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Deck 28: Partnership Dissolution and Conversion to Company Status
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Question
The partners decide to dissolve the partnership. They are offered £40,000 for the building and the fixtures
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What is the profit/ (loss) on realisation in the books of the partnership?
A) £(10,500)
B) £(10,000)
C) £(7,000)
D) £7,000
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What is the profit/ (loss) on realisation in the books of the partnership?
A) £(10,500)
B) £(10,000)
C) £(7,000)
D) £7,000
Question
The partners decide to dissolve the partnership. They are offered £40,000 for the building and the fixtures
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What payment/receipt from/to Aoife is required to close her capital account on the dissolution of the partnership?
A) Receipt from Aoife of £25,500
B) Payment to Aoife of £17,500
C) Payment to Aoife of £20,000
D) Payment to Aoife of £25,500
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What payment/receipt from/to Aoife is required to close her capital account on the dissolution of the partnership?
A) Receipt from Aoife of £25,500
B) Payment to Aoife of £17,500
C) Payment to Aoife of £20,000
D) Payment to Aoife of £25,500
Question
The partners decide to dissolve the partnership. They are offered £40,000 for the building and the fixtures
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What payment/receipt from/to Declan is required to close his capital account on the dissolution of the partnership?
A) Receipt from Declan of £10,000
B) Payment to Declan of £10,000
C) Payment to Declan of £12,000
D) Payment to Declan of £17,000
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What payment/receipt from/to Declan is required to close his capital account on the dissolution of the partnership?
A) Receipt from Declan of £10,000
B) Payment to Declan of £10,000
C) Payment to Declan of £12,000
D) Payment to Declan of £17,000
Question
The partners decide to dissolve the partnership. They are offered £40,000 for the building and the fixtures
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What is the balance on the bank account, before the partners settle their capital account balances assuming all other transactions involving the bank have taken place?
A) A debit balance of £35,300
B) A debit balance of £35,800
C) A debit balance of £38,000
D) A credit balance of £38,000
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What is the balance on the bank account, before the partners settle their capital account balances assuming all other transactions involving the bank have taken place?
A) A debit balance of £35,300
B) A debit balance of £35,800
C) A debit balance of £38,000
D) A credit balance of £38,000
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Deck 28: Partnership Dissolution and Conversion to Company Status
1
The partners decide to dissolve the partnership. They are offered £40,000 for the building and the fixtures
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What is the profit/ (loss) on realisation in the books of the partnership?
A) £(10,500)
B) £(10,000)
C) £(7,000)
D) £7,000
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What is the profit/ (loss) on realisation in the books of the partnership?
A) £(10,500)
B) £(10,000)
C) £(7,000)
D) £7,000
£(10,000)
2
The partners decide to dissolve the partnership. They are offered £40,000 for the building and the fixtures
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What payment/receipt from/to Aoife is required to close her capital account on the dissolution of the partnership?
A) Receipt from Aoife of £25,500
B) Payment to Aoife of £17,500
C) Payment to Aoife of £20,000
D) Payment to Aoife of £25,500
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What payment/receipt from/to Aoife is required to close her capital account on the dissolution of the partnership?
A) Receipt from Aoife of £25,500
B) Payment to Aoife of £17,500
C) Payment to Aoife of £20,000
D) Payment to Aoife of £25,500
Payment to Aoife of £25,500
3
The partners decide to dissolve the partnership. They are offered £40,000 for the building and the fixtures
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What payment/receipt from/to Declan is required to close his capital account on the dissolution of the partnership?
A) Receipt from Declan of £10,000
B) Payment to Declan of £10,000
C) Payment to Declan of £12,000
D) Payment to Declan of £17,000
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What payment/receipt from/to Declan is required to close his capital account on the dissolution of the partnership?
A) Receipt from Declan of £10,000
B) Payment to Declan of £10,000
C) Payment to Declan of £12,000
D) Payment to Declan of £17,000
Payment to Declan of £10,000
4
The partners decide to dissolve the partnership. They are offered £40,000 for the building and the fixtures
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What is the balance on the bank account, before the partners settle their capital account balances assuming all other transactions involving the bank have taken place?
A) A debit balance of £35,300
B) A debit balance of £35,800
C) A debit balance of £38,000
D) A credit balance of £38,000
and fittings. Aoife agrees to take over one car at a value of £2,500 and Declan takes over the other
remaining car at a value of £2,000. It turns out that £2,500 of the trade receivable are bad and the sundry
payables have promised to give the partners, on average 10% discount on settlement of the debt owed to
them if it is paid for on the 1 January 20X2. The loan will be paid off in full on that date. All the monies
in and out will occur on the 1 January 20X2. The dissolution expenses amount to £2,200.
Questions 1 to 4 should be answered from this following information
Aoife and Declan are in partnership, sharing profits equally. Their draft statement of financial position is
as follows:
-What is the balance on the bank account, before the partners settle their capital account balances assuming all other transactions involving the bank have taken place?
A) A debit balance of £35,300
B) A debit balance of £35,800
C) A debit balance of £38,000
D) A credit balance of £38,000
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5
When there is a credit balance brought down on the realisation account, this means that:
A) There is a loss on realisation
B) There is a profit on realisation
C) The company owes the partnership more money
D) The partnership should give money back to the company
A) There is a loss on realisation
B) There is a profit on realisation
C) The company owes the partnership more money
D) The partnership should give money back to the company
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6
The partnership is being dissolved and converted into a company. The realisation account after all the
Assets and liabilities were adjusted to their fair value and the consideration posted has a credit balance
Carried down of £10,000. Assuming there are two partners X and Y, sharing the profits and losses
Equally.
What is the double entry to clear the realisation account?
