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Part A Grange has been operating a small business, taking tourists on trips to the wineries in the Barossa Valley, South Australia. One of his friends, Hermitage, who operates a farm producing lavende

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PartA Grangehasbeenoperatingasmallbusiness,takingtouristsontripstothewineriesintheBarossaValley,SouthAustralia. Oneof hisfriends,Hermitage,whooperatesafarmproducinglavenderoil,strawberriesandolives,suggeststhattheyformapartnershipandconductguidedtours of theareausinghisfarmasabase. 1stSeptember,2012Grange"andHermitageformapartnershipsharingprofitsequallyandtradingas"Barossa Escape". Theirassetsandliabilitiesonthat dateare: Grange: Cash$10,000,OfficeFurniture&Equipment$15,000, MotorVehicles$52,000,Inventories$3,000,Accounts Payable$5,000 Hermitage: Cash$3,00...

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PartA Grangehasbeenoperatingasmallbusiness,takingtouristsontripstothewineriesintheBarossaValley,SouthAustralia. Oneof hisfriends,Hermitage,whooperatesafarmproducinglavenderoil,strawberriesandolives,suggeststhattheyformapartnershipandconductguidedtours of theareausinghisfarmasabase. 1stSeptember,2012Grange"andHermitageformapartnershipsharingprofitsequallyandtradingas"Barossa Escape". Theirassetsandliabilitiesonthat dateare: Grange: Cash$10,000,OfficeFurniture&Equipment$15,000, MotorVehicles$52,000,Inventories$3,000,Accounts Payable$5,000 Hermitage: Cash$3,000AccountsReceivable$7,000,Property $80,000,MotorVehicle$35,000,OfficeFurniture&Equipment$5,000,AccountsPayable$15,000,MortgageLoan$40,000 Required: PreparetheGeneralJournalentriestorecordtheassetsandliabilitiescontributedbythepartners. PrepareafullyclassifiedBalanceSheetof BarossaEscapeon1stSeptember, 2012. Part B Fromtheinformationprovidedonthe30thJune2014(2yearslater)recordthefollowing partnershipadjustments,determinationofprofitandprofitdistribution. Information: Net Profitfortheyearended30June,2014was$910,000 Otheroperatingexpenses$655,432andotheroperatingrevenue$26,304. Profitsandlossesaresharedequallybythepartners. Interestallowedona Loan byGrange$700. Grangeistobeowedasalaryof$75,000andHermitageistobepaidincash asalaryof$80,000. InterestisallowedonpartnersFixedCapitalandCurrentCapitalbalancesat4% perannum(year). Partnersareeachtobeallottedabonusof$4,600perannum. Interestondrawings-Grange$310andHermitage$390. ChargeHermitage5%perannumonhiscurrentaccountdeficit. Drawingsmadeduringtheyear: Grange: $7,000 Hermitage: $8,000 Afteralltheabovetransactionshavebeenrecorded,transferpartnersDrawingstotheirCurrentaccounts. Fixedcapitalaccountbalancesareunchanged from1/9/2012andare$75,000foreachpartner TheCurrent Accountbalanceon1/7/13forGrangeis $5,250(Cr). TheCurrent Accounton1/7/13forHermitageis$6,140(Dr). On31/3/14Hermitagedeposited$5000cashinhisCurrentAccount. Required: PreparetheGeneralJournalentriesfortheaboveadjustments PreparetheClosingJournalentriesfortheProfitandLossaccount,Profit&LossAppropriationaccountandtheentryforthetransferofDrawings. PreparetheProfitandLossAccount,Profit&LossAppropriationAccountandthe Partners'Currentand CapitalAccountstoshowtheprofitdistributionfortheyear ended30June2014. PrepareaBalance Sheetextract for30June,2014showingtheEquity A/c PartC InMarch2016,GrangeandHermitagediscusstaking onanewpartnerinordertoexpand thebusiness. In May2016theydecidetoadmitPenfoldwhoisbasedinTanundaandoperates toursfromhisbase.Penfoldwilldeveloptoursforthenearbywineriesandassociatedareas andwillhavea1/3shareoftheprofit. Penfoldwillcontribute:Cash$5,000,Property $54,000 MotorVehicle $15,000,AccountsReceivable$3,500, andAccountsPayable $2,500 