3.1. Preparation of financial statements
A subsection of Accounting, 9706, through 3. Financial accounting (A Level)
Listing 10 of 678 questions
L, M and N were in partnership sharing profit and losses in the ratio 4 : 3 : 1 respectively. N retired from the partnership on 31 October 2016 when the balance on her capital account was $142 000. Goodwill was valued at $54 000 and would not remain in the books of account. Non-current assets were revalued from $180 000 to $144 000. N was paid all amounts due to her from the business bank account. How much was N paid on retirement from the partnership?
9706_s17_qp_11
MCQ
2017
Paper 1, Variant 1
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Ali, Bharti and Chan were in partnership sharing profit and losses in the ratio 3 : 2 : 1. Bharti retired from the partnership on 30 June 2016. The following were the balances available at 30 June 2016. Ali ($) Bharti ($) Chan ($) capital accounts 60 000 Cr 40 000 Cr 20 000 Cr current accounts 18 650 Cr 6 100 Dr 8 950 Cr On her retirement, Bharti retained a partnership motor vehicle at an agreed valuation of $4000. Goodwill was valued at $39 000. How much was payable to Bharti on her retirement?
9706_s17_qp_12
MCQ
2017
Paper 1, Variant 2
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Amit and Binu are in partnership sharing profits and losses in the ratio 3 : 2 respectively. The partnership statement of financial position at 30 June 2016 is as follows: The partners agreed to dissolve the partnership on 30 June 2016. This resulted in the following: Trade receivables realised $12 600. Trade payables were settled in full for $9800. Inventory was sold for $15 000. The machinery was sold for $35 000. Amit agreed to take over the premises at an agreed valuation of $30 000. Binu agreed to take over one of the motor vehicles at an agreed valuation of $6500. The remaining motor vehicle was sold for $12 000. The costs of dissolution were $6300. $ $ Non-current assets Premises 40 000 Machinery 32 000 Motor vehicles 18 000 90 000 Current assets Inventory 18 600 Trade receivables 13 100 31 700 Total assets 121 700 Capital accounts Amit 30 000 Binu 20 000 50 000 Current accounts Amit 33 200 Binu 18 400 51 600 101 600 Current liabilities Trade payables 9 800 Bank overdraft 10 300 20 100 Total capital and liabilities 121 700 REQUIRED Prepare the realisation account on the dissolution of the partnership. Realisation account Prepare a statement to show how much Binu will receive when the partnership bank account is closed. State two reasons why a partnership may be dissolved. Explain what would happen if the dissolution of the partnership resulted in a debit balance on a partner’s capital account. [Total 15]
9706_s17_qp_21
THEORY
2017
Paper 2, Variant 1
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Ramadhin, Statham and Trueman formed a partnership on 1 January 2016. The draft profit for the year ended 31 December 2016 before appropriation was $232 000, but did not account for the following: A non-current asset costing $20 000 was purchased on 1 July 2016. No depreciation has been charged on this asset. The partnership’s policy is to charge depreciation at 20% using the reducing balance method on all assets. A full year’s depreciation is charged in the year of purchase and none in the year of disposal. Some inventory which had been valued at a cost of $15 000 had been damaged. The mark-up on inventory is 100%. The damaged inventory could only be sold for 20% of the normal selling price. REQUIRED Calculate the adjusted profit for the year ended 31 December 2016 before appropriation. Additional information On 1 January 2016 Ramadhin, Statham and Trueman had introduced capital of $600 000 in their agreed profit and loss sharing ratio of 3 : 2 : 1 respectively. The other terms of the partnership agreement were as follows: Interest of 6% per annum is to be paid on the opening capital account balances. Each partner is to take drawings of $10 000 per annum. Interest is to be charged on total annual drawings at 4% per annum. Trueman is to receive a salary of $1000 per month. REQUIRED Prepare the partnership appropriation account for the year ended 31 December 2016. Explain why partners may value goodwill and revalue the assets when one partner retires. Additional information Trueman received an offer of employment which would provide him with a gross annual income of $50 000. He decided to accept the offer and leave the partnership on 31 December 2016. At that date goodwill was valued at $12 000. It was also agreed that the partnership assets should be revalued at $7500 less than their net book values. Trueman agreed to leave 40% of the balance due to him as a loan to the partnership at an interest rate of 10% per annum. The remainder was paid to him from the business bank account. REQUIRED Prepare a statement showing the amount that Trueman received on leaving the partnership. Assess whether or not Trueman was correct in his decision to leave the partnership. Justify your answer by discussing the financial and non-financial factors involved. Additional information Trueman asks Ramadhin and Statham for an early repayment of his loan to the partnership. REQUIRED Advise the partners whether or not they should make an early repayment. Justify your answer.
9706_s17_qp_23
THEORY
2017
Paper 2, Variant 3
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