Refer back to the information stated in Activity 14.11. You are required to convert the books of

Question:

Refer back to the information stated in Activity 14.11. You are required to convert the books of the partnership into those of Foliage Ltd.


Required: 

Set out the Statement of financial position of Foliage Ltd immediately after the conversion to a company.


Data from Activity 14.11:

After preparing their Statement of financial position as shown, Gerenia and Petunia sold their business, as a going concern, to Foliage Ltd, on the basis of the following valuations:

■ Land and buildings at £960,000

■ Motor vehicles at £90,000

■ Receivables subject to an allowance of 10%

■ Goodwill at £150,000.

Foliage Ltd undertook to discharge the purchase consideration as follows:

(i) allotment to partners in their profitsharing ratio of 1,500,000 ordinary shares of £1 each, in Foliage Ltd at 110p each; and

(ii) payment of the balance in cash. Dissolution expenses amounted to £5,000. Gerenia and Petunia have been sharing profits in the ratio 2:1.


Required: 

(a) The Realisation account and 

(b) The partner’s Capital accounts showing the closure of the partnership books.

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Financial Accounting An Introduction

ISBN: 9780273737650

2nd Edition

Authors: Mr Barry Elliott, Mr Augustine Benedict

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