BDC 201: Financial Accounting 3

Assessment (4)

Full Name:

Student Number:
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[Total: 20%]
Question

Archer and Tam have always shared profits in a 2:1 ratio respectively. They admit Read as a
partner as on 1 December 2012, who will contribute £ 20,000,000 cash as capital. The partners
decided to revalue their assets as on 30 November 2012.

Balance Sheet as at 30 November 2012

£ ’000 £ ’000
Non Current Assets
Equipment 90,000
Machinery 44,000
134,000

Current Assets
Inventory 3,000
Bank 9,500
Cash 3,500 16,000
150,000

Capitals
Archer 90,000
Tam 60,000
150,000

Assets are to be revalued as follows:-

£ ’000
Equipment 160,000
Machinery 40,000
Inventory 6,000

Required:

a) Revaluation Account (10 marks)

b) New balance sheet after the admission of Read on 1 December 2012 (10 marks)

***Please show detailed workings***