Chapter 4.1: Formation of a Partnership Chapter Review Solutions · Prepare Financial Statements - Solutions 30 Chapter 4.1: Formation of a Partnership Chapter Review Solutions 2.

Prepare Financial Statements - Solutions

30

Chapter 4.1: Formation of a Partnership

Chapter Review Solutions

2. Col & Don

General Journal

Date Particulars Debit Credit Bank 100,000 Capital - Col 80,000 Capital - Don 20,000 Capital contributions by Col and Don

4. Roo & Roy

General Journal

Date Particulars Debit Credit Motor Vehicle 30,000 Premises 16,000 Furniture 4,000 Capital - Roo 50,000 Capital contribution by Roo

Bank 50,000 Capital - Roy 50,000 Capital contribution by Roy

6. John & Kay

Date Particulars Debit Credit Business Premises 100,000 Motor Vehicles 50,000 Inventory 50,000 Capital – John 200,000 Capital contribution by John

Bank 200,000 Capital – Kay 200,000 Capital contribution by Kay

8. Noel & Oscar

Date Particulars Debit Credit Land & Buildings 200,000 Inventory 20,000 Motor Vehicle 30,000 Mortgage 100,000 Capital - Noel 150,000 Capital contribution by Noel

Plant & Equipment 30,000 Bank 50,000 Accounts Receivable 30,000 Accounts Payable 10,000 Capital - Oscar 100,000 Capital contribution by Oscar

Chapter 4: Partnerships - Solutions

31

10. Cec & Des

Date Particulars Debit Credit Bank 6,000 Accounts Receivable 3,000 Inventory 31,000 Motor Vehicle 5,000 Accounts Payable 8,000 Loan 22,000 Capital - Cec 15,000 Cec's business brought into partnership as capital

Accounts Receivable 8,000 Inventory 12,000 Premises 40,000 Bank (Overdraft) 30,000 Capital - Des 30,000 Des's business brought into partnership as capital

12. Alpha, Beta & Gamma Note no Bank Overdraft for Gamma

Date Particulars Debit Credit Bank 50,000 Capital - Alpha 50,000 Capital contribution by Alpha

10,000

Bank Motor Vehicle 12,000 Equipment 28,000 Capital - Beta 50,000 Capital contribution by B

Inventory 20,000 Plant 30,000 Accounts Receivable 4,000 Office Equipment 4,000 Accounts Payable 8,000 Capital - Gamma 50,000 Gamma's business brought into partnership as capital

14. E & F Note Motor Vehicle has an agreed value of $18,000

Date Particulars Debit Credit Inventory 20,000 Accounts Receivable 15,000 Motor Vehicles 18,000 Fixtures 8,000 Allowance for Doubtful Debts 1,000 Bank (Overdraft) 2,000 Loan 8,000 Capital - E 50,000 Assets and Liabilities of E's business brought in as Capital.

Bank 50,000 Capital - F 50,000 Capital contribution by F


32

16. G & H Date Particulars Debit Credit

( a ) Bank 30,000 Capital – G 30,000

Capital contribution by G

Bank 30,000 Capital – H 30,000 Capital contribution by H

( b ) Inventory 50,000 Accounts Receivable 10,000

Land & Buildings 80,000 Fixtures & Fittings 20,000 Goodwill 10,000 Bank (Overdraft) 20,000 Accounts Payable 40,000 Mortgage 50,000 J (Vendor) 60,000 Purchase of business from J

( c ) J (Vendor) 60,000 Bank 60,000

Payment of purchase consideration to J


33

18. P Q & R

Date Particulars Debit Credit

( a ) Land & Buildings 100,000 Plant & Machinery 40,000 Inventory 15,000 Accounts Receivable 10,000 Bank 15,000 Accounts Payable 30,000 Capital – P 150,000 Assets & Liabilities of P's business brought in as Capital.

