Tim, Rajay, and Jamie who are in partnership sharing profits and losses 2:2:1 decide to dissolve the partnership on 30 September 2016 at which date their Statement of Financial Position was:
Tim, Rajay, and Jamie
|
Non- current Assets Freehold property Equipment Current assets Inventory Trade receivables Cash at bank Financed by: Capital accounts: Tim Rajay Jamie Current accounts: Tim Rajay Jamie Non-current liabilities Loan- Rajay Current liabilities Creditors |
$ 300,000 150,000 80,000 45,000 21,000 390,000 130,000 20,000 7,000 (3,000) 2,000 |
$ 450,000 146,000 596,000 540,000 6,000 20,000 30,000 596,000 |
Notes:
The partners were unable to sell the business as a going concern and disposed of the assets separately for the amounts:
$
Freehold property 310,000
Equipment 48,000
Inventory 29,000
Trade receivables were paid in full and Trade payables gave discounts totaling $1,000. Dissolution expenses totaled $8,000. James is insolvent and therefore unable to make good his debit balance.
Required:
Prepare the closing entries for the following accounts:
A. Realization
B. Capital
C. Bank
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