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5 marksChanges in Ownership and Capital Structure

CAPE Accounting Unit 1 · 2021 · Paper 2 · Question 2(b)

Jill agrees to provide services on a contract basis only, while Bill joins as a permanent partner. On 1 January 2016, Joe and Bill form a partnership sharing profits and losses in the ratio 3:2 and contributing assets/liabilities as detailed in the contributions schedule.

Prepare the journal entry to record the formation of the partnership.

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Other parts of this question

  1. 2(a)(i)State TWO main characteristics of a Partnership that may be appropriate for Joe's new business.[2 marks]
  2. 2(a)(ii)State TWO main characteristics of a Private company that may be appropriate for Joe's new business.[2 marks]
  3. 2(a)(iii)State TWO main characteristics of a Public company that may be appropriate for Joe's new business.[2 marks]
  4. 2(c)List FOUR additional terms, other than those mentioned in the case, which may be found in the formal partnership agreement.[4 marks]
  5. 2(d)(i)Prepare the entries to record the incorporation, assuming that the new company issues all 30,000 of the ordinary shares.[11 marks]
  6. 2(d)(ii)Prepare the opening balance sheet of the new company, Advanced Marketing Inc., as at 1 January 2021.[9 marks]

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