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:
Question 1
Mary, Jane and Susan are in partnership sharing
|
|
|
Cost |
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:
- Mary took over one of the motor vehicles for $5,000 ii. Stock was taken over by Susan for $12,000
- 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
- Susan was declared insolvent and was unable to repay the amount owed to the partnership. The partnership was terminated on December 31, 2018
- 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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