Changing from partnership to sole trader

anthmills

I have a mother/daughter partnership with y/e of 31st Mar. Daughter left partnership on 30 Sep. Bank is overdrawn but stock value is higher than the overdraft value - they haven't been able to shift the stock to date. Mother is continuing the business as a sole trader - in terms of capital, how do i close the partnership and open the sole trader accounts?

PeterC

How about this:

Assuming that:

Capital = £1,000 stock - £600 overdraft = £400

and no goodwill and 50-50 profit share
then the daughter's capital is £200
As there is no cash to pay her, let's leave it as a loan to the business

Dr daughter's capital £200
Cr loan £200

Mother's (sole trader) capital = £1,000 - £600 - £200 loan from daughter = £200

anthmills

That's great thanks! Much appreciated

PeterC

You're welcome