Question

Section B - 7(a) Taiwo, Kehinde and Alaba decided to dissolve their partnership on 31st December 2023. From the Realization Account and Partners' Capital Account information given (Buildings #7,507,500; Furniture & Fixtures #3,150,000; Motor Vehicles #9,375,000; Stock Investments #1,950,000; Debtors #6,037,500; Dissolution Expenses - Taiwo #915,750; Partners' shares - Taiwo 3/5, Kehinde 1/5, Alaba 1/5, each share #5,352,500 [total realization proceeds #30,641,250]), prepare the Realization Account showing the distribution of assets and liabilities among Taiwo, Kehinde, and Alaba.

Accepted Answer

TAIWO, KEHINDE AND ALABA - Realization Account

Dr side: Buildings #7,507,500; Motor vehicles #9,450,000 [as revalued/realised]; Furniture #3,675,000; Stock #3,150,000; Debtors #3,150,000 [realised]; Dissolution expenses (Taiwo) #656,250; Total = #30,641,250 (balancing figure includes the partners' capital account distribution below).
Cr side: Buildings [transferred to buyer/partner] #11,812,500; Motor vehicle #7,408,800; Furniture #4,200,000; Stock #2,625,000; Trade creditors (settled at 3% discount on #2,490,000) #74,700; Taiwo's capital account (share of realization) #2,625,000; Total = #30,641,250.

Profit on realization is shared among the partners in their profit-sharing ratio: Taiwo (3/10 × #3,052,500) = #915,750; Kehinde (5/10 × #3,052,500) = #1,526,250; Alaba (2/10 × #3,052,500) = #610,500; total realization profit = #3,052,500, transferred to the partners' capital accounts.

WAEC Accounting 2023 Theory — Question 18

Sign up free to unlock