QUESTION 2 22 marks Ryan Racla Randal and Ronel were in par

QUESTION 2 - 22 marks Ryan, Racla, Randal and Ronel were in partnership which relied on imported trading stock form the US. Following the fall of the Namibian Dollar\'s valuc ngainst the US Dollar, the partners decided to liquidnte their husiness following the piecemeal method. The following wns their balance sheet immedintely before the iuidalion Ryan, Raela, Randal and Ronel Partnership Statement of financinl position ns at 29 February 2016 NS 17 400 Sundry Assets Cash Capital Ryan Raela Randal Ronel 2 700 5 000 2 100 2 200 1 000 Loan: R yan Creditors The partnership deed stipulated that profits and losses would be shared in the r 3. ?: 4 2 The assets vere realised as follows: Carrying Amount of Assets Sold Proceeds Loss NS NS NS 2016 8 400 5 400 5 000 1 200 2 000 April May 1 600 400 400 100 300 In March 2016, the creditors were scttled in full. The partncrs roccived cash distributions t the end of cach month in accordance with the guidelines set above Required: (a) Prepare a piecemcal liquidation schedule (20 marks) (b) Show explanatory notes followine the pieceme luidation (2 marks)

Solution

Solution 1 Piecemeal Distribution Schedule Particulars Creditors Ryan\'s loan Ryan capital Racla Capitakl Randal Capital Ronel Capital Amounts due 5000 1000 2700 5000 2100 2200 Amount available in March= (5400+600)=6000 Paid to creditors and remaining to Ryan for his loan 5000 1000 Remaining amount Due 0 0 2700 5000 2100 2200 Amount available in April = 5000 5000 to be distributed among all partners in profit sharing ration = 2:4:1:3 1000 2000 500 1500 Remaining amount due 0 0 1700 3000 1600 700 Amount available in May= 1200 1200 to be distributed among all partners in profit sharing ration = 2:4:1:3 240 480 120 360 Remaining amount due 0 0 1460 2520 1480 340 Amount available in June= 300 300 to be distributed among all partners in profit sharing ration = 2:4:1:3 0 0 60 120 30 90 Remaining amount to be born by all the partners 0 0 1400 2400 1450 250 Total Loss(5500) to be born in profit sharing ratio 1100 2200 550 1650 Amount to be brought by the partners and to be paid 0 0 300 200 900 -1400 Amount brought by Ronel to be paid to Ryan, Racla and Randal Amount to be brought by Ronel 2 In this method, we make payments to outsider first followed by the partners loan and then partners capital. Here, we paid creditors first as we receive maoney by selling assets. After all the assets are sold and payments are made, we are with deficiency of 5500 which is distributed among partner in their profit sharing ratio.