Practice Activity 12.2 Closing the accounts of a partnership business and opening the accounts in t

Practice Activity 12.2 Closing the accounts of a partnership business and opening the accounts in the books of a Limited Liability Company

The facts are the same as practice activity 12.1.

Required:

i. Show the realisation, capital, and Stable Vine Limited accounts in the books of Beautiful, Udo, Joseph & Co.

ii.In the books of Stable Vine Limited show the business purchase account, Beautiful, Udo, Joseph & Co. account.

See the suggested answer to practice activity 12.2 here.

Suggested answer to practice activity 12.2

This is an alternative answer to practice activity 12.1. The purchase consideration comprises 10% ₦26,667 Preference Shares in Stable Vine Ltd. and 368,333 Ordinary shares in Stable Vine Ltd. at ₦1 each.

i. The books of Beautiful, Udo, Joseph & Co.

The statement of financial position of Stable Vine Limited remains the same as shown in the first text box suggesting the answer to practice activity 12.1. The difference between the first suggested answer and the alternative suggested answer is in the use of realisation account to determine the share of profit posted to the credit side of the capital account of the respective partners.

ii. The books of Stable Vine Limited