Plant & Machinery 35,000 Inventory 20,000 Accounts Receivable 15,000 Bank 56,000 Allowance for Doubtful Debts 1,000 Accounts Payable 5,000 Capital – Q 120,000 Assets & Liabilities of Q's business brought in as Capital.

( b ) Land & Buildings 60,000 Plant & Machinery 25,000 Inventory 30,000 Accounts Receivable 5,000 Goodwill 10,000 Accounts Payable 20,000

R (Vendor) 110,000 Purchase of business from R

R (Vendor) 110,000 Bank 110,000

Payment of purchase consideration to R

( c ) Balance Sheet of P & Q

Current Assets

Inventory 65,000

Accounts Receivable 30,000

Less: Allowance for Doubtful Debts 1,000 29,000 94,000

Non Current Assets

Land & Buildings 160,000

Plant & Machinery 100,000

Goodwill 10,000 270,000

Total Assets 364,000

Current Liabilities

Bank (overdraft) 39,000

Accounts Payable 55,000 94,000

Total Liabilities 94,000

Net Assets 270,000

Proprietorship Capital - P 150,000

Capital - Q 120,000 270,000


34

20. M & N

Date Particulars Debit Credit Bank 6,000 Accounts Receivable 13,000 Inventory 23,000 Van 13,000 Allowance for Doubtful Debts 1,000 Accounts Payable 17,000 Loan 10,000 Capital – M 27,000 Business of M introduced as Capital

Accounts Receivable 8,000 Inventory 12,000 Premises 80,000 Accounts Payable 7,000 Mortgage 30,000 Capital - N 63,000 Business of N introduced as Capital

Bank 3,000 Capital - M 3,000 Additional Capital contribution required Capital - N 3,000 Current - N 3,000 Transfer of excess Capital

22. Ultra & Violet


( a ) Bank 100,000 Capital – Ultra 100,000

Capital contribution by Ultra

Bank 100,000 Capital – Violet 100,000 Capital contribution by Violet

( b ) Machinery 60,000 Office Equipment 30,000 Accounts Receivable 45,000 Inventory 40,000

Goodwill 50,000 Allowance for Doubtful Debts 5,000 Accounts Payable 20,000 Ray (Vendor) 200,000 Purchase of business from Ray

( c ) Ray (Vendor) 200,000 Bank 200,000

Payment of purchase consideration to Ray


35

Chapter 4.2: Operation of a Partnership


2. Charles & Dennis

Debit Credit

Interest on Partner’s Loan - Charles 10,000 Capital / Current – Charles 10,000 Interest credited on loan from Charles Capital / Current – Dennis 5,000 Interest on Loan (Advance) to Partner - Dennis 5,000 Interest charged on loan to Dennis Profit & Loss 10,000 Interest on Partner’s Loan 10,000 Balance transfer Interest on Loan to Partner 5,000 Profit & Loss 5,000 Balance transfer

4. Rex & Grace Debit Credit ( a ) Cash at Bank 60,000 01/07/10 Capital – Rex 20,000 Capital – Grace 40,000 Capital contributions by Rex and Grace

( b ) Cash at Bank 30,000 01/01/11 Loan from Partner - Grace 30,000 Loan by Grace to partnership

( c ) Partners’ Salaries 20,000

30/06/11 Current – Rex 20,000 Partner’s salary credited to Rex

( d ) Interest on Partner’s Loan 1,500 Cash at Bank 1,500 Interest on Partner’s Loan paid to Grace

( e ) Profit & Loss Appropriation 12,000 Current – Rex 4,000 Current - Grace 8,000 Interest on capitals credited

( f ) Current – Rex 2,500 Current - Grace 3,500 Profit & Loss Appropriation 6,000 Interest charged on Drawings

( g ) Profit & Loss 78,500 Profit & Loss Appropriation 78,500 Net Profit transfer ($100,000 - $20,000 - $1,500 )

( h ) Current - Rex 20,000 Capital - Rex 20,000 Balance transfer


36

6. Rob & Roy ( a ) Profit & Loss for the year ended ………… Partners’ Salaries 20,000 Gross Profit from Trading 83,000 Interest on Partner’s Loan 2,000 Interest on Advance to Partner 1,000 Net Profit to Appropriation 62,000

84,000 84,000

( b ) Profit & Loss Appropriation for the year ended ……………..

