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 

Answer rating: 100% (QA)

1 Realization account For this requirement we need to transfer all the assets and outside liabilities to this account Next we need to record the cash ... View the full answer