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
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Cost |
NBV |
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Non-Current Assets |
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$ $ |
$ |
|
|
Premises |
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42,000 32,000 |
10,000 |
|
|
Motor Vehicles |
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14,000 10,000 |
4,000 |
|
|
Furniture and Fittings |
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6,000 2,000 |
4,000 |
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|
Current Assets |
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62,000 44,000 |
18,000 |
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|
Inventory |
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|
24,000 |
|
|
Trade Receivables |
|
|
6,800 |
30,800 |
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Capital and Liabilities |
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|
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48,800 |
|
Capitals: Mary |
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|
7,000 |
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|
Jane |
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|
7,000 |
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|
Susan
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4,000 |
18,000 |
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Current A/cs Mary |
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|
6,800 |
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|
Jane |
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5,000 |
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|
Susan |
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3,400 15,200 |
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|
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33,200 |
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|
Loan from Toby
Current Liabilities: |
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|
6,000 |
|
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Trade Payables |
|
|
7,800 |
|
|
Bank overdraft |
|
|
1,800 9,600 |
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|
|
|
|
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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