Interest on Capital Net Profit from Profit & Loss 62,000 - Rob 3,000 Interest on Drawings - Roy 3,000 6,000 - Rob 1,000

Share of Profit - Roy 2,000 3,000 - Rob 29,500 - Roy 29,500 59,000

65,000 65,000

( c ) General Journal

Date Particular Debit Credit

Partners’ Salaries 20,000 Current – Rob 10,000 Current - Roy 10,000 Partners’ salaries credited

Interest on Partner’s Loan 2,000 Current – Rob 2,000 Interest credited on loan from Rob

Current – Roy 1,000 Interest on Advance to Partner 1,000 Interest charged on advance to Roy

Profit & Loss 22,000 Partners’ Salaries 20,000 Interest on Partner’s Loan 2,000 Balances transfer

Interest on Advance to Partner 1,000 Profit & Loss 1,000 Balance transfer

Profit & Loss 62,000 Profit & Loss Appropriation 62,000 Net Profit transfer (83,000 – 22,000 + 1,000)

Profit & Loss Appropriation 6,000 Current – Rob 3,000 Current – Roy 3,000 Interest on capital credited

Current – Rob 1,000 Current – Roy 2,000 Profit & Loss Appropriation 3,000 Interest charged on Drawings

Profit & Loss Appropriation 59,000 Current – Rob 29,500 Current – Roy 29,500 Share of Profit transfer (62,000 – 6,000 + 3,000)


37

8.

( a ) General Journal of Matthew, Mark & Luke Date Particular Debit Credit 30/06/11 Trading 150,000 Profit & Loss 150,000 Gross Profit transferred

Partners' Salaries 30,000 Current – Luke 30,000 Salary credited to partner Luke

Interest on Partner's Loan 2,000 Current – Mark 2,000 Interest on loan from Mark credited

Profit & Loss 102,000 Operating Expenses 70,000 Partners' Salaries 30,000 Interest on Partner's Loan 2,000 Balances transfer

Profit & Loss 48,000 Profit & Loss Appropriation 48,000 Net Profit transfer

( b )

Profit & Loss Appropriation for the year ended 30 June 2011 Interest on Capital Net Profit from Profit & Loss 48,000

- Matthew 3,000 Interest on Drawings - Mark 2,000 - Matthew 700 - Luke 1,000 6,000 - Mark 700

Share of Profit - Luke 600 2,000 - Matthew 22,000

- Mark 11,000 - Luke 11,000 44,000

50,000 50,000


38

( c ) 30/06/11 Profit & Loss Appropriation 6,000 Current – Matthew 3,000 Current - Mark 2,000 Current – Luke 1,000 Interest on capital credited

Current – Matthew 700 Current – Mark 700 Current – Luke 600 Profit & Loss Appropriation 2,000 Interest charged on Drawings

Profit & Loss Appropriation 44,000 Current - Matthew 22,000 Current - Mark 11,000 Current - Luke 11,000 Share of Profit transfer

( d )

Current – Matthew

Drawings 14,000 Balance b/d 5,000 P & L Appropriation P & L Appropriation - Interest on Drawings 700 - Interest on Capital 3,000 Balance c/d 15,300 P & L Appropriation - Share of Profit 22,000

30,000 30,000

Current – Mark Drawings 14,000 Balance b/d 5,000 P & L Appropriation Interest on Partners' Loan 2,000 - Interest on Drawings 700 P & L Appropriation Balance c/d 5,300 - Interest on Capital 2,000 P & L Appropriation - Share of Profit 11,000

