Dissolution of Partnership

QUESTION 3 (15 marks)

Lionel, Richie and Sally are in partnership and share profit and losses in the ratio 3:2:1. On 30 June 2012, the following statement of financial position was prepared:

Lionel, Richie and Sally Partnership
Statement of Financial Position as at 30 September 2012 N$

ASSETS:
Land and buildings 300 000
Furniture 50 000
Vehicles 200 000
Goodwill 42 000

Current assets:
Inventory 25 000
Receivables 21 000
Bank 43 000
Current account: Richie 28 000
Total assets 709 000

EQUITY AND LIABILITIES:

Capital:
Lionel 277 000
Richie 188 000
Sally 109 000
Current accounts:
Lionel 44 000
Sally 41 000
Current liabilities:
Loan from Richie 17 000
Payables33 000
Total equity and liabilities 709 000
The partners decided to terminate their activities and dissolve the partnership on 30 September 2012. For this purpose, they agreed as follows:
Assets will be sold as soon as good prices can be obtained. Repayments of the interest of partners will be made as soon as cash is available, but in such a way that will not be expected from any partner to pay any money back at a later stage.
Before any repayment of equity is done, the loan from Richie has to be repaid immediately and then the payables. The assets are realised as follows:

Oct 4 Receivables 21 000
Inventories 14 000
8 Furnitures 54 000
9 Vehicles 180 000
14 Land and buildings 309 000

YOU ARE REQUIRED TO:

  1. Calculate the excessive equity over profit-sharing ratio. (15 marks)
asked May 3, 2016 in Partnership-Dissolution of a Partnership Firm by DavidMwale (7 points) 1,007 views

1 Answer

0 votes

In case of any doubt, please don't hesitate to discuss further.

answered May 7, 2016 by jbsclasses (3,971 points)
...