Q.6 X.Y and Z have been in partnership for several years, sharing profits and losses in the ratio 3:2:1. Their last balance sheet which was prepared on 31 October 2016 is as follows: Balance sheet of X, Y and Z as at 31 October 2016 $ S Non-current assets At cost 20,000 Less Depreciation (6,000) 14,000 Current assets Inventory 5,000 Accounts receivable 21,000 26,000 Total assets 40,000 Current liabilities Bank 13,000 Accounts payable 17,000 Total liabilities 30,000 Net assets 10,000 Capital X 4,000 Y 4,000 Z 2,000 Total capital 10,000 Despite making good profits during recent years they had become increasingly dependent on one credit customer, Bitter, and in order to retain his custom they had gradually increased his credit limit until he owed the partnership $18,000. It has now been discovered that Bitter is insolvent and that he is unlikely to repay any of the money owed by him to the partnership. Reluctantly X, Y and Z have agreed to dissolve the partnership on the following terms: (1) The inventory is to be sold to Kay Ltd for $4.000 The non-current assets will be sold for K8,000 except for certain items with a book value of $5,000 which will be taken over by X at an agreed valuation of $7,000. (111) The debtors, except for Bitter, are expected to pay their accounts in full (iv) The costs of dissolution will be $800 and discounts received from creditors will be $500. Z is unable to meet his liability to the partnership out of his personal funds. Required: (a) The realization account; (b) The capital accounts to the partners recording the dissolution of the partnership. Q.7 Write notes on the importance of the following in accounting: a) Benefits and limitations of International Financial Reporting Standards b) Users of financial statements and their information needs