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(Solved): QUESTION 3 Adam and Eve are in partnership sharing profits and losses \( 4: 3 \) respectively. They ...
QUESTION 3 Adam and Eve are in partnership sharing profits and losses \( 4: 3 \) respectively. They agreed to amalgamate their business with that of Abraham and Sarah as on \( 30^{\text {th }} \) June, 2020. Abraham and Sarah share profits and losses in the ratio of \( 3: 2 \) respectively. It was mutually agreed that as January 1, 2021 the partnerships be amalgamated into one firm. As on December 312020 , the statements of financial position of the firms were as follows:
The agreement to amalgamate contains the following provisions: i. Provision for doubtful debts at the rate of \( 5 \% \) be made in respect of Receivables and a provision for discount receivable at the rate \( 2 \frac{1}{2} \% \) be made in respect of Payables. ii. The firm is to take over the old partnership assets at the following values: iii. Eve to take over his firm's investment at a value of GHS \( 3,040,000 \). iv. The capital of the new firm to be GHS216,000,000 and to be contributed by the partners in profit and loss sharing ratios, any adjustments to be made in cash. v. Adam, Eve, Abraham and Sarah agreed to share profits and losses in the ratio 6:5:4:3 respectively in the new firm. Required: a) Prepare Realisation Account in the books of each of the old firms as at 30 December 2020. b) Prepare Partners' Capital Account for the period to 1 January 2021. c) Prepare Statement of Financial Position as at 1 January 2021. (10 marks)