Karabo and Moroka were in a partnership and traded as KM Traders. Karabo and Moroka shared...

  

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Karabo and Moroka were in a partnership and traded as KM Traders. Karabo and Moroka shared in the profits or losses of KM Traders in the ratio of 5:4 respectively. Karabo and Moroka decided to admit Queen to the partnership. The new partnership trades as KQM Traders and the profit-sharing ratio between Karabo, Queen and Moroka is 4:2:4 respectively. The following statement of financial position (extract) was prepared (in preparation of the change in the ownership structure) at 28 February 2021, the financial year-end of KM Traders: Moroka Traders Balances as at 28 February 2020: R Furniture and equipment 96,000.00 Inventories 36,000.00 Trade receivables control 24,000.00 Trade payables control Bank (Dr) Capital: Karabo Capital: Moroka 18,000.00 30,000.00 105,000.00 63,000.00 The following appraisals were obtained on 28 February 2021 by KM Traders in the preparation of the change in the ownership structure: 1. Trade receivables control – R24 000. (An allowance for credit losses to the amount of R2 500 should be created.) 2. Inventories - R43 750. 3. Furniture and equipment at market (fair) value - R125 000. After the valuation adjustments, Queen was admitted to the partnership on 1 March 2021. Queen paid R70 000 into the bank account of the partnership for a 20% interest in the net assets (equity) of the new partnership. Which of the following alternatives represents the amount recorded in the Valuation account relating to Inventories and Furniture and equipment in preparation for the admission of Queen as a partner? A. R29 000,00 B. R7 750,00 C. R36 750,00 D. R34 250, 00 Which of the following alternatives is correct for the creation of an allowance for credit losses of R2500,00 in preparation of the change in the ownership structure of the partnership? A. Dr: Valuation account Cr: Allowance for credit losses B. Dr Allowance for credit losses Cr: Trade receivables C. Dr: Trade receivables Cr: Allowance for credit loss D. Dr: Credit Losses Cr: Allowance for credit losses Which alternative is the correct amount recorded for closing off the balancing amount in the valuation account to the capital accounts of Karabo and Moroka according to their profit-sharing ratio? A. Karabo - R19 027,78; Moroka - R16 333,33 B. Karabo - R 20 417,67; Moroka - R16 333,33 C. Karabo - R16 023,77; Moroka - R15 222,22 D. Karabo - R19 027,78; Moroka - R 15 222,22 Which of the following is the correct amount to be recorded as Goodwill in preparation for the admission of Queen? A. R 77 750,00 B. R 112 000,00 C. R 280 000,00 D. R 147 750,00 Which of the following amounts will be recorded for closing off the balances of the equity, liability, and allowance accounts to the transferal account to record the dissolution of the partnership? A. R 132 500,00 B. R 222 750,00 C. R 266 250,00 D. R 300 500,00 Karabo and Moroka were in a partnership and traded as KM Traders. Karabo and Moroka shared in the profits or losses of KM Traders in the ratio of 5:4 respectively. Karabo and Moroka decided to admit Queen to the partnership. The new partnership trades as KQM Traders and the profit-sharing ratio between Karabo, Queen and Moroka is 4:2:4 respectively. The following statement of financial position (extract) was prepared (in preparation of the change in the ownership structure) at 28 February 2021, the financial year-end of KM Traders: Moroka Traders Balances as at 28 February 2020: R Furniture and equipment 96,000.00 Inventories 36,000.00 Trade receivables control 24,000.00 Trade payables control Bank (Dr) Capital: Karabo Capital: Moroka 18,000.00 30,000.00 105,000.00 63,000.00 The following appraisals were obtained on 28 February 2021 by KM Traders in the preparation of the change in the ownership structure: 1. Trade receivables control – R24 000. (An allowance for credit losses to the amount of R2 500 should be created.) 2. Inventories - R43 750. 3. Furniture and equipment at market (fair) value - R125 000. After the valuation adjustments, Queen was admitted to the partnership on 1 March 2021. Queen paid R70 000 into the bank account of the partnership for a 20% interest in the net assets (equity) of the new partnership. Which of the following alternatives represents the amount recorded in the Valuation account relating to Inventories and Furniture and equipment in preparation for the admission of Queen as a partner? A. R29 000,00 B. R7 750,00 C. R36 750,00 D. R34 250, 00 Which of the following alternatives is correct for the creation of an allowance for credit losses of R2500,00 in preparation of the change in the ownership structure of the partnership? A. Dr: Valuation account Cr: Allowance for credit losses B. Dr Allowance for credit losses Cr: Trade receivables C. Dr: Trade receivables Cr: Allowance for credit loss D. Dr: Credit Losses Cr: Allowance for credit losses Which alternative is the correct amount recorded for closing off the balancing amount in the valuation account to the capital accounts of Karabo and Moroka according to their profit-sharing ratio? A. Karabo - R19 027,78; Moroka - R16 333,33 B. Karabo - R 20 417,67; Moroka - R16 333,33 C. Karabo - R16 023,77; Moroka - R15 222,22 D. Karabo - R19 027,78; Moroka - R 15 222,22 Which of the following is the correct amount to be recorded as Goodwill in preparation for the admission of Queen? A. R 77 750,00 B. R 112 000,00 C. R 280 000,00 D. R 147 750,00 Which of the following amounts will be recorded for closing off the balances of the equity, liability, and allowance accounts to the transferal account to record the dissolution of the partnership? A. R 132 500,00 B. R 222 750,00 C. R 266 250,00 D. R 300 500,00

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11 Valuaton A ccount to foven hories t Equipmont Furnitine t rela... View the full answer