A) Dr. Realisation account £10,000 Cr. Current account X £5,000
Cr) Current account Y £5,000
B) Dr. Realisation account £10,000 Cr. Capital account X £5,000
Cr) Capital account Y £5,000
C) Dr. Current account X £5,000 Dr. Current account Y £5,000
Cr) Realisation account £10,000
D) Dr. Capital account X £5,000 Dr. Capital account Y £5,000
Cr) Realisation account £10,000
Assets and liabilities were adjusted to their fair value and the consideration posted has a credit balance
Carried down of £10,000. Assuming there are two partners X and Y, sharing the profits and losses
Equally.
What is the double entry to clear the realisation account?
A) Dr. Realisation account £10,000 Cr. Current account X £5,000
Cr) Current account Y £5,000
B) Dr. Realisation account £10,000 Cr. Capital account X £5,000
Cr) Capital account Y £5,000
C) Dr. Current account X £5,000 Dr. Current account Y £5,000
Cr) Realisation account £10,000
D) Dr. Capital account X £5,000 Dr. Capital account Y £5,000
Cr) Realisation account £10,000
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7
A partnership has reported profit for the year of £258,000 per the income statement. The partners had expected to make £300,000 so are not pleased with performance. The partnership has three partners (Simon, Mary and Anna). It is estimated that these partners would have earned the following amounts (Simon £90,000, Mary £80,000, Anna £65,000) had they been working elsewhere. The balance on Simon's capital account is £400,000, Mary's balance is £200,000 and Anna's is £300,000. The current rate of interest being earned on government gilts is 10%.
Given this information, what is the partnership abnormal profit/ (loss) for the year?
A) Abnormal loss of £42,000
B) Abnormal loss of £67,000
C) Abnormal profit of £23,000
D) Abnormal profit of £168,000
Given this information, what is the partnership abnormal profit/ (loss) for the year?
A) Abnormal loss of £42,000
B) Abnormal loss of £67,000
C) Abnormal profit of £23,000
D) Abnormal profit of £168,000
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8
In a partnership the double entry to record initial realisation expenses not paid is as follows:
A) Dr. Bank account Cr. Realisation account
B) Dr. Partners capital accounts in their profit sharing ratio Cr. Realisation account
C) Dr. Realisation account Cr. Accruals
D) Dr. Realisation account Cr. Bank account
A) Dr. Bank account Cr. Realisation account
B) Dr. Partners capital accounts in their profit sharing ratio Cr. Realisation account
C) Dr. Realisation account Cr. Accruals
D) Dr. Realisation account Cr. Bank account
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9
In a partnership the double entry to record realisation expenses paid is as follows:
A) Dr. Bank account Cr. Realisation account
B) Dr. Partners capital accounts in their profit sharing ratio Cr. Realisation account
C) Dr. Realisation account Cr. Accruals
D) Dr. Realisation account Cr. Bank account
A) Dr. Bank account Cr. Realisation account
B) Dr. Partners capital accounts in their profit sharing ratio Cr. Realisation account
C) Dr. Realisation account Cr. Accruals
D) Dr. Realisation account Cr. Bank account
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10
After receipt of all monies on the dissolution of the partnership the realisation account has a debit
Balance carried down of £8,000. Assuming there are two partners X and Y, sharing the profits and
Losses equally.
What is the double entry to clear the revaluation account?
A) Dr. Realisation account £8,000 Cr. Current account X £4,000
Cr) Current account Y £4,000
B) Dr. Realisation account £8,000 Cr. Capital account X £4,000
Cr) Capital account Y £4,000
C) Dr. Current account X £4,000 Dr. Current account Y £4,000
Cr) Realisation account £8,000
D) Dr. Capital account X £4,000 Dr. Capital account Y £4,000
Cr) Realisation account £8,000
Balance carried down of £8,000. Assuming there are two partners X and Y, sharing the profits and
Losses equally.
What is the double entry to clear the revaluation account?
A) Dr. Realisation account £8,000 Cr. Current account X £4,000
Cr) Current account Y £4,000
B) Dr. Realisation account £8,000 Cr. Capital account X £4,000
Cr) Capital account Y £4,000
C) Dr. Current account X £4,000 Dr. Current account Y £4,000
Cr) Realisation account £8,000
D) Dr. Capital account X £4,000 Dr. Capital account Y £4,000
Cr) Realisation account £8,000
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11
When there is a credit balance carried down on the realisation account, this means that:
A) There is a loss on realisation
B) There is a profit on realisation
C) The company owes the partnership more money
D) The partnership should give money back to the company
A) There is a loss on realisation
B) There is a profit on realisation
C) The company owes the partnership more money
D) The partnership should give money back to the company
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12
In the books of the partnership, how is the consideration received for the partnership treated.
What is the double entry?
A) Dr. Company personal account Cr. Realisation account
B) Dr. Company personal account Cr. Bank
C) Dr. Bank Dr. Company personal account
D) Dr. Realisation account Dr. Company personal account
What is the double entry?
A) Dr. Company personal account Cr. Realisation account
B) Dr. Company personal account Cr. Bank
C) Dr. Bank Dr. Company personal account
D) Dr. Realisation account Dr. Company personal account
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13
What is the main purpose of a purchase of consideration account?
A) To determine the value of goodwill
B) To correctly value the assets and liabilities of the entity
C) To administer the whole start-up process from one ledger
D) To calculate what the purchase consideration should be
A) To determine the value of goodwill
B) To correctly value the assets and liabilities of the entity
C) To administer the whole start-up process from one ledger
D) To calculate what the purchase consideration should be
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14
In a company's statement of financial position goodwill is classed as:
A) A tangible asset
B) An intangible asset
C) A current asset
D) A wasting asset
A) A tangible asset
B) An intangible asset
C) A current asset
D) A wasting asset
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