Module 15 Flashcards
When did the partnership act come into affect?
1890
When is the partnership act default?
If no partnership agreement
Partnership agreements involve?
Salaries (not an expense)
Interest on capital (not and expense)
Profit/loss share ratio (always do last)
When there is a change in members (partners) you?
Transfer current a/c to capital a/c
New members in a partnership constitute a new
Business so new PSR
Existing members use old PSR
A change in membership requires what?
Revaluation or net assets (capital)
What are the two types of goodwill?
Inherent (never permitted to stay in accounts)
Purchased
Revolution accounts for partnerships is
Temporary
What are the 3 journal entries for a leaving member?
Dr net current assets
Cr revaluation a/c
Dr revaluation a/c
Cr capital a/c P1 and P2 (old PSR)
Dr capital a/c P1
Cr bank or loan
What are the 2 journal entries of introducing a new member?
Dr current a/c
Cr capital a/c of remaining partner
Dr bank
Cr capital a/c of new member
What could be an example of goodwill?
Good reputation
Strong customer base
Goodwill comes
In on the old PSR
Out on the new PSR
Journal entry for introducing goodwill?
Dr Goodwill
Cr P1
Cr P2
Journal entry for removing goodwill?
Dr P1
Dr P3 (new partner paying off old partners share)
Cr Goodwill
What is the order or calculation of goodwill?
- Revaluation a/c
- Introduce new partner
- Remove goodwill
What is the revaluation journal entries?
Dr Asset + Goodwill
Cr Revaluation
Dr Revaluation
Cr capital a/c P1 and P2
What is the journal entry for introducing a new partner?
Dr Bank
Cr Capital
What is the journal entry to remove goodwill?
Dr capital a/c P1 and P3
Cr Goodwill
What account do we use to dissolute a partnership?
Realisation account
Journal entry for realisation account?
Dr realisation a/c (not bank)
Cr Asset
Journal entry for when assets are sold during dissolution?
Dr Bank (cash from sale) Cr Realisation a/c
Journal entry for any expenses during dissolution?
Dr Realisation a/c
Cr Bank
What happens to any assets not sold during dissolution?
Taken by the partners
Journal entry for assets not sold during dissolution?
Dr capital a/c P1 and P2
Cr realisation a/c
Journal entry for paying creditors during dissolution?
Dr trade payables Cr bank (paid) Cr realisation a/c (discount received)(credit balance on realisation a/c = profit)
Dr realisation
Cr capital a/c on PSR
Final journal for dissolution of partnership?
Dr capital a/c
Cr bank
What are the steps in dissolution?
Realisation account Sell assets Expenses Assets not sold taken Pay creditors Final journal
Incorporation of a partnership is?
Setting up as a separate legal entity (limited company)
Share capital is?
Capital + current
What account is used for incorporation of a partnership?
Vendor account
What are the journal entries for removing every account relating to partners for incorporation?
Dr capital a/c P1, P2, P3
Dr current a/c P1, P2, P3
Cr vendor a/c
Journal entry for paying cash and shares in incorporation?
Dr vendor a/c (net assets transfer)
Cr bank
Cr ordinary share capital
If vendor a/c has a debit balance in an incorporation this means?
There is purchased goodwill
Dr goodwill
Cr vendor a/c
Goodwill is a what?
Net current asset
