Use the following information to answer questions 1 to 5.

Karabo and Moroka were in a partnership and traded as KM Traders. Karabo and Moroka shared in the profits or losses of KM Traders in the ratio of 5:4 respectively. Karabo and Moroka decided to admit Queen to the partnership. The new partnership trades as KQM Traders and the profit-sharing ratio between Karabo, Queen and Moroka is 4:2:4 respectively. The following statement of financial position (extract) was prepared (in preparation of the change in the ownership structure) at 28 February 2021, the financial year-end of KM Traders:

Moroka Traders

Balances as at 28 February 2020: R

Furniture and equipment 96,000.00

Inventories 36,000.00

Trade receivables control 24,000.00

Trade payables control 18,000.00

Bank (Dr) 30,000.00

Capital: Karabo 105,000.00

Capital: Moroka 63,000.00

The following appraisals were obtained on 28 February 2021 by KM Traders in preparation of the change in the ownership structure:

1. Trade receivables control R24 000. (An allowance for credit losses to the amount of R2 500 should be created.)

2. Inventories R43 750.

3. Furniture and equipment at market (fair) value - R125 000.

After the valuation adjustments, Queen was admitted to the partnership on 1 March 2021.Queen paid R70 000 into the bank account of the partnership for a 20% interest in the net assets (equity) of the new partnership.

Question 1.1

1.The amount recorded in in the Valuation account relating to Inventories and Furniture and equipment in preparation for the admission of Queen as a partner is?

1. R7 750,00

2. R34 250,00

3. R29 000,00

4. R36 750,00

Question 1.2 Which amount is the correct alternative recorded for closing off the balancing amount in the valuation account to the capital accounts of Karabo and Moroka according to their profit-sharing ratio?

1. Karabo - R17 125,00; Moroka - R 17 125,00

2. Karabo - R 34 250,00; Moroka R34 250,00

3. Karabo R16 000,00; Moroka R16 000,00

4. Karabo R32 000,00; Moroka R32 000,00

Question 1.4 Which of the following is the correct amount to be recorded as Goodwill in preparation for the admission of Queen?

1. R 147 750,00

2. R 280 000,00

3. R 77 750,00

4. R 112 000,00

Question 1.5

Which amount should be recorded for closing off the balances of the equity, liability and allowance accounts to the transferal account to record the dissolution of the partnership?

1. R 266 250,00

2. R 132 500,00

3. R 300 500,00

4. R 222 750,00