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Question
Ashu and Harish are partners sharing profit and losses as 3 : 2 . They decided to dissolve the firm on 31st March, 2019. Their Balance Sheet on the above date was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Capital A/cs: | Building | 80,000 | ||||||
| Ashu | 1,08,000 | Machinery | 70,000 | |||||
| Harish | 54,000 | 1,62,000 | Furniture | 14,000 | ||||
| Creditors | 88,000 | Stock | 20,000 | |||||
| Bank Overdraft | 50,000 | Investments | 60,000 | |||||
| Debtors | 48,000 | |||||||
| Cash in Hand | 8,000 | |||||||
| 3,00,000 | 3,00,000 | |||||||
Ashu is to take over the building at ₹ 95,000 and Machinery and Furniture is taken over by Harish at value of ₹ 80,000. Ashu agreed to pay Creditor and Harish agreed to meet Bank overdraft. Stock and Investments are taken by both partner in profit-sharing ratio. Debtors realised for ₹ 46,000, expenses of realisation amounted to ₹ 3,000. Prepare necessary Ledger Accounts.
Solution
Realisation Account
|
Dr. |
|
Cr. |
|||||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
||||
|
Building |
80,000 |
Creditors |
88,000 |
||||
|
Machinery |
70,000 |
Bank overdraft |
50,000 |
||||
|
Furniture |
14,000 |
Ashu’s Capital A/c (see working note) |
1,43,000 |
||||
|
Stock |
20,000 |
Harish’s Capital A/c (see working note) |
1,12,000 |
||||
|
Investments |
60,000 |
Cash (Debtors) |
46,000 |
||||
|
Debtors |
48,000 |
||||||
|
Ashu’s Capital A/c (Creditors) |
88,000 |
||||||
|
Harish’s Capital A/c (Bank Overdraft) |
50,000 |
||||||
|
Cash (Expenses) |
3,000 |
||||||
|
Realisation Profit |
|||||||
|
Ashu’s Capital A/c |
3,600 |
||||||
|
Harish’s Capital A/c |
2,400 |
6,000 |
|||||
|
4,39,000 |
4,39,000 |
||||||
Partners’ Capital Account
|
Dr. |
|
Cr. |
||||||
|
Particulars |
Ashu |
Harish |
Particulars |
Ashu |
Harish |
|||
|
Realisation (Assets taken) |
1,43,000 |
1,12,000 |
Balance b/d |
1,08,000 |
54,000 |
|||
|
Cash |
56,600 |
Realisation (Liabilities) |
88,000 |
50,000 |
||||
|
Realisation (Profit) |
3,600 |
2,400 |
||||||
|
Cash |
5,600 |
|||||||
|
1,99,600 |
1,12,000 |
1,99,600 |
1,12,000 |
|||||
Cash Account
|
Dr. |
|
Cr. |
||||
|
Particulars |
Amount (₹) |
Particulars |
Amount |
|||
|
Balance b/d |
8,000 |
Realisation (Expenses) |
3,000 |
|||
|
Realisation (Debtors) |
46,000 |
Ashu’s Capital A/c |
56,600 |
|||
|
Harish’s Capital A/c |
5,600 |
|||||
|
59,600 |
59,600 |
|||||
Working Notes :
|
Ashu |
Harish |
|
|
Building |
95,000 |
|
|
Machinery and Furniture |
80,000 |
|
|
Stock (3:2) |
12,000 |
8,000 |
|
Investment (3:2) |
36,000 |
24,000 |
|
1,43,000 |
1,12,000 |
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| Liabilities | Amt (Rs.) | Assets | Amt (Rs.) |
| Creditors | 38,000 | Bank | 11,500 |
| Mrs. Surjit loan | 10,000 | Stock | 6,000 |
| Reserve | 15,000 | Debtors | 19,000 |
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| 86,000 | 86,000 |
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| Stock | Rs. 5,000 |
| Debtors | Rs. 18,500 |
| Furniture | Rs. 4,500 |
| Plant | Rs. 25,000 |
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|
Ashish |
30,000 | Investments | 69,000 | |
| Creditors | 65,000 | Plant | 91,200 | |
| Bills payable | 26,000 | |||
| General reserve | 20,000 | |||
| 271,000 | 271,000 |
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| Rs | |
| Debtors | 30,000 |
| Stock | 26,000 |
| Plant |
42,750 |
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4. Expenses of Realisation amounted to Rs 4,100,
5. Firm had to pay Rs 7,200 for outstanding salary not provided for earlier,
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Balance Sheet of Anup and Sumit as on December 31, 2017
| Liabilities | Amt (Rs.) | Amt (Rs.) |
Assets | Amt (Rs.) |
| Sundry Creditors | 27,000 | Cash at bank | 11,000 | |
| Reserve fund | 10,000 | Sundry Debtors | 12,000 | |
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| Capital : | 120,000 | Stock | 42,000 | |
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| Sumit | 60,000 |
Furniture |
25,000 | |
| 197,000 | 197,000 |
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| Rs. | |
| Lease hold land | 72,000 |
| Furniture | 22,500 |
| Stock | 40,500 |
| Plant | 48,000 |
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Balance Sheet of Tanu and Manu as on December 31, 2017
| Liabilities | Amt (Rs.) | Amt (Rs.) | Assets | Amt (Rs.) |
|
Sundry Creditors |
|
62,000 |
Cash at Bank |
16,000 |
|
Bills Payable |
|
32,000 |
Sundry Debtors |
55,000 |
|
Bank Loan |
|
50,000 |
Stock |
75,000 |
|
Reserve fund |
|
16,000 |
Motor car |
90,000 |
|
Capital: |
|
|
Machinery |
45,000 |
|
Tanu |
1,10,000 |
|
Investment |
70,000 |
|
Manu |
90,000 |
2,00,000 |
Fixtures |
9,000 |
|
|
|
3,60,000 |
|
3,60,000 |
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Prepare Realisation Account, Bank Account and Partners Capital Accounts.
