Question
Agnes, Lettie and Zeb are partners in Bakery business, trading as Isidingo Bakery Incorporated, and they share profits and losses in the ratio 4:3:3 respectively.
Agnes, Lettie and Zeb are partners in Bakery business, trading as Isidingo Bakery Incorporated, and they share profits and losses in the ratio 4:3:3 respectively. They have considered to liquidate the partnership for quite some time. They have decided to accept the most favorable of the offers received for the assets, they planned to liquidate the partnership simultaneously on 31 March 2021. Before the liquidation entries were made, the trial balance of the partnership was prepared as follows:
ISIDINGO BAKERY INCORPORATED
Extract Trial Balance as at 31 March 2021 R R
Land and buildings at valuation 800000
Furniture at cost 150000
Vehicles at cost 300000
Accumulated depreciation: Furniture 30000
Accumulated depreciation: Vehicles 150000
Goodwill 90000
Inventory 50000
Trade receivables control 85000
Allowance for credit losses 7000
Capital: Agnes 150000
Capital: Lettie 80000
Capital: Zeb 100000
Current account: Agnes 30000
Current accouint:Lettie 75000
Current account: Zeb 130000
Revaluation surplus 70000
Mortgage 400000
Bank overdraft 50000
Trade payables control 145000
On 31 March 2021 the following transactions regarding the liquidation took place:
Land and buildings were sold for R900 000,00. Furniture was sold to an independent third party at for R200 000,00. Vehicles were taken over by the partners, each partner received a vehicle fair valued at R100 000,00. R50 500,00 was received for the sale of inventory. All outstanding debtors settled their balances, a discount of 15% was allowed. All outstanding amounts relating to creditors was settled, a settlement discount of 10 cents on every Rand owed was received. The mortgage bond was settled in full.
The liquidation cost relating to the above amounted to R15 000,00.
Assuming a profit made on liquidation of R324 250,00. Which one of the following alternatives represents the correct amount that must be recorded in the Liquidation account for the apportionment of profit for Agnes?
A.R 95 175,00
B.R 126 900,00
C.R 100 000,00
D.R 129 700,00
Question 21
Question text
Which of the following alternatives represents the correct recording of the current account amount in the capital accounts of Agnes, Lettie and Zeb?
A.Agnes: Debit R30 000,00
B.Lettie: Credit R75 000,00
C.Zeb: Credit R130 000, 00
D.All of the above
Question 22
Question text
Which of the following alternative represents the amount allocated to the capital account of Agnes relating to the revaluation amount?
A.R 21 000,00
B.R 29 000,00
C.R 28 000,00
D.R 70 000,00
Question 23
Question text
Which of the following alternative represents the amount allocated to the capital account payable to Lettie relating to the goodwill amount?
A.R 27 000,00
B.R 21 000,00
C.R36 0000,00
D.R 90 000,00
Question 24
Question text
Which of the following amounts represents the correct trade payables amount paid by the bakery as a settlement?
A.R 143 550,00
B.R 140 000,0
C.R 130 500,00
D.R 145 000,00
Use the following information to answer questions 25 to 30.
Kris Janner was in partnership with Kylie and Kim trading as KKK Skin, the partnership produces and sells skin products. The partners shared profits/losses in the ratio of 5:3:2 respectively. Due to the dispute on matters affecting the day-to-day operations of the business the partners have consequently agreed to dissolve the partnership piecemeal as from 1 July 2021.
The following is the trial balance of KKK Skin on 30 June 2021:
Trial balance of KKK Skin as at 30 June 2021 R
Property, plant and equipment 242400
Fixed deposit: Kandal Bank 100000
Loan from Kylie 14400
Long-term loan 96000
Trade debtors 126000
Bank (Dr) 18000
Capital: Kris 156000
Capital: Kylie 120000
Capital: Kim 96000
Goodwill 24000
Additional Information:
1. The surrender value of the insurance policy taken out on the lives of the partners is currently R50 000 and is to be paid to the partnership on the 07 July 2021.
2. An agreement was reached with all the debtors, that if outstanding balances are settled before 25 July 2021, a discount of 10% will be granted. On 07 July 2021, 90% of debtors had settled their accounts.
3. The partners loan account is to be transferred to his capital account.
4. The partners agreed to distribute the cash received from the sale of assets immediately, in such a way, that while maximum distribution was to be made to the partners, a partner would under no circumstances be required to refund to the partnership any amount he had received.
5. The assets were sold for cash as follows:
Carrying Value Proceeds
07 July 2021 Fixed deposit R110 0000 R110 000
12 July 2021 Vehicles R100 000 R106 000
Using the columnar formal according to the loss-absorption capacity method record the liquidation of KKK Skin from the 01 July to 07 July 2021 and answer the following.
Which of the following alternatives represents the correct balance in the capital account of Kris at the commencement of the liquidation
A.R 91 200,00
B.R 156 000,00
C.R 144 000,00
D.R 112 800,00
Question 26
Question text
Which one of the following alternatives represents the correct amount that must be allocated to Kylie relating to the life insurance?
A.R 15 000,00
B.R 25 000,00
C.R 50 000,00
D.R 10 000,00
Question 27
Question text
Which one of the following alternatives represents the correct the correct amount that must be allocated to Kylie relating to the amounts received from debtors?
A.R 22 680, 00
B.R 20 412, 00
C.R 11 340, 00
D.R 2 268,00
Question 28
Question text
Which one of the following alternatives represents the correct closing balance in the bank account of KKK Skin on 07 July 2021?
A.R 184 060,00
B.R 224 000,00
C.R 195 000, 00
D.R 208 000,00
Question 29
Question text
Which one of the following alternatives represents the correct closing balance for the Capital account for Kris on the 07 July 2021?
A.R 169 000,00
B.R 174 670,00
C.R 150 000,00
D.R 156 000,00
Question 30
Question text
Which one of the following alternatives represents the correct closing balance in the Assets account of KKK Skin on 07 July 2021?
A.R 245 000, 00
B.R 468 400,00
C.R R256 000,00
D.R 134 060,00
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