Ewen and Stephen Watt are in partnership sharing profits equally . The latest Balance Sheet, in summarised form, is as follows:

Balance Sheet at 30 June 1984 Fixed assets Current assets Less current liabilities Partnership Capital Accounts:

E. Watt S. Watt Current Accounts:

E. Watt S. Watt

£000 174 98 46 52 --

£226 50 50 72 54 - -

£226 The partnership is to be converted to a limited liability company, Watt Brothers Ltd. All the existing assets and liabilities are to be transferred, at Balance Sheet values. The partners are each to receive as part of the purchase consideration 60000 £ I ordinary shares in the new company valued at a premium of 25 pence per share . Any additional funds due to the partners are to be paid to them out of the proceeds of a loan of £200 000 made available to the new company by a private investor who will also subscribe for 40 000 shares in the new company at a price of

£1.25 per share .

Required:

(a) Prepare journal entries to record the cessation of the partnership in the books of the old business.

(b) Show the amount of cash received by each of the old partners.

(c) Prepare journal entries to record the formation of the new company and post the entries to the relevant ledger accounts.

(d) Prepare the opening Balance Sheet of the new company.