Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bedin, Ceyla and Deris have been in a partnership for a number of years, sharing profits in the ratio of 5:3:2, respectively. The statement of

Bedin, Ceyla and Deris have been in a partnership for a number of years, sharing profits in the ratio of 5:3:2, respectively. The statement of financial position of the business as at 31 December 2013 is as follows:

Statement of Financial Position

As at 31 December 2013

RM

RM

ASSETS

Non-Current Assets

Premises

80,000

Equipment

50,000

Vehicles

30,000

160,000

Current Assets

Inventories

40,000

Debtors

50,000

Bank

112,000

202,000

TOTAL ASSETS

362,000

LIABILITIES & OWNERS EQUITY

Non-Current Liabilities

Loan from Bedin

8,000

Loan from Finance Company

20,000

28,000

Current Liabilities

Creditors

42,000

Bank Overdraft

32,000

74,000

Owners Equity

Capital Accounts

Bedin

160,000

Ceyla

60,000

Deris

20,000

240,000

Current Accounts

Bedin

10,000

Ceyla

4,000

Deris

6,000

20,000

TOTAL LIABILITIES & OWNERS EQUITY

362,000

On 1 January 2014, the partnership was dissolved due to a disagreement between the partners. Upon dissolution, the following transactions took place:

1. Premises were sold for RM115,000. The proceeds were then used to settle the bank overdraft. Equipment was realised at a loss of RM10,000.

2. Bedin agreed to take over the vehicles at 20% below book value. The loan from Bedin to the partnership was used as part of the settlement for the vehicles and the balance was paid by cheque.

3. Deris took over the inventories at a discount of 10%.

4. All debtors paid their debts in full except for an amount of RM1,500 which was unrecoverable and was therefore written off as bad debt.

5. The amounts owing to the creditors were paid in full at a discount of RM2,000.

6. Dissolution expenses amounting to RM1,500 were fully paid.

7. All payments and receipts were made through the bank account.

8. Deris had a debit balance in his capital account but only managed to pay RM4,400 to the partnership business. The deficiency is to be borne between Bedin and Ceyla based on the Garner vs. Murray rule.

REQUIRED:

(a) Prepare the realisation account to close the books of the partnership.

(b) Prepare the bank account to close the books of the partnership.

(c) Prepare the partners capital account to close the books of the partnership.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Internet Supply Chain Impact On Accounting And Logistics

Authors: D. Chorafas

5th Edition

0333949633, 9780333949634

More Books

Students also viewed these Accounting questions

Question

Create a Fishbone diagram with the problem being coal "mine safety

Answered: 1 week ago