Question

Ali, Beck and Chris are equal partners in a partnership business engaged in shampoos. The capital accounts balances on 1 January 2017 were as follows: Ali $ 14000 Beck $ 13000 Chris $ 8500 No separate current accounts are kept and accounts are closed on 31st December each year. On 30 June 2017, Chris wanted to start his own business and he retired from the partnership. Ali and Beck agreed to continue to be equal partners. It was also agreed among the partners that Chris will be paid the balance of his capital account on 31 December 2017. Goodwill was valued at $18000 and certain fixed assets were revalued by $6000 above the book value. It was agreed to write off goodwill in capital accounts only. The net profit for the year ended 31 December 2017 was $36000 and was earned uniformly throughout the year. Drawings during the year 2015 were: Ali $ 4500 Beck $ 3000 Chris $ 1500 On 1 January 2018, Ken was admitted as a partner. He paid in $12000 cash as capital together with $4000 for his share of partnership goodwill. The new profit sharing ratio was:

Answer 1

Please find attachment showing Capital Accounts of partners.

6000 307 CAPITAL ACCOUNTS OF PARTNERS FOR THE YEAR 2017 DHE PARTICULARS AL BECK CHRIS DATE PARTICULARS ALL BECK CHRIS 2017 To Goodwill 9000 9000 2017 By Bal bid 14000 13000 8500 JANI Jorneo , cash - 22500 June u Good will 6000 6000 6000 Balced 29000 27000 30 4 Revelation 2000 2000 2000 JSME 1. PIL ALC DECI u PILAIL 150od spool 37000 36000 22500 37000 36000 22500 Note ) 2019 BY B 021 bid 28000 27000 Drawin79% leve done in 2015 and herece o corsideped in 2017 calculation of wood 19000 36000.H wao w en off by old Calculo+son? Of Profit to 6 months = 3600px / 90003boob (CITROS Capital ACCOUNTS OF PARTNERS FOR THE YEAR 2018 291€ PARTICULARS ALL DECK KEN DATE PARTICULARS ALI BECK KEN 2019 By Bal bid 29 DDD 27000 1200D 4 P70177 Loss AIC 4900 4900 2200 4 cash 4 24600 23600 9200 4 croodwill 2000 2000 30000 29000 12000 30000 29000 12000 yun 0*3=boo 269 279 > 400 600 6DD SAN / - 13011 note: It is assumed that the food wil b70079ht hy KEN has beer Shoped by old partners CALI Į BECK) 999301y as per their profit Shooting 2017 CEPITAL ACCOUNTS OF PARTNERS FOR THE YEAR 2019 PARE PARTICULARS AL 13 EK KEN DIE PARTICULARS AL BECK KEN 2019 TO PIL AIC (Loss) 1760 1760 8802019) By B6) b10 24600 23600 9200 JIN2 TAN u cash 22840 21840 8326 24600 23600 9200 24600 23600 9200

In case of Retirement of Partnership Good will can either be carried forward in the Books or else can be written off . In this case the Goodwill has been written off by debiting it in existing partners' Capital Accounts.

In case of admission the Goodwill brought by the incoming partner has been shared by old partners and has been credited in their Capital Accounts in proportion to the profit sharing ratio.