whenhejoinsthepartnershipon1/7/16. PriortotheadmissionofPenfoldasanewpartner,GrangeandHermitagedecidetoadjustthevaluesofsomeoftheirassets: Allowancefordoubtfuldebtstobecreated$1,500 Vehiclestobedepreciatedby15% Propertytobeincreasedinvalueby $20,000 OfficeFurniture&Equipment tobedepreciatedby30% (Theseadjustmentstobemadeon15June,priorto theadmissionofPenfoldtothebusinesson1July 2016) Aftertheadjustmentshavebeenmade,andbeforethenewpartnerisadmitted,the FixedCapitalaccountbalancesforGrangeandHermitagearetobeadjustedto $75,000eachbytransferring to/from theircurrentaccounts. BelowistheBalanceSheetof BarossaEscapebeforetheadmissionof Penfold. BalanceSheetofBarossaEscapeasat15thJune2016 ASSETS Current Assets Cash at bank 23,500 Accounts Receivable 17,000 Inventories 15,000 Total Current Assets 55,500 Non-Current Assets Motor Vehicles 65,000 Property 112,500 Office Furn & Equip 15,000 Total Non-Current Assets 192,500 TOTAL ASSETS 248,000 LIABILITIES Current Liabilities Accounts Payable 23,000 Total Current Liabilities 23,000 Non – Current Liabilities Mortgage Loan 19,000 Total Non – Current Liabilities 19,000 TOTAL LIABILITIES 42,000 NET ASSETS 206,000 PARTNERSHIP FUNDS Capital Accounts Grange 85,000 Hermitage 85,000 Current Accounts Grange 20,400 Hermitage 15,600 TOTAL PARTNERSHIP FUNDS 206,000 Required: PreparetheGeneralJournalentriesforthecapital adjustmentsandthe adjustmentstotheFixedCapitalAccounts. PreparetheEquityAdjustmentAccount. Show the Capital and Current Accounts for Grange and Hermitage after the Equity Adjustment Account has been prepared. Show the ledger entries to adjust the fixed capital account balances for Grange and Hermitage to $75,000 ShowthegeneraljournalentrytoadmitPenfoldandpreparePenfold'sCapital Account. Calculatethenewprofitsharingratios(Grange&Hermitagehadbeensharing profitsequally). PrepareafullyclassifiedBalanceSheeton1/7/16aftertheadmissionofPenfold. PART D The partnership of Grange, Hermitage and Penfold was dissolved as at 31stMarch 2018. They had been sharing profits and losses equally. The balance Sheet at that date is ASSETS Current Assets Petty Cash 200 Cash at bank 8,700 Accounts Receivable 15,000 Less Allow for DD (2,000) 13,000 Inventories 28,000 Total Current Assets 49,900 Non-Current Assets Motor Vehicles 40,000 Less Accum Dep (17,000) 23,000 Property 160,000 Office Furn & Equip 12,000 Less Accum Dep (3,000) 9,000 Total Non-Current Assets 192,000 TOTAL ASSETS 241,900 LIABILITIES Current Liabilities Accounts Payable 24,000 Advance from Grange 7,000 Total Current Liabilities 31,000 Non – Current Liabilities Mortgage Loan 40,500 Total Non – Current Liabilities 40,500 TOTAL LIABILITIES 71,500 NET ASSETS 170,400 PARTNERSHIP FUNDS Capital Accounts Grange 90,000 Hermitage 45,000 Penfold 5,000 140,000 Current Accounts Grange 24,000 Hermitage 12,000 Penfold (5,600) 30,400 TOTAL PARTNERSHIP FUNDS 170,400 Other information Realisationexpensestowindupthepartnershiptotalled$15000+GST. Grangetookovertheinventoriesfor$20000+GSTplustheMortgageand Propertyforatotalof$125,500+GST. (GST applies to property only.) $14,450wascollectedfromAccounts Receivable(adjustforGSTinthe shortfall). InterestdueonLoan fromGrange was$99and was paidincash. Theproceedsfromthesaleoftheother assetstotalled$25,000+GST. Alltheliabilitiesweresettledwithadiscountof $550obtainedwhenpayingAccountsPayable(adjustDiscountwithGST). Penfoldwas personallyinsolvent. Use the capital accounts for distribution as at 31/3/2018. Required: PrepareallGeneralJournalentriesforthedissolutionofthebusinessofGrange, HermitageandPenfold Realisationaccount Capitaland Current accountsforeachpartner CashatBankaccount GST account

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