9/16/24, 7:01 AM Assessment 2 (page 1 of 18)
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,9/16/24, 7:01 AM Assessment 2 (page 1 of 18)
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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 profitable, with Refentse and
Boitshepo sharing profits and losses equally, reflecting 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 influenced 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 final trial balance to summarise the financial 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) R19,500
Current account – Boitshepo (dr) R46,100
Bank R119,700
On 1 June 2024, a series of financial transactions took place to finalise 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 400. 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 finished 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.
Assume the correct total liquidation profit on liquidation is R50 000. Which one of the following alternatives represents the
correct amount that must be paid to Boitshepo on liquidation of Lehumo Bricks on 1 June 2024?
a. R217,400
b. R190,800
c. R357,000
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,9/16/24, 7:01 AM Assessment 2 (page 1 of 18)
d. R195,300 Font size A- A A+ Site color R A A A
e. R307,000
f. R285,900
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, 9/16/24, 7:01 AM Assessment 2 (page 2 of 18)
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FAC1601-24-S2 Welcome Message Assessment 2
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FAC1601-24-S2 Welcome Message Assessment 2
QUIZ
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,9/16/24, 7:01 AM Assessment 2 (page 1 of 18)
Question 1 Font size A- A A+ Site color R A A A
Answer saved
Marked out of 3.00
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 profitable, with Refentse and
Boitshepo sharing profits and losses equally, reflecting 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 influenced 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 final trial balance to summarise the financial 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) R19,500
Current account – Boitshepo (dr) R46,100
Bank R119,700
On 1 June 2024, a series of financial transactions took place to finalise 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 400. 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 finished 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.
Assume the correct total liquidation profit on liquidation is R50 000. Which one of the following alternatives represents the
correct amount that must be paid to Boitshepo on liquidation of Lehumo Bricks on 1 June 2024?
a. R217,400
b. R190,800
c. R357,000
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,9/16/24, 7:01 AM Assessment 2 (page 1 of 18)
d. R195,300 Font size A- A A+ Site color R A A A
e. R307,000
f. R285,900
Clear my choice
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, 9/16/24, 7:01 AM Assessment 2 (page 2 of 18)
Font size A- A A+ Site color R A A A
FAC1601-24-S2 Welcome Message Assessment 2
QUIZ
Time left 2:17:51
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