Assessment 2 Time left 02:02:18 Question 17 Not yet answered Marked out of 3.00 Trading under the name Lehumo Bricks, Refentse and Boitshepo are partners in this brick manufacturing company. Over the years, Lehumo Bricks has established itself as a reputable supplier of high-quality bricks used in various construction projects, from residential homes to large commercial buildings. The business has been profitable, with Refentse and Boitshepo sharing profits and losses equally, reflecting their initial capital investments and contributions to the partnership. However, after years of operating in the competitive construction materials industry, the partners decided to liquidate the business. Their decision was influenced by a combination of factors, including changes in market demand, increasing production costs, and their desire to pursue other ventures. Having carefully evaluated offers for key assets, particularly the land, the building, manufacturing equipment and inventory on hand, they decided to accept the most favourable ones for the sale of the land, inventory and equipment. With this decision in place, they planned to initiate the simultaneous liquidation of the partnership on 1 June 2024. Before any liquidation entries were recorded, they prepared a final trial balance to summarise the financial position of the business. EXTRACT OF TRIAL BALANCE AS AT 1 JUNE 2024 R Equipment at carrying amountR290,000Long-term loan -R968,500Land and building at carrying amountR792,000InventoryR256,000Capital – Refentse-R268,900Capital – Boitshepo-R285,900Current account – Refentse (dr)R45,200Current account – Boitshepo (dr)R20,400BankR119,700 On 1 June 2024, a series of financial transactions took place to finalise the sale of the business’s assets and settle its liabilities. Below is a summary of the key transactions that occurred during the liquidation: The land and buildings, which had been integral to Lehumo Bricks' manufacturing operations, were sold for a cash amount of R855 000. Boitshepo, one of the partners, took over certain brick-making equipment with a carrying amount of R87 600. While Boitshepo did not pay for the equipment immediately, the partners agreed on a cash value of R74 000 for this transaction. The remaining brick-making equipment was sold to an external buyer at a carrying value in cash. The costs associated with the liquidation process amounted to R45 500. These costs included legal fees, administrative expenses, and other charges incurred during the winding-up of the business. The inventory of bricks and raw materials was sold for R210 000. The sale of these finished goods and materials added substantial cash to the liquidation process, ensuring that more of the partnership’s liabilities could be paid off. Lehumo Bricks had an outstanding long-term loan, which was fully paid off during the liquidation process at a negotiated settlement amount of R800 000. Assume the correct total liquidation profit on liquidation is R50 000. Which one of the following alternatives represents the correct amount that must be paid to Boitshepo on liquidation of Lehumo Bricks on 1 June 2024? a. R191,700 b. R216,500 c. R281,300 d. R195,300 e. R285,900 f. R331,300

Assessment 2 Time left 02:02:18 Question 17 Not yet answered Marked out of 3.00 Trading under the name Lehumo Bricks, Refentse and Boitshepo are partners in this brick manufacturing company. Over the years, Lehumo Bricks has established itself as a reputable supplier of high-quality bricks used in various construction projects, from residential homes to large commercial buildings. The business has been profitable, with Refentse and Boitshepo sharing profits and losses equally, reflecting their initial capital investments and contributions to the partnership. However, after years of operating in the competitive construction materials industry, the partners decided to liquidate the business. Their decision was influenced by a combination of factors, including changes in market demand, increasing production costs, and their desire to pursue other ventures. Having carefully evaluated offers for key assets, particularly the land, the building, manufacturing equipment and inventory on hand, they decided to accept the most favourable ones for the sale of the land, inventory and equipment. With this decision in place, they planned to initiate the simultaneous liquidation of the partnership on 1 June 2024. Before any liquidation entries were recorded, they prepared a final trial balance to summarise the financial position of the business. EXTRACT OF TRIAL BALANCE AS AT 1 JUNE 2024 R Equipment at carrying amountR290,000Long-term loan -R968,500Land and building at carrying amountR792,000InventoryR256,000Capital – Refentse-R268,900Capital – Boitshepo-R285,900Current account – Refentse (dr)R45,200Current account – Boitshepo (dr)R20,400BankR119,700 On 1 June 2024, a series of financial transactions took place to finalise the sale of the business’s assets and settle its liabilities. Below is a summary of the key transactions that occurred during the liquidation: The land and buildings, which had been integral to Lehumo Bricks' manufacturing operations, were sold for a cash amount of R855 000. Boitshepo, one of the partners, took over certain brick-making equipment with a carrying amount of R87 600. While Boitshepo did not pay for the equipment immediately, the partners agreed on a cash value of R74 000 for this transaction. The remaining brick-making equipment was sold to an external buyer at a carrying value in cash. The costs associated with the liquidation process amounted to R45 500. These costs included legal fees, administrative expenses, and other charges incurred during the winding-up of the business. The inventory of bricks and raw materials was sold for R210 000. The sale of these finished goods and materials added substantial cash to the liquidation process, ensuring that more of the partnership’s liabilities could be paid off. Lehumo Bricks had an outstanding long-term loan, which was fully paid off during the liquidation process at a negotiated settlement amount of R800 000. Assume the correct total liquidation profit on liquidation is R50 000. Which one of the following alternatives represents the correct amount that must be paid to Boitshepo on liquidation of Lehumo Bricks on 1 June 2024? a. R191,700 b. R216,500 c. R281,300 d. R195,300 e. R285,900 f. R331,300

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter23: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 2ADM: Domino's Pizza: Franchise segment return on investment Domino's Pizza, Inc. is the second-largest...

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