- 15 Marks
FA – May 2012 – L1 – SB – Q2 – Partnership Accounts
Partnership business dissolution with the necessary ledger accounts.
Question
Tap, Sea, Air, and River are in partnership business sharing profits and losses in the ratio 8:5:4:3, respectively. Their Statement of Financial Position was as follows as at 1 January 2009:
On the date of the statement, the business was brought to an end, and the assets realized as follows:
| Assets Realized | N’000 |
|---|---|
| Motor Vehicles | 60,000 |
| Plant and Machinery | 60,000 |
| Furniture and Fittings | 52,500 |
| Inventories | 15,300 |
| Accounts Receivable | 9,450 |
Dissolution expenses amounted to N22,500,000. Air became bankrupt and could only pay 40k for every N100 owed. The other partners were solvent, and the amount was collected from Air’s administrator. Cash was returned to or received from partners as appropriate.
You are required to:
(a) State the ways in which the amount owed by Air will be absorbed by the other partners. (3 Marks)
(b) Show the necessary ledger accounts to close the partnership’s books.
Find Related Questions by Tags, levels, etc.