ZIMSEC O Level Principles of Accounting: 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 |
|||
| $ | 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 Principles of Accounts Notes.
