Scribd
Upload
868 views4 pages

Amalgamation - Principles of Accounting

The document discusses the principles of accounting for amalgamation, which is when two sole traders merge their separate businesses to form a partnership. It provides examples of balance sheets for sole traders Mr. Brown and Mr. Owen, and questions requiring the preparation of their amalgamated balance sheet. It also gives additional examples and questions involving sole traders T. Terry and B. Berry, Mr. X and Mr. Y, and sole traders Neena and Beena, requiring the calculation of partner capitals and preparation of amalgamated partnership balance sheets based on revalued asset and liability amounts.

Uploaded by

Abdulla Maseeh
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
868 views4 pages

Amalgamation - Principles of Accounting

The document discusses the principles of accounting for amalgamation, which is when two sole traders merge their separate businesses to form a partnership. It provides examples of balance sheets for sole traders Mr. Brown and Mr. Owen, and questions requiring the preparation of their amalgamated balance sheet. It also gives additional examples and questions involving sole traders T. Terry and B. Berry, Mr. X and Mr. Y, and sole traders Neena and Beena, requiring the calculation of partner capitals and preparation of amalgamated partnership balance sheets based on revalued asset and liability amounts.

Uploaded by

Abdulla Maseeh
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

Amalgamation - Principles Of Accounting

Page 1 of 4

Principles Of Accounting
Principles of Accounting Made Easy
Home Topics Pricacy Policy
Accounting

Contact Us
Balance Sheet Business Cash Principles

Search

Business reporting

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/ Amalgamation


When two traders decide to merge their separate business to form a partnership then it is known as Amalgamation of two sole traders. The entries and balance sheet are prepared in the books of partnership concern. Q 1. Following are the balance sheets of two sole traders who decided to amalgamate their business. You are required to prepare the amalgamated balance sheet of their business. Balance Sheet of Mr. Brown. Assets Premises Fixtures Stock Debtors Bank Loan Balance Sheet of Mr. Owen. Assets Land Premises Fixtures Stock Debtors $ Liabilities 30 000Capital 25 000Creditors 5 000 10 000 12 000 $ 68 000 16 000 $ Liabilities 20 000Capital 35 000Creditors 14 000 16 000 3 000 88 000 88 000 $ 70 000 18 000

Big Data Interpreted By Experts For Your Business in a Free Whitepaper www.Amadeus.com/BigData

/ http://www.principlesofaccounting2.com/
Cash in hand 2 000 84 000 84 000 Q 2. T. Terry is a businessman carrying on a small business. His balance sheet as on 01.01.2003 is as follows: Assets Land Building Machinery Furniture Stock Debtors Bank $ Liabilities 75 000Creditors 40 000Capital 25 000 5 000 21 000 18 000 3 300 1 87 300 1 87 300 $ 15 000 1 72 300

B. Berry is another sole trader carrying on a similar business and his balance sheet as on 01.01.2003 is as follows: Assets Building Furniture Machinery Stock Debtors Cash $ Liabilities 35 000Creditors 2 000Capital 25 000 18 000 15 300 2 000 97 300 97 300 $ 12 600 84 700

On 01.01.2003 they decided to amalgamate their separate business and form a partnership. For the purpose of which partnership assets and liabilities are revalued as follows: T. Terry Land B. Berry Increase by 5000 -

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/
Building 10% depreciation 5% depreciation Machinery 20% depreciation 15% depreciation

http://principlesofaccounting2.com/topics/amalgamation/

8/12/2013

Amalgamation - Principles Of Accounting

Page 2 of 4

Furniture Stock Debtors

Book Value Less 10% Book Value

Book Value Less 10% 1300 Provision for bad debts

Cash, bank and creditors for both the sole traders are at book value. You are required to: a. Calculate the Capital for each partner. b. Prepare the balance sheet of the Partnership.

