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QUESTION 1 (Blue book) (30 MARKS) Jabu. Kristin and Louise are students and partners in Knockoff Traders. The three partners are best friends and travel

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QUESTION 1 (Blue book) (30 MARKS) Jabu. Kristin and Louise are students and partners in Knockoff Traders. The three partners are best friends and travel to Bangkok in Thailand every three months to buy clothing merchandise which they then sell for a significant profit at local flea markets. The partnership owns amongst others a delivery vehicle, display shelves used at markets and the clothing inventory. The partners use their profits to fund their studies and also to pay for their travelling expenses overseas. Jabu. Kristin and Louise share profits and losses in the ratio 4:3:1, and the partnership is not registered for VAT (1.e. you may ignore VAT). On 31 December 2018, the partners decided to dissolve the partnership, as they had all obtained their degrees and found employment for the 2019 year, and did not have to sell clothes for additional income anymore. The original partnership agreement stipulated that should there be a shortfall on a partner's account upon dissolution, helshe shall be responsible to pay in the amount owing to the partnership. Any amounts owing to the partners after the dissolution will be settled via EFT (electronic fund transfer) using the BABSA Bank banking application through which the partnership manages its bank account with BABSA Bank Jabu maintains the accounting records of the partnership, and provided you with the following information. He had accounting at school, but studied Engineering and is having difficulty with how to dissolve the partnership, and requested your help. KNOCKOFF TRADERS Statement of financial position at 31 December 2018 R R ASSETS Non-current assets Vehicle 100 000 Equipment (shelving) 16 000 Goodwill 4 000 Total non-current assets 120 000 Current assets Inventories (clothing) 23 000 Cash and cash equivalents (BABSA Bank) 27 000 Total current assets 50 000 Total assets 170 000 EQUITY AND LIABILITIES Equity Capital 80 000 Jabu 40 000 Kristin 30 000 Louise 10 000 Current accounts 70 000 Jabu 80 000 Kristin 28 000 Louise (38 000) Total equity 150 000 Non-current liabilities Loan from BABSA Bank 20 000 Total equity and liabilities 170 000 Page 2 of 7 FSAO - ACCOBBUREKOBO1 - Accounting B Additional information 1. Accounting fees of R5 000 were paid to you, which is what you invoiced the partnership to give effect to the dissolution of the partnership according to the agreement 2. The loan from BABSA Bank was settled upon dissolution, however the bank charged a R1 000 penalty to Knockoff Traders (which was paid), as the amount was settled early, which was not in line with the initial loan agreement with the bank 3. Teskom (supplier of the hand-held device through which credit card payments are made by customers at markets), refunded a deposit (which was expensed in 2016) to the partnership when the device was returned to Teskom. This deposit that was refunded should be recognised as an income, and amounted to R2 000 3. The assets of the partnership realised the following amounts on auction: Vehicle R90 000 Equipment R29 000 Inventories R40 000 REQUIRED Prepare the following ledger accounts to give effect to the dissolution of Knockoff Traders Partnership: Realisation account (9) Capital accounts in column form (11) Bank account (10) Page 3 of 7

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