Ebb and Flow, who shared profits in the ratio 3:2, respectively, decided to terminate their partnership with effect from 31 March 2012 when their Statement of financial position was prepared as shown. The dissolution progressed as follows:

1. Flow took over a vehicle which had had cost £30,000 and was written down by that date to £26,000.

2. Remaining vehicles, furniture and inventory realised £54,000, £92,000 and £718,000 respectively.

3. Trade receivables were collected subject to writing off £74,000 as irrecoverable.

4. Dissolution expenses were £18,000.

Required: 

Set out a Dissolution account, the Cash Book and the partners’ accounts recording the closure of the partnership books.

Transcribed Image Text:

Statement of financial position as at 31.3.2012 Cost Depreciation £'000 Furniture Motor vehicle Inventory Trade receivables Allowance for doubtful debt Cash and bank 420 280 460 (24) 168 252 140 140 625 436 72 1,133 1,525