20,000 20,000

Current – Luke Drawings 12,000 Balance b/d 4,000 P & L Appropriation Partners' Salaries 30,000 - Interest on Drawings 600 P & L Appropriation Balance c/d 33,400 - Interest on Capital 1,000 P & L Appropriation - Share of Profit 11,000

46,000 46,000


39

10. Crosby, Stills & Nash

( Extracts of ) Balance Sheet as at 30 June 2012

Current Assets Advance to Nash (due 31/10/2012) 10,000 Non-Current Liabilities Loan from Partner - Crosby (due 1/03/2014) 20,000 Proprietorship Crosby - Capital 50,000 - Current 10,000 60,000 Stills - Capital 50,000 - Current 15,000 65,000 Nash - Capital 50,000 - Current - 5,000 45,000 170,000


40

12. Song, Sung & Blue

( a ) Profit & Loss Appropriation for the year ended 30 June 2011

Interest on Capital Net Profit from Profit & Loss 14,600 - Song 3,000 ( 67,100 - 52,500) - Sung 2,500 Interest on Drawings

- Song 2,000 - Sung 1,500 - Blue 800

- Blue 2,000 7,500 Share of Profit 4,300 - Song (1/3) 3,800 - Sung (1/3) 3,800 - Blue (1/3) 3,800 11,400

18,900 18,900

( b ) Current Accounts

Song Sung Blue Song Sung Blue

Drawings 20,000 15,000 8,000 Balance b/d 14,000 8,000 2,000

Capital 10,000 10,000 10,000 Partners Salaries 15,000 17,500 20,000

P&L App P&L App

Interest on Draw 2,000 1,500 800 Interest on Capital 3,000 2,500 2,000

Balance c/d 3,800 5,300 9,000 Share of Profit 3,800 3,800 3,800

35,800 31,800 27,800 35,800 31,800 27,800

( c )

Balance Sheet of Song, Sung & Blue as at 30 June 2011

Current Assets Accounts Receivable 84,000 Less Allowance for Doubtful Debts 1,130 82,870

Inventory 80,000 Bank 54,600 217,470

Non Current Assets Fixtures & Fittings 14,400 Less Accumulated Depreciation 1,440 12,960

Motor Vehicles 74,000 Less Accumulated Depreciation 37,000 37,000 49,960

Total Assets 267,430

Current Liabilities Accounts Payable 69,330 69,330

Net Assets 198,100 Proprietorship Song – Capital 70,000 - Current 3,800 73,800

Sung – Capital 60,000 - Current 5,300 65,300

Blue - Capital 50,000

- Current 9,000 59,000 198,100


41

14. Bob, Ted & Alice ( a ) Profit & Loss for the year ended 30 June…… Operating Expenses 110,000 Trading - Gross Profit 560,000 Partner's Salary 50,000 Interest on Partner's Loan 900 Profit & Loss Appropriation

- Net Profit 399,100 560,000 560,000

( b )

Profit & Loss Appropriation for the year 30 June ………

Interest on Capital Net Profit from Profit & Loss 399,100 - Bob 5,000 Interest on Drawings - Ted 5,000 - Bob 8,700 - Alice 2,500 12,500 - Ted 5,700 Share of Profit - Alice 13,500 27,900 - Bob 165,800 - Ted 165,800 - Alice 82,900 414,500

427,000 427,000

( c )

Current - Bob

Drawings 58,000 Balance b/d 35,000 P & L Appropriation Interest on Partners' Loan 900 - Interest on Drawings 8,700 P & L Appropriation Balance c/d 140,000 - Interest on Capital 5,000 P & L Appropriation - Share of Profit 165,800

206,700 206,700

Current - Ted

Drawings 38,000 Balance b/d 30,000 P & L Appropriation P & L Appropriation - Interest on Drawings 5,700 - Interest on Capital 5,000 Balance c/d 157,100 P & L Appropriation - Share of Profit 165,800

200,800 200,800

Current - Alice

Drawings 90,000 Balance b/d 20,000 P & L Appropriation Partners' Salaries 50,000 - Interest on Drawings 13,500 P & L Appropriation Balance c/d 51,900 - Interest on Capital 2,500 P & L Appropriation - Share of Profit 82,900