X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1 respectively. The firm was dissolved on 1st March, 2013. After transferring assets (other than cash) and third party liabilities to the 'Realisation Account' you are provided with the following information:
(a) There was a balance of ₹ 18,000 in the firm's Profit and Loss Account.
(b) There was an unrecorded bike of ₹ 50,000 which was taken over by X.
(c) Creditors of ₹ 5,000 were paid ₹ 4,000 in full settlement of accounts.
Pass necessary Journal entries for the above at the time of dissolution of firm.
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(a) A creditor of ₹ 3,60,000 accepted machinery valued at ₹ 5,00,000 and paid to the firm ₹ 1,40,000.
(b) A second creditor for ₹ 50,000 accepted stock at ₹ 45,000 in full settlement of his claim.
(c) A third creditor amounting to ₹ 90,000 accepted ₹ 45,000 in cash and investments worth ₹ 43,000 in full settlement of his claim.
(d) Loss on dissolution was ₹ 15,000.
Pass necessary Journal entries for the above transactions in the books of firm assuming that all payments were made by cheque.
Balance Sheet of a firm as at 31st March, 2019, when it was decided to dissolve the same, was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Sundry Creditors | 14,000 | Cash at Bank | 640 | |||||
| General Reserve | 500 | Stock | 4,740 | |||||
| Capital A/cs: | Debtors | 5,540 | ||||||
| X | 4,000 | Machinery | 10,580 | |||||
| Y | 3,000 | 7,000 | ||||||
| 21,500 | 21,500 | |||||||
₹19,500 were realised from all assets except Cash at Bank. The cost of winding up came to ₹ 440. X and Y shared profits in the ratio of 2 : 1 respectively.
Prepare Realisation Account and Capital Accounts of Partners.
P, Q and R were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. They agreed to dissolve their partnership firm on 31st March, 2019. P was deputed to realise the assets and pay the liabilities. He was paid ₹ 1,000 as commission for his services. The financial position of the firm was:
Balance Sheet as at 31st March, 2019
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Creditors | 10,000 | Stock | 5,500 | |||||
| Bills Payable | 3,700 | Investments | 15,000 | |||||
| Investments Fluctuation Reserve | 4,500 | Debtors | 7,100 | |||||
| Capital A/cs: | Less: Provision for Doubtful Debtors | 450 | 6,650 | |||||
| P | 37,550 | Cash | 5,600 | |||||
| Q | 15,000 | 52,550 | R's Capital A/c | 8,000 | ||||
| Plant and Machinery | 30,000 | |||||||
| 70,750 | 70,750 | |||||||
P took over Investments for ₹ 12,500. Stock and Debtors realised ₹ 11,500. Plant and Machinery were sold to Q for ₹ 22,500 for cash. Unrecorded assets realised ₹ 1,500. Realisation expenses paid amounted to ₹ 900.
Prepare necessary Ledger Accounts to close the books of the firm.
A, B and C were in partnership sharing profits in the ratio of 7 : 2 : 1 and the Balance Sheet of the firm as at 31st March, 2019 was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital A/cs: | Building | 20,000 | ||
| A | 12,410 | Plant | 31,220 | |
| B | 8,650 | Goodwill | 10,000 | |
| C | 80,620 | 1,01,680 | 100 Shares in X Ltd. (At cost) | 2,400 |
| Creditors | 11,210 | 1,000 Shares in Y Ltd. (At cost) | 10,000 | |
| Reserve for Depreciation on Plant | 20,000 | Stock | 11,240 | |
| Debtors | 8,740 | |||
| Bank | 1,210 | |||
| Patents | 38,080 | |||
| 1,32,890 | 1,32,890 | |||
It was agreed to dissolve the partnership as on 31st March, 2019 and the terms of dissolution were−
(a) A to take over the Building at an agreed amount of ₹ 31,500.
(b) B, who was to carry on the business, to take over the Goodwill, Stock and Debtors at book value, the Patents at ₹ 30,000 and Plant at ₹ 5,000. He was also to pay the Creditors.
(c) C to take over shares in X Ltd. at ₹ 15 each.
(d) The shares in Y Ltd. to be divided in the profit-sharing ratio.
Show Ledger Accounts recording the dissolution in the books of the firm.
