Alex, Dennis and Francis have been in partnership business for a number of years, sharing profits in the ratio 6:5:3 respectively. The statement of financial position of the partnership as at 31 March, 2018, showed the following positon:
Additional Information:
On 31 March, 2018, Alex retired from the partnership and the remaining Partners agreed to admit George as a partner on the following terms:
- Goodwill in the old partnership was to be revalued to two years purchase of the average profits over the last three years. The profits of the last three years have been GH¢24,800, GH¢27,200 and GH¢28,010. Goodwill was to be written off in the new partnership.
- Alex was to take his car out of the partnership assets at an agreed value of GH¢2,000. The car had been included in the accounts as of 31 March, 2018, at a written down value of GH¢1,188.
- The new partnership of made up of Dennis, Francis and George were to share profits in the ratio 5:3:2 respectively. The initial capital was to be GH¢50,000 subscribed in the profit sharing ratio.
- Dennis, Francis and George were each to pay to Alex the sum of GH¢10,000 out of their personal resources in part repayment of his share of the partnership.
- Alex was to lend to George any amount required to make up his capital in the firm from the monies due to him (Alex) and any further balance due to Alex was to be left in the new partnership as a loan, bearing interest at 20% per annum. Any adjustments required to the capital account of Dennis and Francis were to be paid into or withdrawn from the partnership
bank account.
Required:
i) Prepare the partners’ capital accounts, in columnar form, reflecting the adjustments required on the change in partnership. (5 marks)
View Solution
ii) Prepare the statement of financial position on completion. (5 marks)
View Solution
iii) For registration of partnership to be effected, there shall be sent to the Registrar General’s Department a copy of the partnership agreement and a statement on a prescribed form signed by all the partners. Outline the main contents of the statement on the prescribed form. (2 marks)
View Solution
(i) The firm name of the partnership.
(ii) The general nature of the business.
(iii) The address and Post Office Box number of
- the principal place of business of the partnership,
- all other places in Ghana at which the business is carried on.
(iv) The names and any former names, residential addresses and business occupation of the partners.
(v) The date of commencement of the partnership- unless the partnership has commenced more than 12 months prior to the date of the statement.
(vi) Particulars of any charges requiring registration under section 25 of Act 152 or statement that there are no such charges and where particulars of any charge require registration under section 25 of the Act, the statement shall be accompanied by the documents required by that Section. (Any 4 items x ½ mark= 2 marks)
iv) In accordance with the Incorporated Private Partnership Act 1962 (Act 152), state THREE (3) grounds upon which the Registrar General’s Department may not register a partnership business. (3 marks)
View Solution
- The partnership is not one which is registerable under Act 152, for example, if it has more than 20 persons;
- Any of the business which the partnership has been carrying on or is to carry on is unlawful;
- The name of the firm is misleading or undesirable;
- Any of the partners is an infant or of unsound mind or a person who within the preceding 5 years has been guilty of fraud or dishonesty whether convicted or not in connection with any trade or business or is an undischarged bankrupt or
- The statement is incomplete, illegible, inaccurate, irregular or on paper insufficiently durable to be suitable for registration, the Registrar shall, upon the payment of the prescribed fee register the said statement. (Any 3)