Accounting 9706 · AS & A Level · Business acquisition and merger

Business acquisition and merger — practice question

Anjali and Bailey operate as partners, sharing profits and losses in the ratio $3:2$. On 30 April 2016, the partnership statement of financial position was as follows.
(a(i))[7]

Prepare the realisation account for the partnership of Anjali and Bailey.

(a(ii))[7]

Prepare the capital accounts of Anjali and Bailey for the partnership’s realisation.

(a(iii))[2]

Calculate the total share premium payable to Anjali and Bailey.

(b)[4]

Assess the effect for Anjali and Bailey if the ordinary shares had been allocated in the profit sharing ratio instead of in proportion to their capital balances.

(c)[5]

Explain whether Anjali and Bailey made the right choice in forming a limited company. Justify your answer.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme.

  • Full mark scheme, point by point
  • Step-by-step worked solution
  • Write your answer & get it marked instantly by AI