Question $4$

$(25$ Marks$)$

African Stars, Chula Chula and UNAM FC were in partnership selling soccer gear and accessories. They shared profits and losses in the ratio $3$:$5$:$2.$ On $01$ January $2022,$ they decided to dissolve the partnership as Chula Chula was personally insolvent. The partnership's postclosing trial balance at that date was.

POST$-$CLOSING TRIAL BALANCE AS AT $01$ JANUARY $2022$

Details

Capital:

African Stars

Chula Chula

UNAM FC

Current accounts:

African Stars

UNAM FC

Loan UNAM FC

$8\%$ Mortgage bond

Accounts payable

Goodwill $($at cost$)$

Land and Buildings $($at cost$)$

Equipment $($at cost$)$

Accumulated depreciation: Equipment

Inventory

Accounts receivable

Allowance for bad debts

Bank

Debit

Credit

$19000$

$6000$

$10000$

$1000$

$2000$

$2000$

$6000$

$8800$

$12000$

$18000$

$4000$

$10050$

$6500$

$6350$

$56900$

$56900$

The realisation transactions are summarised as follows:

African Stars agreed to take over the land and buildings for $$20000$ and assume liability for the mortgage bond.

The equipment and accounts receivable were disposed of for $N$$$7400$ cash.

Inventory was sold by public auction for $N$$$6350.$

Paid auctioneer's fee of $N$$$100.$

As the tangible assets have been disposed of separately, the goodwill has no value.

Paid payables $N$$$8400$ in full settlement of their claims.

Divided the loss on realisation amongst the partners.

Paid UNAM FC N$$2000$ for his loan.

Divided Chula Chula's deficiency amongst African Stars and UNAM FC in the ratio $5$:$3($applying the rule in Garner vs Murray$).$

Distributed the remaining cash to the partners.