ACT102- Introduction to Accounting Second Semester, 2020 -Take Home Assignment Total Marks: 20…

ACT102- Introduction to Accounting Second Semester, 2020 -Take Home Assignment Total Marks: 20 Marks. You must use MS Excel to complete this assignment. Due Date: 2 October 2020. Question No. 1 MST is a partnership owned by M, S and T. The partners’ profit and loss sharing agreement is 1:3:4 respectively. The adjusted trail balance of the partnership at 30th November 2019 is given below. Account Title Dr. $ Cr. $ Cash 9,000 Inventory 10,000 Building 200,000 Accumulated depreciation –Building 60,000 Accounts Payable 7,000 Mortgage Payable 50,000 M Capital 60,000 S Capital 35,000 T Capital 27,000 M Drawings 7,000 S Drawings 4,000 T Drawings 1,000 Sales Revenue 100,000 Cost of Sales 74,000 Salary Expense 22,000 Rent Expense 12,000 Totals 339,000 339,000 Requirements: 1. Prepare an Income Statement, Statement of Changes in Equity, Balance Sheet for the month ended 30.11.2019. Use a separate columnar for each partner in Statement of Changes in Equity. 2. Compute and Interpret the following ratios based on number 1 above. GP Ratio, NP Ratio, Return on Capital Employed (ROCE) for the MST Partnership, Current Ratio, Quick-Assets Ratio, Debt- Equity Ratio. Indicate the going concern ability and performance of the business for the month of November 2019. 3. Prepare the closing entries for the month ended 30.11.2019. 4. T decides to withdraw from the partnership on 01.12.2019. She agrees to accept all of the inventory and all of the cash in exchange for her equity interest in the partnership. 5. Immediately after T’s withdrawal, M and S decide to liquidate the partnership. They sell the building for $108,000 and then they pay the liabilities and distribute the cash to complete the liquidation. Journalize these liquidation entries. (Total Marks: 12 Marks). Question 2- Liquidation of a partnership The partnership of E, K and C has experienced operating losses for three consecutive years. The partners –who have shared profits and losses in the ratio of E, 15%: K, 60%: and C, 25%- are liquidating the business. They asked you to analyze the effects of liquidation. They present the following balance sheet as at 31.12.2019. E, K, C Partnerships Balance Sheet as at 31 December 2019 Description Dr ($) Cr ($) Assets: Cash 14,000 Non-cash assets 160,000 Liabilities: Accounts payable 65,000 Patterns’ equity E Capital 21,000 K Capital 69,000 C Capital 19,000 Total 174,000 174,000 Requirements: 1. Prepare a summary of liquidation transactions (as illustrated in exhibits 13-6, 13-7 and 13-8, as appropriate. These exhibits are given in the prescribed text book pages 586, 587 and 588) for each of the following situations a) The non-cash assets are sold for $ 130,000 b) The non-assets are sold for $ 60,000 and any partner with capital deficiency pays cash to the partnership to cover the deficiency. c) The non-cash assets are sold for $ 60,000 and any partner with capital deficiency is personally bankrupt 2. Journalize the liquidation transactions in above three situations (Total Marks: 8 Marks).  

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