Question 1

Which one of the following alternatives is correct?

• A.

  Since partnerships are not governed by a law requiring that IFRS be applied, it is not possible to introduce a standardised accounting procedure according to which changes in the ownership structure of partnerships ought to be recorded.

• B. Since a partnership is a legal entity, the ownership of a partnership is vested in the partners, and not in the partnership.

• C.

  From the legal perspective, the activities of a dissolved and a subsequent new partnership are not separately accounted for and reported on.

• D.

  When a change in the ownership structure of a partnership occurs, a new partnership agreement is entered into by the new partners which causes the existing partnership to continue with its business operations without any interruptions.

• E.

  The retirement of a partner from a partnership does not require the calculation of a new profit-sharing ratio but a simple reallocation of a retired partners share.

QUESTION 2

Which one of the following alternatives is correct?

• A. To ensure that compliance is followed, the financial statements of partnerships must be prepared according to IFRS.

• B. An existing goodwill account balance is transferred to the partners capital accounts on admission of a new partner.

• C. The selling price of the partnership business is determined by the value of its assets.

• D. When recording the valuation adjustments, if the value of a liability is decreased, the valuation account credited with the amount of a decrease.

• E. The fair value of the assets of a partnership is equal to the total equity of a partnership.

Part 2 of 5 - Changes in ownership of a partnership

QUESTION 1

Which one of the following alternatives represents the new profit-sharing ratio after the admission of Mqithwa into the new partnership?

• A.

  3:1:4

• B.

  7:9:2

• C.

  7:9:4

• D.

  2:2:1

QUESTION 2

Which one of the following alternatives represents the correct balance in the capital account of Mrebe after the valuation of assets and prior to the admission of Mqithwa?

• A.

  112 950

• B.

  123 200

• C.

  125 400

• D.

  147 900

QUESTION 3

Which one of the following alternatives represents the correct balance in the capital account of Johannes after the valuation of assets and prior to the admission of Mqithwa?

• A.

  51 000

• B.

  45 950

• C.

  50 000

• D.

  59 900

QUESTION 4

Which one of the following alternatives represents the correct amount of goodwill in the accounting records of KwaQongo Farmers after the admission of Mqithwa?

• A.

  90 800

• B.

  83 100

• C.

  92 400

• D.

  109 400

Part 3 of 5 - Simultaneous liquidation [1]

Question 1 of 1

QUESTION 1

Which one of the following alternatives represents the correct net profit (or loss) made on the simultaneous liquidation?

• A.

  76 200

• B.

  68 500

• C.

  74 500

• D.

  89 400

Part 4 of 5 - Simultaneous liquidation [2]

Magutshwa and Bafunani are partners in a baking company, trading as Nolanga Bakery, and they share profits and losses in the ratio of 3:1 respectively. They have considered to liquidate the partnership for quite some time and received various offers for the land and buildings as well as for the baking equipment. Since they have decided to accept the most favourable of these offers, they planned to liquidate the partnership simultaneously on 1 June 20.0. Before the liquidation entries were made, the trial balance of the partnership was prepared as follows:

QUESTION 1

Which one of the following alternatives represents the correct amount that must be allocated to Magutshwa on as liquidation profit (loss) of Nolanga Bakery on 1 June 20.0?

• A. 88 200

• B. 106 050

• C. 90 000

• D. 81 000

Question 2 of 4

3.0 Points

QUESTION 2

Which one of the following alternatives represents the correct amount that must be allocated to Bafunani on as liquidation profit (loss) of Nolanga Bakery on 1 June 20.0?

• A.

  27 000

• B.

  35 350

• C.

  29 400

• D.

  30 000

Question 3 of 4

3.0 Points

QUESTION 3

Assume the correct amount of liquidation loss allocated is R103 000. Which one of the following alternatives represents the correct amount that must be paid to Magutshwa on liquidation of Nolanga Bakery on 1 June 20.0?

• A.

  534 200

• B.

  605 000

• C.

  591 600

• D.

  730 500

Question 4 of 4

3.0 Points

QUESTION 4

Assume the correct amount of liquidation loss allocated is R60 000. Which one of the following alternatives represents the correct amount that must be paid to Bafunani on liquidation of Nolanga Bakery on 1 June 20.0?

• A.

  156 000

• B.

  194 500

• C.

  134 400

• D.

  152 000

Part 5 of 5 - Piecemeal liquidation

Question 1 of 7

3.0 Points

The following information relates to questions 1 7:

Rhugani and Zimkhona are in partnership, trading as Khabonina Welders and sharing profits/losses of the partnership equally. The partners decided to liquidate the partnership piecemeal as from 1 May 20.1. The partners further agreed that interim repayment will be made to them as cash becomes available in such a way that, while maximum distribution was to be made to the partners, under no circumstances would a partner be required to refund to the partnership any amount he had received.

The following information is extracted from the accounting records of the partnership on 30 April 20.1:

QUESTION 1

Which one of the following alternatives represents the correct balance in the capital account of Rhugani at the commencement of the liquidation?

