Nyfe, Ork and Poon decide to dissolve their partnership on 1 December 2015 after being in business for many years. The balance sheet of the partnership as at 30 November 2015 was as follows: Nyfe, Ork and Poon Balance sheet as at 30 November 2015 Assets Non-current assets $ $ Furniture and fittings 50,000 Motor vehicles 35,000 85,000 Current assets Inventory 25,000 Receivables 42,000 Bank 6,000 73,000 Total assets 158,000 Capital and liabilities Partners’ capital accounts Nyfe 45,000 Ork 30,000 Poon 15,000 90,000 Partners’ current accounts Nyfe 9,750 Ork 7,450 Poon 6,300 23,500 Loan 18,000 Current Liabilities Payables 26,500 Total capital and liabilities 158,000 Additional Information The partnership agreement states that Nife, Ork and Poon share profits and losses in the ratio 3:2:1 The furniture and fittings were sold for $48,800. Only $39,900 of outstanding receivables were recovered. The payables were settled for $25,440. It was agreed between the partners that Poon could take a motor vehicle at a valuation of $9,000 in addition to his share of the profit. The motor vehicle had a net book value of $8,000. The other motor vehicles were sold for $29,500. The inventory was sold for $27,750. The loan was repaid in full on 1 December 2015. There were no outstanding interest payments on the loan. Expenses incurred in dissolving the partnership were $1,000. Required: Prepare the following accounts on dissolution: (i) Partners’ accounts (ii) Realisation account (iii) Cash and bank account
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Nyfe, Ork and Poon decide to dissolve their
Nyfe, Ork and Poon
Balance sheet as at 30 November 2015
|
Assets |
|
|
|
Non-current assets |
$ |
$ |
|
Furniture and fittings |
|
50,000 |
|
Motor vehicles |
|
35,000 |
|
|
|
85,000 |
|
Current assets |
|
|
|
Inventory |
25,000 |
|
|
Receivables |
42,000 |
|
|
Bank |
6,000 |
73,000 |
|
Total assets
|
|
158,000
|
|
Capital and liabilities |
|
|
|
Partners’ capital accounts |
|
|
|
Nyfe |
45,000 |
|
|
Ork |
30,000 |
|
|
Poon |
15,000 |
|
|
|
|
90,000 |
|
Partners’ current accounts |
|
|
|
Nyfe |
9,750 |
|
|
Ork |
7,450 |
|
|
Poon |
6,300 |
|
|
|
|
23,500 |
|
Loan |
|
18,000 |
|
Current Liabilities |
|
|
|
Payables |
|
26,500 |
|
Total capital and liabilities |
|
158,000 |
Additional Information
The partnership agreement states that Nife, Ork and Poon share
The furniture and fittings were sold for $48,800.
Only $39,900 of outstanding receivables were recovered.
The payables were settled for $25,440.
It was agreed between the partners that Poon could take a motor vehicle at a valuation of $9,000 in addition to his share of the profit. The motor vehicle had a net book value of $8,000. The other motor vehicles were sold for $29,500.
The inventory was sold for $27,750.
The loan was repaid in full on 1 December 2015.
There were no outstanding interest payments on the loan.
Expenses incurred in dissolving the partnership were $1,000.
Required:
Prepare the following accounts on dissolution:
(i) Partners’ accounts
(ii) Realisation account
(iii) Cash and bank account
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