Mava and Sizwe, are in a partnership, trading as MavaS. The partnership share profits or losses of the partnership in the ratio of 3:2 respectively. Recently they signed a contract with a chain store to supply packed baked products and urgently needed an additional partner to join the partnership. Bam offered to join the partnership.
On 31 December 2020, the following list of balances were extracted from the books of MavaS:
R
Capital: Mave...................................................................... 181 050
Capital: Sizwe ...................................................................... 123 000
Current account Mava (Cr) .................................................... 18 750
Current account Sizwe (Dr) ................................................... 24 300
Revaluation surplus.............................................................. 37 500
Vehicle at carrying amount................................................... 90 000
Equipment at carrying amount............................................... 14 250
Furniture and fittings at carrying amount................................. 210 000
Trade payables control.......................................................... 32 800
inventory............................................................................ 25 950
Trade receivables control ..................................................... 9 750
Bank (Overdraft) ................................................................. 13 162
Allowance for credit losses..................................................... 788
Additional information:
It was agreed that Bam will acquire a third share in the profits/losses of the new partnership. Mava and Sizwe will relinquish a third share to Bam according to their existing profit-sharing ratio. On 1 January 2020, Bam will contribute a vehicle with a value of R150 000 as well as cash to the amount of R112 500 for his third share in the net assets of the new partnership.
In preparation of the change in the ownership structure of MavaS the partners decided to record the following valuations:
Vehicle….............................................................................. 67 500
Equipment…........................................................................ 6 000
Furniture and fittings…....................................................... 333 150
Inventory….......................................................................... 23 250
3. The allowance for credit losses must be adjusted to 5% of the trade debtors.4. Creditors offered a 8% discount for payments made on or before 31 January 2020. MavaS will settle 80% on 30 January 2020.
Which one of the following alternatives represents the balance in the valuation account in the general ledger of MavaS on 31 December 2020? (All amounts should be rounded up to the nearest Rand)
Select one:
a.R 90 000
b.R 98 250
c.R 92 100
d.R 92 287
e.R 92 700
Question 55
Question text
Assume that the correct valuation suprplus amount is R102 000. Which one of the following alternatives represents the balance transferred to the capital account of Sizwe as a result of the revaluation of the partnerships assets and liabilities on 31 December 2020? (All amounts should be rounded up to the nearest Rand).
Select one:
a.R 36 000
b.R 36 840
c.R 40 800
d.R 36 915
e.R 61 200