155,400 155,400


42

Chapter 4.3: - Introduction of a New Partner


2. Cliff, Ford & Tex

( a ) 15 : 5 : 4 Cliff = 3/4 x 5/6 = 15/24 Ford = 1/4 x 5/6 = 5/24 Tex = 1/6 = 4/24

( b ) General Journal of Cliff, Ford & Tex Debit Credit

Bank 26,000 Capital - Tex 26,000 Capital contribution by Tex

4 Bill, Ian & Gary

( i ) Equity Adjustment

Motor Vehicles 10,000 30/06/08 Plant 2,000

Allowance for Doubtful Debts 1,000 Land & Buildings 12,000

Capital - Bill 1,500

Capital – Ian 1,500 3,000

14,000 14,000

( ii ) General Journal Debit Credit

Bank 54,000 Capital - Gary 54,000 Capital contribution by Garry

( a ) Calculation of new profit-sharing ratio

Bill ½ x 2/3 1/3

Ian ½ x 2/3 1/3

Gary 1/3


43

6. Tom, Jerry & Sylvester

( a ) Debit Credit

( i ) Bank 10,000 Capital – Sylvester 10,000 Capital contribution by Sylvester

( ii ) 9 : 6 : 5 Tom 3/5 x 3/4 = 9/20 Jerry 2/5 x 3/4 = 6/20 Sylvester 1/4 = 5/20

( b ) Debit Credit

Equity Adjustment 10,000 Allowance for Doubtful Debts 2,000 Inventory 1,000 Equipment & Vehicles 7,000 Adjustment of asset values - decreases

Land & Buildings 40,000 Equity Adjustment 40,000 Adjustment of asset value - increases

Equity Adjustment 30,000 Capital - Tom 18,000 - Jerry 12,000 Transfer of balance of adjustments of assets


44

8. Roo, Rob & Max

( a ) Equity Adjustment

Motor Vehicles 10,000 Plant 2,000 Allow for Doubtful Debts 1,000 Land & Buildings 20,000 Capital - Roo 5,500 Capital - Rob 5,500 11,000

22,000 22,000

( b ) Debit Credit

Bank 54,000 Capital – Max 54,000 Capital contribution by Max

( c ) 1 : 1 : 1 Roo = 1 / 2 x 2 / 3 = 1 / 3 Rob = 1 / 2 x 2 / 3 = 1 / 3 Max = 1/3 = 1 / 3

10. A, B & C

( a ) Equity Adjustment

Allow for Doubt. Debts 1,000 Land & Buildings 65,000 Vehicles & Equipment 6,000 Inventory 2,000

Capital - A 40,000 Capital - B 20,000

67,000 67,000

( b ) Capital - A

Balance c/d 120,000 Balance b/d 72,000 Equity Adjustment 40,000 Bank 8,000

120,000 120,000

Capital - B Balance c/d 60,000 Balance b/d 28,000 Equity Adjustment 20,000 Bank 12,000

60,000 60,000

Capital - C

Bank 120,000


45

( c )

Balance Sheet

Current Assets Bank 140,000 Accounts Receivable 10,000 Less: Allowance for Doubtful Debts 1,000 9,000

Inventory 17,000 166,000

Non-Current Assets Land and Buildings 185,000 Vehicles and Equipment 15,000 200,000

Total Assets 366,000 Liabilities 66,000

Net Assets 300,000

Proprietorship Capital - A 120,000 Capital - B 60,000 Capital - C 120,000 300,000

300,000


46

12. Victor, Walter & Xavier

( a ) Debit Credit

Inventory 15,000

Equity Adjustment 15,000

Asset value increases


Office Equipment 25,000

Allowance for doubtful debts 1,000

Asset value decreases

Victor, Walter & Xavier continued

Capital / Current - Victor 7,333

Capital / Current - Walter 3,667


Balance transferred

( b ) Equity Adjustment

Office Equipment 25,000 Inventory 15,000 Allowance for doubtful debts 1,000 Capital / Current

