Gce Model Questions Vol1 2021 Financial Accounting Question 20

A partnership of three partners, A, B and C, is being dissolved. Their capital balances at the date of dissolution are: A \(₦150,000\), B \(₦120,000\), C \(₦90,000\). The partnership has outstanding liabilities of \(₦80,000\). Assets consist of cash \(₦200,000\), inventory costing \(₦150,000\) (to be sold at 80 % of cost) and equipment with a book value of \(₦100,000\) (to be sold for its market value of \(₦120,000\)). After settling the liabilities, the remaining cash is to be distributed among the partners in the profit‑sharing ratio 2:1:1 (A:B:C). Any loss on the sale of inventory and equipment is to be shared equally among the partners. Determine (a) the amount of cash each partner receives on dissolution, and (b) the final capital balance of each partner after distribution.