- 20 Marks
FA – L1 – Q82 – Preparation of Partnership accounts
Question
K, M, and B are in partnership; they share profits and losses 3:3:2. They agree to dissolve their partnership on 31.12.20X9 when their statement of financial position is as follows:
| Non-current assets | GH₵ |
|---|---|
| Premises | 300,000 |
| Plant and machinery | 150,000 |
| Vehicles (3 cars) | 90,000 |
| 540,000 |
| Current assets | GH₵ |
|---|---|
| Inventory | 60,000 |
| Receivables | 70,000 |
| Cash | 5,000 |
| 135,000 |
| Current liabilities | GH₵ |
|---|---|
| 65,000 |
| Capital accounts | GH₵ |
|---|---|
| K | 200,000 |
| M | 150,000 |
| B | 100,000 |
| 450,000 |
| Current accounts | GH₵ |
|---|---|
| K | 5,000 |
| B | 5,000 |
| Loan – M | 50,000 |
Various assets are sold for cash as follows:
- Premises: 400,000
- Plant and machinery: 100,000
- Inventory: 50,000
The vehicles are taken over by the partners at the following agreed values:
- Car 1 – K: 35,000
- Car 2 – M: 30,000
- Car 3 – B: 25,000
The receivables pay GH₵ 67,000 in settlement.
The payables are paid GH₵ 18,000 in settlement.
Dissolution expenses amount to GH₵ 20,000.
Required:
Prepare the realisation account, cash account, and capital accounts to close off the partnership books.
Answer
Realisation Account
| Dr | GH₵ | Cr | GH₵ |
|---|---|---|---|
| Premises | 300,000 | Vehicles (K) | 35,000 |
| Plant and machinery | 150,000 | Vehicles (M) | 30,000 |
| Vehicles | 90,000 | Vehicles (B) | 25,000 |
| Inventory | 60,000 | Cash (Premises) | 400,000 |
| Receivables | 70,000 | Cash (Plant) | 100,000 |
| Cash (Payables) | 18,000 | Cash (Inventory) | 50,000 |
| Cash (Expenses) | 20,000 | Cash (Receivables) | 67,000 |
| Capital – K (3/8) | 55,500 | Loss on receivables | 3,000 |
| Capital – M (3/8) | 55,500 | ||
| Capital – B (2/8) | 37,000 | ||
| Total | 856,000 | Total | 856,000 |
Cash Account
| Dr | GH₵ | Cr | GH₵ |
|---|---|---|---|
| Balance b/d | 5,000 | Realisation (Payables) | 18,000 |
| Realisation (Premises) | 400,000 | Realisation (Expenses) | 20,000 |
| Realisation (Plant) | 100,000 | Capital – K | 225,500 |
| Realisation (Inventory) | 50,000 | Capital – M | 200,500 |
| Realisation (Receivables) | 67,000 | Capital – B | 158,000 |
| Total | 622,000 | Total | 622,000 |
Capital Accounts
| Dr | K | M | B | Cr | K | M | B |
|---|---|---|---|---|---|---|---|
| Realisation (Vehicles) | 35,000 | 30,000 | 25,000 | Balance b/d | 200,000 | 150,000 | 100,000 |
| Cash | 225,500 | 200,500 | 158,000 | Current a/c | 5,000 | – | 5,000 |
| Realisation (Profit) | 55,500 | 55,500 | 37,000 | ||||
| Loan | – | 50,000 | – | ||||
| Total | 260,500 | 230,500 | 183,000 | Total | 260,500 | 230,500 | 183,000 |
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