a) A, B and C have been trading as equal partners having capital contributions of ksh.500,000, ksh.400,000 and ksh.300,000 respectively as at 1st January 2011. On the same date B decided to leave the partnership and A and C were to continue trading as partners sharing profits in the ratio of 2:1. The total amounts due to B could not be paid immediately and thus the remaining partners agreed with B that they will pay 25% of the total due in cash and the balance will be left as a loan earning interest at a rate of 8% per annum. Meanwhile goodwill has agreed at ksh.180,000 and B had a credit balance on his current account of ksh.40,000. Goodwill was not to be retained in the books.
i. Prepare partners capital account to record the retirement of B. [10 marks]
ii. The following information was extracted from Rivatex Ltd.
Net profit
Working capital adjustment
issue of share capital
purchase of machinery
bank loan raised ksh.
10,000
5,000
80,000
100,000
15,000
Required:
Prepare the cashflow statement according to the IAS. [4 marks]
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