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Question
Hema, Manisha and Limsy were in partnership firm sharing profits and losses in the ratio of 5:3:2. They decided to dissolve their partnership firm on 31st March 2019 and their Balance sheet as on that date stood as:
| Balance sheet as on 31st March,2019 | |||
| Liabilities | Amount ₹ | Assets | Amount ₹ |
| Capital Account: | Machinery | 1,00,000 | |
| Hema | 1,50,000 | Debtors | 50,000 |
| Manisha | 80,000 | Stock | 70,000 |
| Reserve Fund | 10,000 | Cash at Bank | 30,000 |
| Sundry Creditors | 20,000 | Limsy Capital A/c | 20,000 |
| Bills payable | 10,000 | ||
| 2,70,000 | 2,70,000 | ||
The firm was dissolved on 31st March, 2019 and assets were realised as under:
- Machinery realised 60% of its book value.
- Out of debtors, Mr. Jagdish, our customer for ₹ 20,000 was declared insolvent and nothing could be recovered from him. Other debtors are good and recovered and realised.
- Hema took stock at an agreed value of ₹ 50,000.
- Creditors and Bills payable were paid at 10% discount.
- Limsy became insolvent and nothing was recovered from her estate.
Prepare:
- Realisation Account
- Partners’ Capital Account
- Bank Account
Solution
| Dr. | In the books of Hema, Manisha & Limsy Realisation A/c |
Cr. | |||
| Particulars | Amount ₹ | Particulars | Amount ₹ | ||
| To Sundry Assets | By Sundry Liabilities | ||||
| Machinery | 1,00,000 | 2,20,000 | Sundry Creditors | 20,000 | 30,000 |
| Debtors | 50,000 | Bills Payable | 10,000 | ||
| Stock | 70,000 | By Bank A/c | |||
| To Bank A/c | Machinery A/c | 60,000 | 90,000 | ||
| Sundry Creditors | 18,000 | 27,000 | Debtors | 30,000 | |
| Bills Payable | 9,000 | By Hema's Capital A/c (stock taken over) |
50,000 | ||
| Hema | 38,500 | 77,000 | |||
| Manisha | 23,100 | ||||
| Limsy | 15,400 | ||||
| 2,47,000 | 2,47,000 | ||||
| Dr. | Partner's Capital A/c | Cr. | |||||
| Particulars | Hema | Manisha | Limsy | Particulars | Hema | Manisha | Limsy |
| To Balance b/d | - | - | 20,000 | By Balance b/d | 1,50,000 | 80,000 | - |
| To Realisation A/c | 50,000 | - | - | By Reserve fund (5 : 3 :2 ) | 5,000 | 3,000 | 2,000 |
| To Realisation A/c (Loss) | 38,500 | 23,100 | 15,400 | By Hema's Capital A/c | - | - | 20,875 |
| To Limsy's Capital A/c | 20,875 | 12,525 | - | By Manisha's Capital A/c | - | - | 12,525 |
| To Bank A/c | 45,625 | 47,375 | - | ||||
| 1,55,000 | 83,000 | 35,400 | 1,55,000 | 83,000 | 35,400 | ||
| Dr. | Bank A/c | Cr. | |
| Particulars | Amount ₹ | Particulars | Amount ₹ |
| To Balance b/d | 30,000 | By Realisation A/c | 27,000 |
| To Realisation A/c | 90,000 | By Hema's Capital A/c | 45,625 |
| By Manisha's Capital A/c | 47,375 | ||
| 1,20,000 | 1,20,000 | ||
Working Note :
1. Hema's Capital A/c (stock taken over) -
Hema = `77,000xx 5/10`= 38,500
Manisha = `77,000 xx 3/10 = 23,100`
Limsy = `77,000xx 2/10 = 15,400`
2. Limsy capital a/c
Hema = `33,400 xx5/8 = 20,875`
Manisha = `33,400xx3/8 = 12,525`
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| Balance Sheets as on 31st March, 2019 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capital: | Land | 2,10,000 | |
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| 3,90,000 | 3,90,000 | ||
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Show Realisation Account, Partners Capital Account, and Bank Account.
Name the account opened to find out the Profit or Loss on Sale of Assets and Settlement of Liabilities?
A partnership firm is compulsorily dissolved:
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At the time of the firm's dissolution, the balance of General Reserve shown in the Balance Sheet is credited to ______.
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At the time of dissolution of a firm, Creditors are ₹ 70,000; Firm’s Capital is ₹ 1,20,000; Cash Balance is ₹ 10,000. Other assets realised ₹ 1,50,000. Gain/Loss in the realisation account will be ______.
Complete the table.
| Debit side total of Realisation A/c |
Credit side total of Realisation A/c |
Loss on Realisation |
| ₹ 20,000 | ? | ₹ 4,000 |
On the day of dissolution of the firm ‘Roop Brothers’ had partner’s capital amounting to ₹ 1,50,000 external liabilities ₹ 35,000, Cash balance ₹ 8,000 and P & L A/c (Dr.) ₹ 7,000. If Realisation expense and loss on Realisation amounted to ₹ 5,000 and ₹ 25,000 respectively, the amount realised by sale of assets is ______.
On dissolution, cash/bank account is closed automatically.
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| 2,08,800 | 2,08,800 |
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| Balance Sheet as on 31st March, 2023 | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Capital : | Plant | 2,40,000 | |||
| Vinay | 1,80,000 | 3,60,000 | Debtors | 90,000 | |
| Premal | 1,20,000 | Stock | 1,50,000 | ||
| Monil | 60,000 | ||||
| Loan | 24,000 | ||||
| Sundry Creditors | 18,000 | ||||
| Bank Overdraft | 78,000 | ||||
| 4,80,000 | 4,80,000 | ||||
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(1) Vinay to discharge Loan and to take Debtors at book value.
(2) Plant realised ₹ 2, 70,000.
(3) Stock realised ₹1,44,000.
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Lal, Bal and Pal were partners sharing profits and losses in the ratio of 2 : 2 : 1. The following is the Balance Sheet as on 31st March, 2020.
| Balance sheet as on 31st March 2020 | ||||
| Liabilities | Amount (₹) | Assets | Amount (₹) | |
| Capital A/c | Machinery | 50,000 | ||
| Lal | 60,000 | Investments | 24,000 | |
| Bal | 20,000 | Debtors | 55,000 | 52,000 |
| Pal | 20,000 | Less: R.D.D. | (3,000) | |
| General Reserve | 6,000 | Stock | 20,000 | |
| Creditors | 48,000 | Profit and loss A/c | 18,000 | |
| Bills Payable | 14,000 | Bank | 4,000 | |
| 168000 | 168000 | |||
On the above date the partners decided to dissolve the firm.
(1) Assets were realised as:
| Machinery | ₹ 45000 |
| Stock | ₹ 18000 |
| Investment | ₹ 21000 |
| Debtors | ₹ 45000 |
(2) Dissolution expenses were ₹ 3000.
(3) Goodwill of the firm realised ₹ 24000.
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- Realisation Account
- Partner's Capital Account
- Bank Account.