- Victor 7,333

- Walter 3,667 11,000

26,000 26,000

( c ) Debit Credit

Bank 60,000 Capital – Xavier 60,000 Admission to partnership of Xavier

( d ) Calculation of new Profit Sharing Ratio

2 : 1 : 1 Workings: Victor = 2/3 x 3/4 = 2/4 Walter = 1/3 x 3/4 = 1/4 Xavier = = 1/4


47

Chapter 4.4: Dissolution of a Partnership


2.

( a ) Debit Partners Salaries xxx

Credit Capital – A xxx

Salary to date credited

( b ) Debit Profit & Loss Appropriation xxx


Interest on Capital to date, credited

( c ) Debit Profit & Loss Appropriation xxx


Share of estimated partnership profit

( d ) Debit Equity Adjustment xxx


Share of profit on asset revaluations

( e ) Debit Loan by Partner A xxx


Transfer of Loan account balance

4. Gary, Harry & Larry

( a ) Current – Larry 10,000 Capital – Larry 10,000 Transfer of balance

Capital – Larry 15,000 Drawings – Larry 15,000 Transfer of balance

Loan from Larry 25,000 Capital – Larry 25,000 Transfer of balance

Profit & Loss Appropriation 20,000 Capital – Larry 20,000 Share of profit to date ($60,000 x 1/3)*

Partners’ Salaries 10,000 Capital – Larry 10,000 Salary credited ($20,000 x 6/12)

Profit & Loss Appropriation 3,000 Capital – Larry 3,000 Interest on capital credited ($60,000 x 10% x 6/12)

Capital – Larry 1,500 Profit & Loss Appropriation 1,500 Interest charged on drawings ($15,000 x 10%)

Interest on Partner’s Loan 1,250 Capital – Larry 1,250 Interest on loan credited ($25,000 x 10% x 6/12)

Equity Adjustment 5,000 Capital – Larry 5,000 Share of profit on asset revaluations ($15,000 x 1/3)


48

The following have been determined ( after any adjustments ):*

Partnership profit to 31 December 2011 $60,000

( b ) Capital – Larry 31/12/11 Drawings 15,000 01/07/11 Balance 60,000

P & L Appropriation 31/12/11 Current – Larry 10,000 - interest - drawings 1,500 Loan from Larry 25,000 Bank 117,750 Partners’ Salaries 10,000 P & L App'n - interest on capital 3,000 Interest on L’s Loan 1,250

P & L App'n - share of profit 20,000 Equity Adjustment 5,000

134,250 134,250

( c ) 01/01/12 Capital - Larry 117,750 Cash at Bank 117,750 Payment to Larry of Capital account balance


49

6. E & F Realisation

Other Assets 17,500 Bank - Proceeds 24,000

Bank - Expenses 700 Accounts Payable – Discounts 200 Capital – Profit on Realisation

- E 3,000

- F 3,000 6,000

24,200 24,200

Bank

Balance c/d Realisation - Proceeds

2,500 Loan Accounts Payable Realisation - Expenses Capital - E - F

3,000 24,000 3,800

700 11,000 8,000

26,500 26,500

Capital - E

Bank 11,000 Balance b/d Realisation - Profit

8,000 3,000

11,000 11,000

Capital - F

Bank 8,000 Balance b/d Realisation - Profit

5,000 3,000

8,000 8,000


50

8. R & S Realisation

Other Assets Bank - Expenses Loan - Interest Capital - Profit on Realisation - R 3,750 - S 3,750

17,500 Bank - Proceeds Accounts Payable - Discounts

25,000

400 500

100

7,500

25,500 25,500

Bank Balance b/d Realisation - Proceeds

1,500 Loan (and interest) Accounts Payable Realisation - Expenses Capital - R - S

