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ACC 301 - Assignment 1 and 2

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12 views

ACC 301 - Assignment 1 and 2

Uploaded by

Mujeeb Ayomide Bakare
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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DEPARTMENT OF ACCOUNTING

COURSE: INTERMEDIATE FINANCIAL ACCOUNTING I (ACC 301)


ASSIGNMENT 1 AND 2
Question 1
The partnership of Anthony & Joshua decided to amalgamate with the partnership of Andy & Ruiz to
form a new Partnership (AJAR Enterprises), with effect from 1st July, 2024. At that date the statements of
financial position of the firms are as given below:
Non-current Assets Anthony & Joshua Andy & Ruiz
Freehold Property 6,500,000 4,761,000
Plant & Machinery 1,800,000 895,000
Furniture & Equipment 3,000,000 1,853,500
Motor Vehicles 2,500,000 1,985,000
Goodwill 2,850,000 1,897,500
16,650,000 11,392,000
Current Assets
Inventory 12,595,500 6,898,500
Receivables 3,568,500 1,858,500
Prepayments 930,500 579,500
Bank 2,509,500 19,604,000 1,439,500 10,776,000
36,254,000 22,168,000
Equity & Liabilities
Capital: Anthony 10,600,000 -
Joshua 8,600,000 -
Andy - 7,500,000
Ruiz - 6,500,000
Current Accounts: Anthony 1,858,500 -
Joshua 1,756,500 -
Andy - 985,700
Ruiz - 3,615,000 595,800 1,581,500

Non-current Liabilities
Loan 9,655,000 4,555,000
Current Liabilities
Payables 2,526,500 1,255,000
Accruals 1,257,500 3,784,000 776,500 2,031,500
36,254,000 22,168,000
Additional Information:
i. Anthony and Joshua share profits in the ratio 5:3 respectively, while it is 3:2 for Andy and Ruiz.
ii. The new company will take over assets from the two firms as follows:
Anthony & Joshua Andy & Ruiz
Freehold Property 7,300,000 4,885,000
Plant & Machinery 1,950,000 910,000
Furniture & Equipment 3,650,000 1,855,000
Motor Vehicles 2,890,000 1,995,000
Goodwill 2,500,000 1,500,000
Current Assets
Inventory 10,585,000 6,500,000
Receivables 3,000,000 1,800,000
Prepayments 930,500 579,500
iii. All the liabilities were taken over.
iv. The dissolution expenses incurred by Anthony & Joshua amounted to N150,000, while Andy & Ruiz
incurred .N118,000 as dissolution expenses. Also AJAR Enterprises incurred N250,000 as setup
expenses.
Required: Show
a. All the necessary entries to close the books of the amalgamating firms; (10 Marks)
b. All the opening entries in the books of AJAR Enterprises after the amalgamation; (6 Marks)
c. The Statement of Financial Position of AJAR Enterprises immediately after the amalgamation.
(5 Marks)

Question 2
The partnership of Obi & Chika decided to absorb the partnership of Ada & Nkiru with effect from 1st
July, 2024. At that date the statements of financial position of the firms are as given below:
Non-current Assets Obi & Chika Ada & Nkiru
Freehold Property 200,000 112,000
Plant & Machinery 100,000 45,000
Furniture & Equipment 60,000 15,000
Motor Vehicles 80,000 40,000
Goodwill 70,000 10,000
Current Assets
Inventory 70,000 30,000
Receivables 32,000 20,000
Prepayments 8,000 3,000
Bank 20,000 130,000 10,000 63,000
640,000 285,000
Equity & Liabilities
Capital: Obi 280,000 -
Chika 170,000 -
Ada - 108,000
Nkiru - 95,000
Current Accounts: Obi 30,000 -
Chika 20,000 -
Ada - 15,000
Nkiru - 50,000 5,000 20,000

Non-current Liabilities
Loan 110,000 45,000
Current Liabilities
Payables 25,000 15,000
Accruals 5,000 30,000 2,000 17,000
640,000 285,000
Additional Information:
i. Obi and Chika share profits in the ratio 3:2 respectively, while it is in the ratio 3:1 for Ada and Nkiru.
ii. Obi & Chika sold their freehold property for N300,000 to finance the takeover.
iii. The assets of both partnerships businesses for the absorption are to be taken as follows:
Obi & Chika Ada & Nkiru
Freehold Property - 150,000
Plant & Machinery 90,000 40,000
Furniture & Equipment 65,000 18,000
Motor Vehicles 86,000 45,000
Goodwill 60,000 15,000
Current Assets
Inventory 72,000 28,000
Receivables 30,000 18,000
Prepayments 8,000 3,000
iv. All the liabilities were taken over as well
v. The realisation expenses incurred amounted to N3,000.
vi. Ada & Nkiru will not be partners in the emerging business, rather they will be paid the sum of
N280,000 for their business.
Required: Show
a. All the necessary closing entries in the books of Ada & Nkiru; (4 Marks)
b. All the entries in the books of Obi & Chika; (10 Marks)
c. The Statement of Financial Position of Obi & Chika immediately after the absorption.(6 Marks)

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