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FAC1601 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 16 September 2024
FAC1601 Assignment 2 (COMPLETE ANSWERS) Semester 2 2024 - DUE 16 September 2024
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F,AC1601 Assignment 2 (COMPLETE ANSWERS) Semeste
2 2024 - DUE 16 September 2024 ; 100% T
RUSTED Comple
Trading under the name Lehumo Bricks, Refentse and Boitshepo
are partners in this brick manufacturing company. Over the
years, Lehumo Bricks has established itself as a reputable
supplier of high-quality bricks used in various construction
projects, from residential homes to large commercial buildings.
The business has been profi table, with Refentse and Boitshepo
sharing profi ts and losses equally, refl ecting their initial capital
investments and contributions to the partnership. However,
after years of operating in the competitive construction
materials industry, the partners decided to liquidate the
business. Their decision was infl uenced by a combination of
factors, including changes in market demand, increasing
production costs, and their desire to pursue other ventures.
Having carefully evaluated offers for key assets, particularly the
land, the building, manufacturing equipment and inventory on
hand, they decided to accept the most favourable ones for the
sale of the land, inventory and equipment. With this decision in
place, they planned to initiate the simultaneous liquidation of
the partnership on 1 June 2024. Before any liquidation entries
were recorded, they prepared a fi nal trial balance to
summarise the fi nancial position of the business. EXTRACT OF
TRIAL BALANCE AS AT 1 JUNE 2024 R Equipment at carrying
amount R290,000 Long-term loan -R968,500 Land and building
at carrying amount R792,000 Inventory R256,000 Capital –
, Refentse -R268,900 Capital – Boitshepo -R285,900 Current
account – Refentse (dr) R41,600 Current account – Boitshepo
(dr) R24,000 Bank R119,700 On 1 June 2024, a series of fi
nancial transactions took place to fi nalise the sale of the
business’s assets and settle its liabilities. Below is a summary of
the key transactions that occurred during the liquidation:
1. The land and buildings, which had been integral to Lehumo
Bricks' manufacturing operations, were sold for a cash
amount of R855 000. 2. Boitshepo, one of the partners, took
over certain brick-making equipment with a carrying amount
of R87 600. While Boitshepo did not pay for the equipment
immediately, the partners agreed on a cash value of R74 000
for this transaction. 3. The remaining brick-making
equipment was sold to an external buyer at a carrying value
in cash. 4. The costs associated with the liquidation process
amounted to R54 000. These costs included legal fees,
administrative expenses, and other charges incurred during
the winding-up of the business. 5. The inventory of bricks and
raw materials was sold for R210 000. The sale of these fi
nished goods and materials added substantial cash to the
liquidation process, ensuring that more of the partnership’s
liabilities could be paid off. 6. Lehumo Bricks had an
outstanding long-term loan, which was fully paid off during
the liquidation process at a negotiated settlement amount of
R800 000. Which one of the following alternatives represents
the correct amount that must be allocated to Refentse on as
liquidation profi t (loss) of Lehumo Bricks on 1 June 2024?
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