PART 1 - Commencement of business
PART 1 - Commencement of business (Just Juice Bar)
1. What date did business commence? (Any date up to you)
2. Work out how much it will cost to commence business.
3. The capital to start business must come from the partners. Work out how much each partner is contributing (REALISTIC NUMBERS, REMEMBER IT'S A JUICE BAR BUSINESS). Write the details of each partner's contribution in narrative form. At least one of the partners must have contributed more than just cash. If other assets are introduced, they must be realistic. Explain where they came from if necessary.
2. Prepare general journal entries to account for the capital contributed by the partners. Include narrations. (Example of general journal entry attached)
3. Prepare a statement of financial position on the day of formation. (Example of statement of financial position attached)
PART C continued
1. Prepare a journal entry to share the profit among the partners. (Transfer to Current accounts). Include a narration.
2. Prepare journal entries to close the Drawings accounts to the partners' Current accounts. Include a single narration.
3. Prepare a statement of comprehensive income, showing allocation of profit.
4. Prepare a statement of changes in equity.
5. Prepare a partnership statement of financial position. (Statement format).
PART D You can choose whether to admit a new partner or have a partner retire.
Include a narrative as described below.
Admission of a new partner
1. Include in the narrative: Who is the new partner? What was he/she doing before? Why was he/she invited to join the partnership? How much is the new partner contributing and what will be his or her share of partnership equity? What is the new profit sharing agreement?
2. What was the equity of the partnership before admission of the new partner? (If it is the day after Part C it will be the same. If it is later it will be different. Ensure it is not long afterwards). Prepare a worksheet to show the calculation of the new partner's capital and any bonus to or from the existing partners.
3. Prepare a journal entry to admit the new partner. Include a narration.
4. What is the equity of each partner and of the partnership after the admission of the new partner?
OR
Retirement of a partner
1. Include in the narrative: Who is retiring from the partnership? Why is he/she retiring? (Not working any more, moving away, dissatisfied with the other partners, setting up a new business etc). Is the retiring partner being paid any goodwill? How much? Or is the retiring partner leaving some equity behind? Why and how much?
3. Revalue/devalue at least one some partnership asset.
4. Calculate the equity owing to the retiring partner.
5. Prepare a journal entry to account for the payment to the retiring partner including bonus to or from the remaining partners. Include a narration.
6. What is the equity of each of the remaining partners and of the business after settlement to the retiring partner?