• A.

  186 450

• B.

  178 950

• C.

  162 700

• D.

  149 200

Question 2 of 7

3.0 Points

QUESTION 2

Which one of the following alternatives represents the correct balance in the capital account of Zimkhona at the commencement of the liquidation?

• A.

  277 050

• B.

  288 750

• C.

  231 000

• D.

  251 800

Question 3 of 7

3.0 Points

QUESTION 3

With regard to inventory, which one of the following alternatives represents the correct amount that will be allocated to Zimkhona?

• A.

  10 450

• B.

  8 350

• C.

  9 100

• D.

  10 000

Question 4 of 7

3.0 Points

QUESTION 4

Which one of the following alternatives represents the correct the net cash proceeds on sale of equipment?

• A.

  107 900

• B.

  96 700

• C.

  104 300

• D.

  90 500

Question 5 of 7

3.0 Points

QUESTION 5

Which one of the following alternatives represents the correct the correct amount that must be paid to Rhugani on 10 May 20.1?

• A.

  3 350

• B.

  4 360

• C.

  3 710

• D.

  4 830

Question 6 of 7

3.0 Points

QUESTION 6

Which one of the following alternatives represents the correct the correct amount that must be paid to Zimkhona on 10 May 20.1?

• A.

  101 810

• B.

  93 460

• C.

  105 650

• D.

  86 630

Question 7 of 7

3.0 Points

QUESTION 7

Which one of the following alternatives represents the correct closing balance in the bank account of Khabonina Welders on 8 May 20.1?

• A.

  115 100

• B.

  124 600

• C.

  107 300

• D.

  128 800

EXTRACT OF GIVEN INFORMATION FOR KWAQONGO FARMERS Capital - Mrebe.. Capital - Johannes.. Current account - Mrebe (Cr). Current account - Johannes (Dr). R 124 500 110300 45400 28400 Mrebe and Johannes decided to admit Mqithwa from 1 August 20.1. Maithwa will contribute the following to acquire a fifth of the net asset share of the partnership 1. Cash......... 2. Farming equipment worth.. 21300 58000 Mrebe and Johannes agreed to relinquish 20% of their share in profits or losses to Mqithwa in the ratio of 3:1 respectively All other assets were revalued before admitting Mqithwa to the partnership. A valuation loss was correctly calculated at.. 44000 MAQHUZE WELDERS had the following balances when they commenced a simultenous liquidation of the partnership: Welding equipment (cost).. Welding equipment (accumulated depreciation), Trade receivables... Trade payables.... R 432 000 145 800 70 200 32 400 216000 The following transactions took place as part of the liquidation: 1. Welding equipment were sold for........ 2. Debtors settled their accounts in full 3. On settlement, the creditors granted a settlement discount of............. 3. Liquidation costs amounted to...... 1700 27000 NOLANGA BAKERY TRIAL BALANCE AS AT 1 JUNE 20.0 Capital - Magutshwa Capital - Bafunani Current account - Magutshwa Current account - Bafunani Long-term loan Trade payables control Land and buildings at cost. Baking equipment at cost. Accumulated depreciation: baking equipment Bank R -R741 7001 -R247 300 R47 100 -R23 600 -R223 700 -R58 9001 R1 059 500 R235 500 -R117 800 R70 900 On 1 June 20.0 the following transactions took place with regard to the liquidation: 1. The land and buildings were sold for cash... 2. Baking equipment with a carrying amount of R60 000 was taken over (not paid for immediately) by Bafunani at an agreed cash amount of...... R941 800 R58 900 R82 500 R5 900 3. The remaining baking equipment were sold for cash amount of..... 4. On full settlement of the creditors accounts, a settlement discount was received at an amount of......... 5. The long-term loan were paid in full 6. The liquidation costs which were paid amounted to....... R29 500 Capital: Rhugani Capital: Zimkhona Current account: Rhugani (Dr)... Current account: Zimkhona (Cr) Land and buildings at cost. Equipment at cost ...... Accumulated depreciation: Equipment Goodwill.... Inventory... Trade payables control Bank (Dr) R 232 3001 263 800 45 400 21 200 348 300 97 200 8 600 15 900 29 700 21 200 10 600 100% Additional information: R19 200 R9 700 1. On 2 May 20.1 the partners took the following decision on inventory: 1.1 Donate inventory to the local charity at a cost price of...... 1.2. The remaining inventory was sold on the same day for cash amount 2. On 8 May 20.1 the partners took the following decision in regard to equipment: 2.1 Equipment was sold at a public auction for a cash profit of..... 2.2. The auctioneers fee amounted to...... 3. The partners negotiated a settlement discount of 10% with their creditor. The creditor agreed on condition that the account is settled on or before 10 May 20.1. The due date for payment was met by the partnership R21 000 R5 300 4. On 12 May 20.1, the partners received and accepted an offer for the purchase of the land and buildings for. R369 400