QUESTION 2 TUTORIAL CHANGES IN PARTNERSHIP

Old value New value Difference

Machine 120,000 90,000 (30,000)

Vehicle 80,000 55,000 (25,000)

Furniture 40,000 25,000 (15,000)

Accounts receivable 20,000 18,000 (2,000)

Inventory 36,000 32,000 (4,000)

Revaluation Accounts

Machine 30,000 Loss on revenue : 76,000

Ayuni (⅖)- 30,400
Camelia (⅖)- 30,400
Eima (⅕)- 15,200

Vehicle 25,000

Furniture 15,000

Accounts receivable 2,000

Inventory 4,000

76,000 76,000

Capital Accounts

Ayuni Cameli Eima Ayuni Camelia Eima

a

Sharing 30,400 30,400 15,200 Balance 100,000 80,000 60,000

loss on b/d
revaluation

Bank 30,000 Current 12,000

accounts

Loan 92,000
-
60,400
=
31,600

Balance 69,600 0 44,800 100,000 92,000 60,000

c/d

Ayuni and Eima

Statement of Financial Position

NCA

Machine 90,000

Vehicle 55,000

Furniture 25,000

Total NCA 170,000

CA

Inventory 32,000

Accounts receivable 18,000

Bank (14,000 - 30,000) (16,000)

Total CA 34,000

Total Assets 204,000

Liabilities

Accounts payable 40,000

Loan 31,600

Total liabilities (71,600)

132,400
 Financed by :

Capital accounts : Ayuni 69,600

Eima 44,800

114,400

Current accounts : Ayuni 15,000

Eima 3,000

132,400

3 reasons why partners have to revalue their partnership assets

- the carrying value of the net assets may not be the same as its current value.
- to determine the contributed capital between the new partners.
- to transfer profit/loss on revaluation to old partners' accounts on their old profit sharing ratio.