Kamal, Teoh and Mohan are in a legal partnership. The following balances were extracted from the...

Kamal, Teoh and Mohan are in a legal partnership. The following balances were extracted from the partnership books of account as at 31 March 2018.

	RM	RM
Capital account as at 1 April 2017:
Kamal		72,000
Teoh		62,000
Mohan		52,000
Current account as at 1 April 2017:
Kamal	45,000
Teoh	44,000
Mohan	43,000
Land and building	102,000
Accumulated depreciation		66,000
Fixtures and fittings	52,000
Accumulated depreciation		46,000
Inventories	45,500
Accounts receivable (net)	67,000
Bank	83,500
Accounts payable		54,000
Revaluation surplus		63,500
Net profit for the year		66,500
	482,000	482,000

Additional information:

1. The partnership profit sharing ratio is 3:2:1.
The partners will be entitled to 15 percent interest per annum on capital account balances.
Kamal retired on 31 December 2017. Upon his retirement the assets are revalued resulting a revaluation surplus of RM63,500.
Goodwill was valued at two year’s purchase of the average profit for the last three years. The profit for the last three years were:

	RM
31 March 2017	90,000
31 March 2016	56,000
31 March 2015	52,000

Due to his retirement, Kamal’s current account is to be transferred to his capital account. The partnership agreed to pay the amount due to Kamal, except for RM92,000 which remain as a loan to the partnership.
Following Kamal’s decision to retire, Teoh and Mohan invited Salim to join the partnership on 1 January 2018. Salim agreed to pay RM57,000 into the new partnership as his capital contribution and RM49,000 for his share of goodwill. This entry has not been recorded in the books upon admission of Salim.
The new partnership profit sharing ratio is 2:1:1.
The net profit for the year is deemed to have been earned evenly throughout the year.

REQUIRED:

Compute the goodwill for the partnership.
Prepare the partnership appropriation account incorporating the pre and post period for the year ended 31 March 2018.
Prepare the partner’s current account in a columnar form.
Prepare the partner’s capital account in a columnar form.

Expert Solution

Answers are in the photos attached

Read notes and assumptions carefully.

ekkarill92 answered 2 years ago

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