Quelpr
2 marksChanges in Ownership and Capital Structure

CAPE Accounting Unit 1 · 2019 · Paper 2 · Question 2(c)(ii)

Davis, Grant and Rachel are partners in Southside Auto Repairs, sharing profits in the ratio 1/4, 1/4 and 1/2. Capital balances at 31 December 2018: Davis 60 000, Grant 70 000, Rachel 100 000; Drawings balances: Davis 13 000, Grant 14 000, Rachel 23 000. Net income for the year ended 31 December 2018 was $80 000.

On 01 January 2019, Davis retired and sold his interest to Rachel and Grant for $80 000, paid from personal funds. Prepare the journal entry to record the sale of partner's interest.

The mark scheme is shown once you've answered.

Practise this question

Other parts of this question

  1. 2(a)Prepare a multi-step statement of comprehensive income for Cutting Ltd in accordance with IAS 1 and IFRS for SMEs.[16 marks]
  2. 2(b)Distinguish between 'corporations' and 'cooperatives'.[8 marks]
  3. 2(c)(i)Prepare a statement of partners' equity for the current year.[9 marks]

More practice: the rest of this paper · more Changes in Ownership and Capital Structure questions · all CAPE Accounting Unit 1 past papers