Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Illustrations of Dissolutions
X, Y and Z have been trading as partners sharing profits and losses in the ratio of 2:2:1 on the 1st July 2005, they decided to dissolve the partnership and all the assets were sold in a single transaction in the market. The balance sheet as at 1s July 2005 was as follows:
X, Y and Z
Balance Sheet as at 1.7.2005
£
Freehold property
60,000
Equipment
30,000
90,000
CURRENT ASSETS
Inventory
16,000
Account receivables
9,000
Cash at bank
4,200
29,200
Account payables
(6,000)
Net current assets
23,200
NET ASSETS
113,200
FIANCNED BY:
Capital accounts X
78,000
Y
26,000
Z
4,000
108,000
Current accounts X
1,400
(600)
400
1,200
109,200
Loan from bank
3,000
Loan from Y
1,000
The current assets sold on the market fetched the following assets:
62,000
9,600
5,800
The receivables paid their amounts in full while payables gave discounts of £200. The dissolution amounts to £1600.
Required:
Prepare the relevant accounts to record the dissolution.
Solution
Realization account
Cash book equipment
Property
6,200
8,800
Debtors
Cash book dissolution expenditure
1,600
A/c payables discounts
200
Loss on dissolution X
12,000
______
6,000
116,600
Cash book account
Balance b/d
Realizable dissolution expense
Realisation – equipment
Accounts payables
7,000
Accounts receivables
Capital X
67,400
Capital account Z
13,400
92,200
Capital account
X
Realisation account – loss
Bal b/d
Current account
-
600
Cash book (bal. Fig)
_____
Cash book (Bal. Fig)
79,400
In the current example, we have assumed that partner Z is solvent and therefore he is in a position to bring in the cash required from him so that full distribution is made to the other partners.However, in certain situations, a partner/some partners may not be able contribute the additional cash required and thus they are said to be insolvent.
Principles, concepts and CONVETIONS
explain accounting concepts and conventions
At year-end (December 31), Chan Company estimates its bad debts as 0.30% of its annual credit sales of $753,000. Chan records its Bad Debts Expense for that estimate. On the follow
The December 31, 2005, balance sheet of Far Imports includes the following items: The bonds were issued on December 31, 2004, at 97, with Interest payable on June 30 and December 3
Baruch Lev, who is a professor of accounting at New York University and a globally known academic for his research on financial reporting for intangibles, is that the economy has c
Simon Corporation's bonds have 12 years left over to maturity. Interest is paid yearly, the bonds have a $1,000 par value, and the coupon interest rate is 11.5%. The bonds have a y
On December 31, 2014, Santana Company has $7,194,600 of short-term debt in the form of notes payable to Golden State Bank due in 2015. On January 28, 2015, Santana enters into a re
Ace Company has a 30 percent marginal tax rate and uses a 12% discount rate to compute NPV. The firm started a venture that will yield the following before-tax cash flows: year 0,
An investment project requires a net investment of $100,000 and is expected to generate annual net cash inflows of $25,000 for 6 years. The firm's cost of capital is 12 percent. De
Personal representatives duties Personal representation has the following duties; 1) To provide and pay out of the estate of the deceased, the expenses of a reasonable funeral
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd