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Question:

A and B were carrying on business sharing profits and losses equally. The firms financial position as at 31/ 12/ 2020 was:

		TZS '000			TZS '000
Assets			Liabilities
Stocks		60,000	Sundry Creditors		60,000
Machinery		150,000	Bank overdraft		35,000
Debtors		70,000	Capital Accounts A	140,000
Joint Life Policy		9,000	B	130,000	270,000
Leasehold Premises		34,000
P &L		26,000
Drawings accounts: A	10,000
B	6,000	16,000
		365,000			365,000

The business was carried on till 30/6/2021. The partners withdrew in equal amounts half the amount of profits made during the six months period after charging depreciation at 10% p.a on machinery and after writing off 5% on leasehold premises. In the half year, sundry creditors were reduced by TZS 10 Million and bank overdraft by TZS 15 Million.

On 30/6/2021, stock was valued at TZS 75 Million and debtors at TZS 60 Million; the joint life policy had been surrendered for TZS 9 Million before 30/6/2021 and other items remained the same as at 31/12/2020.

On 30/6/2021, the firm sold the business to a PAM Limited, a Limited Company. The value of goodwill was fixed at TZS 100 Million and the rest of the assets were valued on the basis of the balances as at 30/6/2021. The company paid the purchase consideration in Equity shares of TZS 10,000 each.

Required to prepare:

1. Statement of financial position/balance sheet as at 30/6/2021
2. The realization account
3. Partners capital accounts showing the final settlement between them.

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