At the end of year three the partners decided to dissolve the partnership business. They shared profits and losses in the ratios 3:2:1 respectively. The statement of financial position of the partnership immediately before dissolutions is shown in Table 2

Assets $

Premises 40 000

Furniture 10 800

Motor vehicles 11 600

Inventory 17 400

Trade Receivables 24 400

Cash 700

104 900

Equity and Liabilities

Capital Chiedza 30 000

Rutendo 20 000

Chenai 10 000

60 000

Current accounts

Chiedza 2 950(credit)

Rutendo 2 420 (credit)

Chenai (1 170(debit)

4 200

Non Current Liabilities

4 % Loan : Chiedza 6 000

Current Liabilities

Trade Payables 27 400

Bank overdraft 7 300

34 700 104 900

Notes

i. Some of the assets were sold as follows

$

Premises 41 600

Furniture 4 700

Motor vehicles 3 400

Inventory 16 200

ii. The partners took over the assets not sold as follows

Assets Value$ Partner

Furniture 4 000 Chiedza

Motor vehicles 4 700 Rutendo

Furniture 1 000 Chenai

Inventory 400 Chenai

iii. Trade Receivables owing $16 000 paid $15 040 in full settlement. Chiedza will collect the outstanding debts subject to a provision of 10% for the possible bad debts

iv. Trade payables amounts of $18 000 were paid $17 100 in full settlement. The balance due to the remaining trade payables was to be paid in due course

v. Chiedza was paid the loan plus the interest due

vi. The dissolution expenses amounted to $660

Figures should be rounded off to the nearest dollar

Required

Prepare the

i. Relisation account [10 marks]

ii. Partners’ capital accounts in columnar form [10 marks]

iii. Bank account [5 marks]