Question 1   Mary, Jane and Susan are in partnership sharing profits and losses in the ratio 2:2:1 respectively. The following was their balance sheet as at 31 December 2018:

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Question 1

 

Mary, Jane and Susan are in partnership sharing profits and losses in the ratio 2:2:1 respectively. The following was their balance sheet as at 31 December 2018:

 

                                     

 

Cost       Depreciation.

NBV

Non-Current Assets  

 

    $                     $        

    $

Premises                       

 

42,000             32,000 

10,000

Motor Vehicles            

 

14,000             10,000 

  4,000

Furniture and Fittings 

 

  6,000               2,000 

  4,000

                                     

Current Assets

 

62,000             44,000  

18,000

Inventory                     

 

 

           24,000

 

Trade Receivables        

 

 

              6,800  

30,800

                                     

Capital and Liabilities

 

 

                        

48,800

Capitals:          Mary 

 

 

            7,000

 

                        Jane      

 

 

            7,000

 

                        Susan 

 

 

 

            4,000   

18,000

Current A/cs Mary 

 

 

 6,800

 

                        Jane      

 

 

 5,000

 

                        Susan 

 

 

 3,400             15,200

                                     

 

 

   33,200

Loan from Toby           

 

Current Liabilities

 

 

     6,000

Trade Payables             

 

 

           7,800

Bank overdraft             

 

 

 1,800    9,600

                                     

 

 

   48,800

 

On 31 December 2018 the partners decide to terminate the business. The following took place: 

 

  1. Mary took over one of the motor vehicles for $5,000 ii. Stock was taken over by Susan for $12,000
  2. Premises, inventory, the remaining motor vehicles, furniture and fittings were sold for

$9000, $12000, $1000 and $1000 respectively iv.      Receivables realised $6,450 and Payables were paid in full v.       Dissolution Expenses amounted to $100

  1. Susan was declared insolvent and was unable to repay the amount owed to the partnership. The partnership was terminated on December 31, 2018

 

  1. You are required to prepare the following accounts to record the termination of the partnership:

i. Realisation Account                       

 ii. Bank Account 

iii. Partners’ Capital Account 

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