Earlier article regarding partnership’s summary of steps upon the dissolution of a partnership. Append below a very basic illustration on this.
Jim and John are partners sharing profits or loss in the ratio 50:50 respectively. Both agree to dissolve the partnership and their Balance Sheet at the date of dissolution 31 December 2007 is as follows:
The assets other than cash were disposed for a total sum of $30,000.
Required: Close the books of the firm.
At the end of the day, the balance in the cash book should equate the payment to the partners capital account