Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Accounting for Partnerships: Partnership Dissolution Example
- We looked at the basics of partnership dissolution here
- We also posted an example question here
- Now we will present the solution to that question
The realisation account
$ | Realisation Account | $ | $ | ||
Details | Amount | Details | Amount | ||
Fixed Assets | 14 000 | Bank: Fixed Assets | 8 000 | ||
Inventory | 5 000 | Fixed Assets: Nkosi | 7 000 | ||
Receivables (Debtors) | 21 000 | Bank: Inventory | 4 000 | ||
Bank: Dissolution costs | 800 | Bank: Debtors | 3 000 | ||
discount Received | 500 | ||||
Loss: Nkosi | 9 150 | ||||
Xo | 6 100 | ||||
Zack | 3 050 | ||||
18 300 | |||||
40 800 | 40 800 |
- Debtors and Receivables are just one and the same thing
- Creditors can also be referred to as Accounts Payable
- Fixed Assets can also be called Non-current Assets
Nkosi | Xo | Zack | Capital Accounts | Nkosi | Xo | Zack | ||
Details | $ | $ | $ | Details | $ | $ | $ | |
Fixed Assets taken over | 7 000 | Balances b/d | 4 000 | 4 000 | 2 000 | |||
Loss shares | 9 150 | 6 100 | 3 050 | Shared Deficiency: Nkosi | 525 | |||
Deficiency | 525 | 525 | Xo | 525 | ||||
Amounts to be settled: Bank | 12 675 | 2 625 | ||||||
16 675 | 6 625 | 3 050 | 16 675 | 6 625 | 3 050 |
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$ | Bank | $ | ||||||
Details | Amount | Details | Amount | |||||
Realisation: Fixed Assets | 8 000 | Balance b/d | 13 000 | |||||
Inventory | 4 000 | Creditors | 16 500 | |||||
Trace Receivables | 3 000 | Realisation costs | 800 | |||||
Capital: Nkosi | 12 675 | |||||||
Xo | 2 625 | |||||||
30 300 | 30 300 | |||||||
- Since there is a deficit the two partners Nkosi and Xo have to fork out money from their own funds to settle the outstanding amount
- In addition to the amount they owe these two partners have to cover Zack’s liability which they share according to their last known capital rations of 4 000: 4 000
To access more topics go to the Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes.