Exam (elaborations)
FAC1601 Assignment 5
(COMPLETE ANSWERS)
Semester 2 2024 - DUE 12
November 2024
Course
Financial Accounting and Reporting
(FAC1601)
Institution
University Of South Africa (Unisa)
Book
ABOUT FINANCIAL ACCOUNTING
VOLUME 2 (8TH EDITION)
[Pick the date]
[Type the company name]
tabbymwesh59@gmail.com
, FAC1601 Assignment 5 (COMPLETE ANSWERS)
Semester 2 2024 - DUE 12 November 2024; 100%
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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
