You have been given the assignment to read Beer School: Bottling Success at The Brooklyn Brewery. Upon completion of reading this informative book dealing with this real life rags to riches entrepreneurial….
Prepare the Statement of Financial Position of the new firm.
- Billy and Erica are partners sharing profits and losses in the ratio of 3:2 respectively. Their Statement of financial position as at March 31, 2016 was as follows:
Billy and Erica
Statement of Financial Position as at 31 March 2016
|Accounts receivable||19 000|
|Cash at bank||23 000|
|Cash in hand||3 000|
|Less; Current liabilities|
|Accounts payable||28 000|
On that date, they admit Devon into the partnership for 1/3 share of the profits on the following terms:
- Furniture and inventory are to decrease by 10%.
- Building is appreciated by $20 000.
- 5% provision is to be created for doubtful debts.
- Devon is to bring in $50 000 as his capital and $30 000 as goodwill.
- the revaluation account (7 marks)
- the partners’ capital account (10 marks)
- the Statement of Financial Position of the new firm. (8 marks)