Statement of financial position as at 30 June 2021 Provision for depreciation Costs (RM) Net Book Value (RM) Non-Current Assets Freehold land (RM) 50,000 50,000 18,000 37,500 105,500 Office building 5,000 15,000 20,000 13,000 22,500 85 500 Motor vehicle Current Assets Inventory Accounts receivable 1,500 6,000 7,500 Current Liabilities Accounts payable Bank overdraft 4,000 6,000 2.500 83.000 (10,000) Financed by: Capital account: Nazlia Marina Alia 30,000 22,500 8,000 60,500 Current account: Nazlia 20,000 12,500 (20.000) Marina Alia 12,500 Non-current Liability Loan - Nazlia 10,000 83 000 Upon dissolution, the following took place: 1. The land was sold for RMB0,000 (market value). 2. Nazlia took over the office building for RM9,000. 3. The partnership owned two cars, one car was taken over by Nazlia at RM12,500 (net book value RM15,000) and the other one was sold at RM7,500. 4. Marina took over the inventory in hand at a discount of 10%. 5. All debtors settled their debts except for RM1,000 which the partners considered as bad debts. 6. They paid RM250 in legal fees arising from the dissolution.
Statement of financial position as at 30 June 2021 Provision for depreciation Costs (RM) Net Book Value (RM) Non-Current Assets Freehold land (RM) 50,000 50,000 18,000 37,500 105,500 Office building 5,000 15,000 20,000 13,000 22,500 85 500 Motor vehicle Current Assets Inventory Accounts receivable 1,500 6,000 7,500 Current Liabilities Accounts payable Bank overdraft 4,000 6,000 2.500 83.000 (10,000) Financed by: Capital account: Nazlia Marina Alia 30,000 22,500 8,000 60,500 Current account: Nazlia 20,000 12,500 (20.000) Marina Alia 12,500 Non-current Liability Loan - Nazlia 10,000 83 000 Upon dissolution, the following took place: 1. The land was sold for RMB0,000 (market value). 2. Nazlia took over the office building for RM9,000. 3. The partnership owned two cars, one car was taken over by Nazlia at RM12,500 (net book value RM15,000) and the other one was sold at RM7,500. 4. Marina took over the inventory in hand at a discount of 10%. 5. All debtors settled their debts except for RM1,000 which the partners considered as bad debts. 6. They paid RM250 in legal fees arising from the dissolution.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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ACD 10403-TUTORIAL
7. The creditors agreed to accept RM3,800 as full payment for the amount due to them
and the loan from Nazlia was fully settled.
8. All receipts and payments were made through the bank account and all the partners
settled their accounts except for Alia who was declared insolvent. She only
managed to pay RM500 and the deficiency in her capital account was borne by the
other solvent partners according to the Garner versus Murray rule.
DISSOLUTION OF PARTNERSHIP
QUESTION 1
Nazlia, Marina and Alia have been in a partnership for a number of years sharing profit in the
ratio of 2 :2:1. Due to some financial problems, the partnership had to be dissolved on 1
July 2021. The statement of financial position of the business as at 30 June 20 is as follows.
Required:
Nazlia, Marina and Alia
a) Prepare Realisation account.
b) Prepare Partners' capital account (calculate to the nearest ringgit).
c) Prepare Bank account.
Statement of financial position as at 30 June 2021
Provision for
Net Book
Costs
(RM)
depreciation
(RM)
Value
(RM)
50,000
Non-Current Assets
50,000
18,000
37,500
105,500
Freehold land
QUESTION 2
Office building
5,000
15,000
13,000
Motor vehicle
22,500
85,500
Xuan, Yuan and Zuan Associates were partnership for many years sharing profits and losses
in the ratio 3:2:1. They make up their accounts to 30 June each year. The balance sheet of
the partnership as at 30 June 2021 was as follows:
20,000
Current Assets
Inventory
Accounts receivable
1,500
Xuan, Yuan and Zuan Associates
Statement of Financial Position as at 30 June 2021
6,000
7,500
RM
RM
RM
Current Liabilities
Non-current assets
Accounts payable
Bank overdraft
4,000
6,000
Land and Building
Fixtures and Fitting at cost
Less: Accumulated depreciation
Motor Vehicles
Less: Accumulated depreciation
124,000
(10,000)
2,500
24,000
(14,400)
48,000
(36,000)
83,000
9,600
Financed by :
Capital account:
Nazlia
12,000
145,600
30,000
Current assets
Marina
22,500
Inventory
Debtors
Less: Provision for doubtful debts
18,400
Alia
8.000
60,500
33,600
(800)
32,800
1,600
16,000
68,800
Prepayment
Bank
Current account:
Nazlia
20,000
12,500
(20,000)
Marina
Current liabilities
Alia
12,500
Creditors
Accruals
12,000
2,400
54,400
200,000
(14,400)
Non-current Liability
Financed by:
Capital accounts:
Xuan
Yuan
Loan - Nazlia
10,000
83.000
72,000
44,000
44,000
Upon dissolution, the following took place:
1. The land was sold for RM80,000 (market value).
2. Nazlia took over the office building for RM9,000.
3. The partnership owned two cars, one car was taken over by Nazlia at RM12,500
(net book value RM15,000) and the other one was sold at RM7,500.
4. Marina took over the inventory in hand at a discount of 10%.
5. All debtors settled their debts except for RM1,000 which the partners considered as
bad debts.
6. They paid RM250 in legal fees arising from the dissolution.
Zuan
160,000
Current accounts:
Xuan
19,200
8,000
6,400
Yuan
Zuan
Loan from Xuan (8% interest per annum)
33,600
6,400
200,000
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ACD 10403-TUTORIAL DISSOLUTION OF PARTNERSHIP Q1 Q2
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On 30 September 2021, Xuan, Yuan and Zuan decided to dissolve their partnership. In the
period from July to 30 September 2021, the following transactions related to the dissolution
resulted:
1.
Land and Building were sold for RM160,000.
Fixtures and Fitting was disposed at RM4,000.
Xuan agreed to take over one of the motor vehicles at the value of RM3,200
the remaining motor vehicles being sold at RM8,000.
Half of the inventory were sold for RM8,000 and another half were taken over
by Yuan at RM6,400.
The debtors, except for debts of RM1,600, were settled their debts in full.
Refund of RM1,200 from the prepayments were received.
After some negotiation with the creditors, the partnership only paid 95% of the
creditors to full settlement of its debts.
2.
3.
4.
5.
6.
7.
8.
Professional charges relating to the dissolution of RM800 was paid.
The partnership settled all of the accrued expenses.
It was agreed that loan from Xuan of RM6,400 should be paid to him plus the
interest accrued to him since 30 June 2021.
The partner's current accounts were to be closed and any balances on them
as at 30 September 2021 to be transferred to the respective capital accounts.
9.
10.
11.
Required:
Prepare the following accounts showing the dissolution of the partnership:
a) Realisation accounts;
b) Partners' capital accounts;
c) Bank account
13
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