CHANGE IN PROFIT SHARING RATIO AMONG THE EXISTING PARTNERS 2.73 16 PARTive ance \( A ? 3,82,8 i i \) \begin{tabular}{|c|c|c|c|c|} \hline 0 & \( 5,00,000 \) & & Advertisement Suspense & 75,000 \\ \hline\( R \) & \( 3,00,000 \) & \( 10,00,000 \) & & \\ \hline & & \( 14,00,000 \) & & \( 14,00,00 \) \\ \hline \end{tabular} On 1st April, 2018 they decided to share future profits in the ratio of \( 4: 6: 5 \). It was agreed that : (i) Claim for Workmen Compensation has been estimated at \( ? 1,00,000 \). (ii) A motor cycle valued at \( ? 30,000 \) was unrecorded and is now to be recorded in the books. (iii) Outstanding expenses were not payable anymore. (iv) Value of stock be increased to \( ? 2,90,000 \). (v) A provision for doubtful debts be created (a) \( 5 \% \) on Sundry Debtors. (vi) Goodwill is valued at \( ? 1,00,000 \). (vii) The work of reconstitution was assigned to firm's auditors. They were paid \( ? 20,000 \) for this work. Pass journal entries and prepare Revaluation Account. [Ans, Gain on Revaluation ?39,000.]
Added by Abhayanshi T.
Close
Step 1
The new profit sharing ratio is given as 4:6:5. Let's assume the existing profit sharing ratio is x:y:z. So, we can write the equation as: x/y = 4/6 x/z = 4/5 Simplifying these equations, we get: x = 2.67y x = 0.8z Substituting the value of x from the second Show more…
Show all steps
Your feedback will help us improve your experience
Croup Chais and 66 other Intro Stats / AP Statistics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2016. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc: for the year ended December 31, 2016. 2016 Sales Revenue: $139,500 Cost of Goods Sold: 76,700 Gross Profit: 62,800 Selling, General, and Administrative Expenses: 39,600 Interest Expense: 540 Income before Income Tax Expense: 22,660 Income Tax Expense: 6,300 Net Income: $16,360 2015 Sales Revenue: $113,000 Cost of Goods Sold: 66,500 Gross Profit: 46,500 Selling, General, and Administrative Expenses: 37,300 Interest Expense: 530 Income before Income Tax Expense: 8,670 Income Tax Expense: 2,100 Net Income: $6,570 Required: 1. Compute the gross profit percentage for each year. Assuming that the change from 2015 to 2016 is the beginning of a sustained trend, is Computer Tycoon likely to earn more or less gross profit from each dollar of sales in 2017? 2. Compute the net profit margin for each year. Given your calculations here and in requirement 1, explain whether Computer Tycoon did a better or worse job of controlling operating expenses in 2016 relative to 2015. 3. Computer Tycoon reported average net fixed assets of $55,500 in 2016 and $46,400 in 2015. Compute the fixed asset turnover ratios for both years. Did the company better utilize its investment in fixed assets to generate revenues in 2016 or 2015? 4. Computer Tycoon reported average stockholders' equity of $55,300 in 2016 and $42,100 in 2015. The company has not issued preferred stock. Compute the return on equity ratios for both years. Did the company generate greater returns for stockholders in 2016 than in 2015?
Croup C.
Ramesh R.
Income statement and schedule of cost of goods manufactured. The following items (in millions) pertain to Schaeffer Corporation: Schaeffer's manufacturing costing system uses a three-part classification of direct materials, direct manufacturing labor, and manufacturing overhead costs. $$\begin{array}{lclr} {}{} {\text { For Specific Date }} & {}{} {\text { For Year 2017 }} \\ \hline \text { Work-in-process inventory, Jan. 1, 2017 } & \$ 10 & \text { Plant utilities } & \$ 8 \\ \text { Direct materials inventory, Dec. 31, 2017 } & 4 & \text { Indirect manufacturing labor } & 21 \\ \text { Finished-goods inventory, Dec. 31, 2017 } & 16 & \text { Depreciation- plant and equipment } & 6 \\ \text { Accounts payable, Dec. 31, 2017 } & 24 & \text { Revenues } & 359 \\ \text { Accounts receivable, Jan. 1, 2017 } & 53 & \text { Miscellaneous manufacturing } & 15 \\ & & \text { overhead } & \\ \text { Work-in-process inventory, Dec. 31, 2017 } & 5 & \text { Marketing, distribution, and } & 90 \\ & & \text { customer-service costs } & \\ \text { Finished-goods inventory, Jan 1, 2017 } & 46 & \text { Direct materials purchased } & 88 \\ \text { Accounts receivable, Dec. 31, 2017 } & 32 & \text { Direct manufacturing labor } & 40 \\ \text { Accounts payable, Jan. 1, 2017 } & 45 & \text { Plant supplies used } & 9 \\ \text { Direct materials inventory, Jan. 1, 2017 } & 34 & \text { Property taxes on plant } & 2 \end{array}$$ Prepare an income statement and a supporting schedule of cost of goods manufactured. (For additional questions regarding these facts, see the next problem.)
Recommended Textbooks
Elementary Statistics a Step by Step Approach
The Practice of Statistics for AP
Introductory Statistics
Watch the video solution with this free unlock.
EMAIL
PASSWORD