Question

Dr. Shikongo and Dr. Sauer were in a partnership and traded together for some time. On 01 July

2016 Dr. Sauer decided to withdraw from the partnership to start her own practice. Their

abridged statement of financial position as at 30 June 2016 was:

ASSETS N$ EQUITY & LIABILITIES N$

Property, Plant & Equipment (PPE) 152,500.00 Capital: Dr. Shikongo 76,200.00

Accumulated depreciation:PPE (20,000.00) Capital: Dr. Sauer 65,200.00

Vehicles 65,000.00 Current account: Dr. Shikongo 21,750.00

Accumulated depreciation:Vehicle (25,000.00) Current account: Dr. Sauer 27,250.00

Trade receivable 27,600.00 Loan: Deutche Bank 31,000.00

Allowance for bad debts (3,500.00) Trade payable 17,500.00

Cash 42,300.00

238,900.00 238,900.00

Transactions for July 2016:

1. Trade receivable who owed N$ 20, 050.00 settled their accounts in full.

2. The trades payable were settled in full.

3. A vehicle was sold for N$ 19, 500.00 with a carrying value of N$ 25, 000.00.

4. A vehicle was sold for N$ 15, 000.00 with a carrying value of N$ 6, 000.00.

5. The loan from Deutche Bank was repaid in full.

6. The equipment was disposed of for N$ 50, 000.00

7. Land and building was sold by public auction for N$ 70, 000.00

You are required to:

1. Do the journal entries to record Dr. Sauers’ withdrawal from the partnership. ( 12

Marks)

2. Prepare the following accounts to show the liquidation and dissolution of Dr. Shikongo

& Dr. Sauer Partnership:

a. Realisation account. ( 6 Marks)

b. Capital accounts of the partners (in a columnar form) in the general ledger. ( 8

Marks)

3. Mention and discuss three factors that may lead to the dissolution of a partnership. ( 6

Marks)

ASSETS N$ EQUITY & LIABILITIES N$

Property, Plant & Equipment (PPE) 152,500.00 Capital: Dr. Shikongo 76,200.00

Accumulated depreciation:PPE (20,000.00) Capital: Dr. Sauer 65,200.00

Vehicles 65,000.00 Current account: Dr. Shikongo 21,750.00

Accumulated depreciation:Vehicle (25,000.00) Current account: Dr. Sauer 27,250.00

Trade receivable 27,600.00 Loan: Deutche Bank 31,000.00

Allowance for bad debts (3,500.00) Trade payable 17,500.00

Cash 42,300.00

238,900.00 238,900.00

Answer 1

1a
		Debit	Credit
	Cash account	20050
	Realisation Account	11050
	Allowance for bad debts		3500
	Trade Receivable		27600
	Trade Payables	17500
	CAsh A/C		17500
	CAsh A/C	19500
	REalisation Account	5500
	Vehicles		25000
	CAsh A/C	15000
	Realization Account		9000
	Vehicles		6000
	Loan dutch bank	31000
	CAsh A/C		31000
	CAsh A/C	50000
	Equipment a/c		50000
	CAsh A/C	70000
	REalisation Account	12500
	Land & plant and machinery		82500
	Realisation Account	9000
	Vehicles		9000
	Shikongo Current a/c	21750
	REalisation Account		21750
	Sauer Current A/c	27250
	REalisation Account		27250
	rEalisation Account	26950
	Shikongo Capital 50%		13475
	Sauer Capital 50%		13475
	Shikongo	89675
	Sauer	78675
	CAsh A/C		168350
	realisation Account
	trade receivables loss	11050
	loss on sale of vehicles	5500
	Profit on sale of second vehicle	9000
	Loss on sale of P&m	-12500
	Vehicle closing balance	9000
	SHIKONGO current capital	-21750
	Sauer Current A/c	-27250
	realisation Account total	-26950
	CAsh A/C
	Cash	42300
	Trade receivable realisation	20050
	trade payable payment	-17500
	Sale of vehicle	19500
	Sale of second vehicle	15000
	Loan repayment	-31000
	Equipment disposed off	50000
	Land & plant and machinery	70000
	Cash account total	168350
	Capital
	Shikongo	76200
	Realisation Account	13475
	TOTAL	89675
	Sauer	65200
	Realisation Account	13475
	TOTAL	78675