Question 5, 6 and 7 Given information for questions 5 to 7: Thula and Sizwe are...

Question:

Question 5, 6 and 7

Given information for questions 5 to 7: Thula and Sizwe are in the business of renovating dilapidated buildings around Hillbrow. They are trading in a partnership named Thulasizwe Renovations with a profit sharing ratio of 3:2 respectively. They decided to admit Sethu from 1 July 2019 and the new partnership will trade under the new name Thulasizwe Sethu Renovations. 15
The following information is extracted from the accounting records of the partnership on 30 June 2019, the end of the financial year. Capital: Thula Capital: Sizwe.... Current account: Thula (dr).. Current account: Sizwe Revaluation reserve Vehicles at cost.... Accumulated depreciation: Vehicle (1 July 2018) -- Furniture at cost. Accumulated depreciation: Furniture (1 July 2018). Inventory Bank. 99 400 85 800 21 300 42 600 90 000 177 500 39 480 175 200 39 192 70 400 98 560 Additional information: 1 On 1 July 2019 Thula and Sizwe decided that they would relinquish a third of interest in the profits/losses to Sethu in the ratio of 6:4 respectively. Sethu contributed a vehicle worth R134 000, equipment worth R34 000 and R25 000 cash and thereby acquire a third interest in the equity of the new partnership. 2. The depreciation was correctly calculated as follows: Vehicles: R42 000 Furniture: R42 300 3. In preparation for Sethu's admission an independent appraiser made the following valuation on 1 July 2019: Vehicles R 86 000 Furniture R107 128 Inventory R 62 000 QUESTION 5 Which one of the following alternatives represents the profit/loss made on the valuation adjustments? 1. R5 000 (Loss) 2. R5 000 (Gain) 3. R13 420 (Gain) 4. R13 420 (Loss)
QUESTION 6 Which one of the following alternatives represents the correct amount of the goodwill acquired? 1. R287 500 2. R579 000 3. R94 500 4. R193 000 QUESTION 7 Which one of the following alternatives represents the correct new profit sharing ratio after the admission of Sethu? 1. 5:4:6 for Thula, Sizwe and Sethu respectively. 2. 6:4:5 for Thula, Sizwe and Sethu respectively. 3. 3:2:1 for Thula, Sizwe and Sethu respectively, 4. 5:3:2 for Thula, Sizwe and Sethu respectively. 5. None of the above

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