3,100 25,000 4,000

400 10,250 8,750

26,500 26,500

Capital - R Bank 10,250 Balance b/d

Current Realisation - Profit

4,000

2,500

3,750

10,250 10,250

Capital - S Bank 8,750 Balance b/d

Current Realisation - Profit

4,000

1,000

3,750

8,750 8,750


51

10. D, E and F

Realisation

Sundry Assets Bank - Expenses Capital - Gain on Realisation - D 1,500 - E 1,500 - F 1,500

14,000 Bank - Proceeds Accounts Payable - Discounts

18,450

150 200

4,500

18,650 18,650

Bank

Realisation - Proceeds Capital – F

18,450 Balance b/d Accounts Payable Realisation - Expenses Capital - D - E

2,000

500 3,800

150

7,500

5,500

18,950 18,950

Capital - D

Bank 7,500 Balance b/d Realisation - Gain

6,000

1,500

7,500 7,500

Capital - E

Bank 5,500 Balance b/d Realisation - Gain

4,000

1,500

5,500 5,500

Capital - F

Balance b/d 2,000 Realisation - Gain Bank

1,500

500

2,000 2,000


52

12. Betty and Maxwell

Realisation

Bank Other Assets Capital- Betty 20,000 Capital- Maxwell 20,000

10,000 Accounts Payable Betmax Pty Ltd - purchase consideration

40,000

190,000

40,000 200,000

240,000 240,000

Betmax Pty. Ltd

Realisation - consideration 200,000 Capital - Betty 100,000

Capital - Maxwell 100,000

200,000 200,000

Capital - Betty

Betmax Pty Ltd - shares issued to Betty

100,000 Balance b/d Realisation

80,000

20,000

100,000 100,000

Capital - Maxwell

Betmax Pty Ltd - shares issued to Maxwell

100,000 Balance b/d Realisation

80,000

20,000

100,000 100,000


53

14. G & P

General Journal of G & P


Realisation 200,000 Assets 200,000 Transfer of balances

Liabilities 40,000 Realisation 40,000 Transfer of balances

Ewing Promotions 150,000 Realisation 150,000 Agreed purchase consideration

Bank 150,000 Ewing Promotions 150,000 Receipt of purchase consideration

Capital G 5,000 Capital P 5,000 Realisation 10,000 Loss on sale transferred

Current G 40,000 Current P 20,000 Capital - G 40,000 Capital - P 20,000 Transfer of balances

Capital G 85,000 Capital P 65,000 Bank 150,000 Settlement to partners of Capital balances.


54

16. Brahe, Kepler and Jeans Realisation

Inventory 58,600 Bank: Proceeds 222,200

Accounts Receivable 37,200 Accounts Payable - Discounts 3,200

Land & Buildings 138,000 Mortgage ( & Interest ) 77,000

Plant 44,000

Bank - costs 600

Mortgage - Interest 1,000

Capital - Brahe 7,667

Capital - Kepler 7,667

Capital - Jeans 7,666 23,000

302,400 302,400

Bank

Realisation: Proceeds Balance b/d 37,600 Land & Buildings 152,000 Realisation - costs 600 Plant 16,000 Accounts Payable 39,600 Inventory 36,300 Capital - Brahe 67,667 Accounts Receivable 17,900 Capital - Kepler 57,667 Capital - Jeans 19,066

222,200 222,200

( c ) Capital - Brahe

Bank 67,667 Balance b/d 40,000 Current 20,000 Realisation - Profit 7,667

67,667 67,667

Capital - Kepler

Bank 57,667 Balance b/d 40,000 Current 10,000 Realisation - Profit 7,667

57,667 57,667

Capital - Jeans

Current 8,600 Balance b/d 20,000 Bank 19,066 Realisation - Profit 7,666

27,666 27,666

Chapter 4.1: Formation of a Partnership Chapter Review Solutions · Prepare Financial Statements - Solutions 30 Chapter 4.1: Formation of a Partnership Chapter Review Solutions 2.

Documents