Practice Activity 12.3 Preparation of accounts and the statement of financial position of a Limited

Practice Activity 12.3 Preparation of accounts and the statement of financial position of a Limited Liability Company immediately after conversion from a partnership business

At the end of December 2017, the Statement of financial position of Adaobi, Udobata, Gaaniru & Co., sharing profits and losses equally, was as follows:

The partnership business was converted to a Limited Liability Company on 1 January 2018. The new Company was named Otitodilichukwu Limited. The agreed purchase consideration was ₦144,010 to be discharged by a payment to the partners of ₦44,010 through the bank account and by the issue of 100,000 ordinary shares of ₦1 per share. The shares were taken up by Adaobi- 50,000 shares, Udobata – 25,000 shares and Gaaniru -25,000 shares.

Required:

i. Prepare the realisation, Otitodilichukwu Ltd and Capital accounts of the partnership to record the conversion.

ii.Prepare the statement of financial position immediately after the conversion of the partnership business to a Limited Liability Company.

See the suggested answer to practice activity 12.3 here.