Chan, Tan and Eric were in partnership sharing profits and losses in the ratio Chan 2/3, Tan 1/4 and Eric 1/12. Their summarized Balance Sheet as at 31 October 2019 was as follows: $$$ $ $ $ $$$ Fixed Assets (at Book Value) Premises 120 000 Machinery 60 000 Motor Vehicle 9 000 189 000 Current Assets Stock 14 200 Debtors 18 000 less Provision for Doubtful Debts 360 17 640 Bank 16 160 48 000 237 000 Capital Accounts Chan 144 000 Tan 54 000 Eric 18 000 216000 Long-term Liabilities Loan from Chan 9 000 Current Liabilities Creditors 12 000 21000 237000 The partnership did not maintain partners' current accounts. Chan left the partnership on 31 October 2019 to start his own business. Tan and Eric continued the partnership, sharing profits in the ratio Tan 3/4 and Eric 1/4. The following adjustments were made: Premises were valued at $150 000 Machinery was revalued at $ 50 000 Chan took over machinery which had been revalued at $ 20 000 Provision for doubtful debts was reduced to $ 260 stock was reduced in value by $ 1200 Required: Draw up the revaluation and goodwill account to show the above adjustments.
1/4 and Eric 1/12. Their summarized Balance Sheet as at 31 October 2019 was as follows:
$$$ $ $ $ $$$
Fixed Assets (at Book Value)
Premises 120 000
Machinery 60 000
Motor Vehicle 9 000 189 000
Current Assets
Stock 14 200
Debtors 18 000
less Provision for Doubtful Debts 360 17 640
Bank 16 160 48 000
237 000
Capital Accounts
Chan 144 000
Tan 54 000
Eric 18 000 216000
Long-term Liabilities
Loan from Chan 9 000
Current Liabilities
Creditors 12 000 21000
237000
The partnership did not maintain partners' current accounts. Chan left the partnership on 31 October 2019 to start his own business. Tan and Eric continued the partnership, sharing profits in the ratio Tan 3/4 and Eric 1/4.
The following adjustments were made:
- Premises were valued at $150 000
- Machinery was revalued at $ 50 000
- Chan took over machinery which had been revalued at $ 20 000
- Provision for doubtful debts was reduced to $ 260
- stock was reduced in value by $ 1200
Required:
- Draw up the revaluation and
goodwill account to show the above adjustments.
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