- 20 Marks
Prepare realisation, cash, and capital accounts for K, M, and B partnership dissolution on 31.12.20X9, including asset sales and liability settlements.
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.
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