
$66300 $66300
Q#8. D Ferman and LHudson are in partnership sharing profits and losses in a 2:1 ratio.
The following were the relevant balances in the ledger at 30 June 1988.
Capital D Ferman $44000
Current D Ferman $7850
Drawings D Ferman $7000
Capital LHudson $22000
Current LHudson $3290
Drawings LHudson $8000
 Interest on drawings is to be charged and interest on capital allowed.
 D Ferman and L Hudson are non-working partners and each receives $5000 as a salary as
per the partnership agreement. These salaries have been paid.
 Interest on drawings was calculated as: Ferman $325 and Hudson $340.
 Interest on capital was calculated as: Ferman $4400 and Hudson $2200.
 Net profit for the year was $12000.
Assuming that these are balance day adjustments, prepare;
a. The profit and Loss Appropriation account.
b. Capital and Current accounts of the partners.

Q#9. J Burns and D Currier are in partnership sharing profits and losses in a 3:2 ratio.
The following were the relevant balances in the ledger at 31 December 1988.
Capital J Burns $35000
Current J Burns $3400
Drawings J Burns $3800
Capital D Currier $30000
Current D Currier $1700
Drawings D Currier $2400
 Interest of 10% is to be allowed on Capital.
 D Currier who works for the business is to receive $10000 salary.
 Profit for the year was $45000 before any adjustments are made.
 Interest charged on drawings was J Burns, $230 and D Currier, $150.
Using the preceding information prepare.
c. The profit and Loss Appropriation account.
d. Capital and Current accounts of the partners.