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/
Balance Sheet of Mr. X Assets Premises Buildings Machinery Fittings Stock Debtors Cash in hand Cash at bank $ Liabilities 80 000Creditors 45 000Bank Overdraft 28 000Capital 6 000 8 500 22 000 1 500 3 500 1 94 500 1 94 500 $ 15 500 14 000 1 65 000

Q 3. Mr. X and Mr. Y are two sole traders carrying on similar business concerns. Their balance sheet as on 01.01.2001 was as follows:

Balance Sheet of Mr. Y Assets Land Furniture Fittings Machinery Stock $ Liabilities 38 000Creditors 21 000Bank Loan 3 100Capital 49 000 16 000 15 900 $ 18 000 21 000 1 10 000

/ http://www.principlesofaccounting2.com/
Debtors Cash in hand Cash at bank 2 000 4 000 1 49 000 1 49 000 On 01.01.2001, they decided to amalgamate their sole trading business into a partnership concern. They revalued assets and liabilities as follows:

Mr. X Premises Land Buildings Machinery Furniture Fittings Stock Debtors bad debts. Creditors

Mr. Y Less 10% depreciation Less 10% depreciation Less 12% depreciation Book value Book value Decrease by 5% Book value less 2000 as Bad debts. Less 1500 from book value. Less 1500 from book value. Increased by 20000 Less 10% depreciation Book value Book value Decrease by 5% Book value less 900 as

The amount of cash in hand and cash at bank for both the sole traders are at book value. You are required to:

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/
(b) Prepare the balance sheet of the partnership. Q 4. The following balance sheet appeared in the books of Neena as at 31.12.2002. Liabilities $ Assets $

(a)

Calculate the capital for each partner.

http://principlesofaccounting2.com/topics/amalgamation/

8/12/2013

Amalgamation - Principles Of Accounting

Page 3 of 4

Capital Creditors

72 000Premises 25 000Machinery Furniture Stock Debtors Cash at bank Cash in hand 97 000

29 000 25 000 14 000 12 000 10 000 5 000 2 000 97 000

Balance sheet of Beena as at 31.12.2002 was as follows:

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/
Liabilities Capital Creditors $ Assets 60 000Machinery 25 000Furniture Stock Debtors Cash in hand Cash at bank 85 000 $ 30 000 20 000 15 000 12 000 1 000 7 000 85 000

Both of them decided to amalgamate on the following conditions: 1. The assets and liabilities were revalued as followsNeena Beena

Debtors Premises Machinery Furniture Stock Creditors

9 800 30 000 20 000 12 000 11 500 26 000

11 500 28 000 17 000 15 500 27 000

/ http://www.principlesofaccounting2.com/
All the other items are at Balance sheet values. 2. The business purchase price was fixed at Neena $ 68000 and Beena $ 60000. 1. The Goodwill is recorded in the books. You are required to show the balance sheet of Neena and Beena. Q 5. The following balance sheets were available on 31.12.2002. Balance Sheet of X Liabilities Capital Creditors Bank Overdraft $ 52 500Premises 16 000Furniture 4 000Stock Debtors Cash in hand 72 500 Assets $ 40 000 15 000 9 000 8 000 500 72 500

Balance Sheet of Y Liabilities Capital Creditors Bank Loan $ Assets 35 700Furniture 27 000Stock 5 000Debtors Cash at bank Cash in hand 67 700 $ 35 000 12 000 15 000 5 000 700 67 700

X and Y decided to amalgamate their business on the following conditions on 01.01.2003. 1. Assets and Liabilities are revalued as follows: X Premises Furniture Stock 12 000 45 000 30 000 Y

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/
10 000 7 000 11 500 Debtors 14 200

http://principlesofaccounting2.com/topics/amalgamation/

8/12/2013

Amalgamation - Principles Of Accounting

Page 4 of 4

Creditors

17 000

26 000

1. Bank Overdraft for X and Bank loan for Y will be taken at book value.

1. Xs Goodwill was considered value less and Ys Goodwill was valued at $ 400.

The amalgamation procedure was completed on 01.01.2003. You are required to amalgamate the balance sheet of X and Y as at 01.01.2003. Incoming search terms:

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/
amalgamation accounting amalgamation of business amalgamation of sole traders to form partnership amalgamation principle partnershgp amalgametion partnership amalgamation accounting poa amalgamation capital account

http://www.principlesofaccounting2.com

/ http://www.principlesofaccounting2.com/

http://principlesofaccounting2.com/ http://principlesofaccounting2.com/

http://principlesofaccounting2.com/topics/amalgamation/

8/12/2013

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy