Class Activity Kand A are partners in a firm. They share profits and the losses in the ratio of 4:1. They decide to dissolve thefirm on March 31,2021, their balance sheet is as follows: Liabilities RO Assets RO Bank loan 8250 Trade mark 6600 Creditors for goods Bills payable 44000 Machine 66000 2750 Furniture 2200 88000 Stock K's Capital Ac A's Capital Ac 33000 33000 Debtors Less: Provision for bad debt 49500-2200 47300 O Cash in hand O Profit & loss Ac 15400 5500 Total 176000 Total 176000 The realization shows the following results: Debtors were realized at book value less 10% Goodwill was sold for 5500 Trade mark was realized for 4400 Machinery and stock were taken over by K for 99000 An unrecorded asset was sold for 1100 A creditor for goods was settled at discount of The expenses on realization were Pass Journal Entries and Prepare Realization A/c, Capital A/cs and Cash/Bank A/c. 440 2200

Class Activity Kand A are partners in a firm. They share profits and the losses in the ratio of 4:1. They decide to dissolve thefirm on March 31,2021, their balance sheet is as follows: Liabilities RO Assets RO Bank loan 8250 Trade mark 6600 Creditors for goods Bills payable 44000 Machine 66000 2750 Furniture 2200 88000 Stock K's Capital Ac A's Capital Ac 33000 33000 Debtors Less: Provision for bad debt 49500-2200 47300 O Cash in hand O Profit & loss Ac 15400 5500 Total 176000 Total 176000 The realization shows the following results: Debtors were realized at book value less 10% Goodwill was sold for 5500 Trade mark was realized for 4400 Machinery and stock were taken over by K for 99000 An unrecorded asset was sold for 1100 A creditor for goods was settled at discount of The expenses on realization were Pass Journal Entries and Prepare Realization A/c, Capital A/cs and Cash/Bank A/c. 440 2200

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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EXERCISE 8-10. Problem Solving 2: Gain or loss on realization of non-cash assets; capital deficiency absorption. Joshua, Daniel, and Martha were partners sharing profit and losses in the ratio of 1:2:1, respectively. On March 15, 2019, they decided to liquidate. Capital balances of Joshua, Daniel, and Martha were P215,000, P75,000, and P85,000, respectively. Liabilities amounting to P100,000 had yet to be settled. Total assets, inclusive of P35,000 cash, totaled P475,000. All non-cash assets were sold for only 30% of their book values. Liquidating expenses of P5,000 were also incurred. It was also determined that all partners, except Daniel, were solvent. REQUIRED: 1. How much was the gain or loss on non-cash asset realization? 2. How much cash should Martha infuse to satisfy the liquidation process of the partnership?
Case Study Louise Mathew is one of three full partners in a newly formed business. Without the permission of the other two partners, she enters into a written contract with a creditor. The transaction binds the firm in the amount of $75,000. Louise then leaves the area and cannot be located by the other two partners. Directions: Answer the following questions and include the characteristics of this business form to provide support for your answer. Are the other two partners liable for the $75,000? What legal features of the partnership apply to this case? Is what Louise has done legal?
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A, B and C were partners in a busines sharing profits equally, C retires on 1.1.2012, when the Balance Sheet stood as follows: BALANCE SHEET as at 1.1.2012 Liabilities Assets $ Bills Payable 2,000 Cash at Bank 3,750 Creditors 350 Bills Receivable 2,500 General Reserve 7,500 Debtors 6,300 Profit and Loss A/c 3,000 Stock in Trade 700 Capitals - Furniture & Fixtures 4,000 Building & Land Deferred Revenue Expenditure A 7,500 16,350 B 8,250 3,000 8,000 (Advertisement) 36,600 36,600 The goodwill of the firm is valued at $ 11,250. Amount payable to C is transferred to his loan account which will be paid in three equal annual installment together with interest @ 10% p.a. Show the Retiring Partner's Capital Account and his Loan Account till it is paid off. Books of accounts are closed on 31st December every year.
Prepare the Statement of Changes in Equity for the year ended 28 February 2022. INFORMATION The information given below was extracted from the accounting records of Sunray Traders, a partnership business with Sunny and Raymond as partners. Extract from the ledger of Sunray Traders as at 28 February 2022 CREDIT DEBIT R Capital: Sunny 1 000 000 Capital: Raymond 600 000 Current alc Sumy (01 March 2021) 60 000 Current alc Raymond (01 March 2021) 40 000 Drawings: Sunny 300 000 Drawings Raymond 400 000 The following must be taken into account: (a) The Statement of Comprehensive Income refected a net profit of R900 000 for the year ended 28 February 2022 (b) The partnership agreement provided for interest on capital at 12% p.a on the balances on the capital accounts. Note: Sunny increased his capital contribution by R200 000 on 01 June 2021 whilst Raymond decreased his capital contribution by R200 000 on 01 September 2021. The capital changes have been recorded. (c) The partrers are entided…
The partnership of Kylie, Bamboo and Tank is being liquidated. The summarized balance sheet below depicts their financial position before liquidation: Cash Loans to Tank Other non-cash assets P 30,000 70,000 600,000 The other non-cash assets were sold at P400,000. 1. The excess cash distributed to Kylie is P40,000 A. True B. False Accounts payables P Kylie, loan Kylie, capital (40%) Bambo, capital (20%) Tank, capital (40%) 2. The excess cash distributed to Tank is P110,000 A. True B. False 3. The ending balance of non-cash assets after liquidation is P200,000 A. True B. False 280,000 30,000 90,000 150,000 150,000
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A,B and C were partners sharing profits and losses 2:3:1. The position of the firm as on 1-4-2014 and 31-3-2015 was : 01/04/2014 31/03/2015 01/04/2014 31/03/2015 A's Capital B's Capital C's Capital General Reserve Capital Reserve Bank Overdraft Fixed Assets Debtors Stock Loans and Advances 20,000 18,000 30,000 28,000 40,000 36,000 40,000 37,000 65,000 22,000 10,000 9,000 20,000 30,000 72,000 32,000 12,000 12,000 10,000 1,22,000 5,000 1,52,000 On 1st April, 2014 the partners decided to change their profit and loss sharing ratio to 2:4:1. 1,22,000 1,52,000 Goodwill was valued at $ 42,000. No entries were, however, passed to give effect to this change. Pass Journal entries in the books of the firm as on 31st March, 2015 and prepare Capital Accounts of the Partners.
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