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Question
Jayant and Ramakant were partners in the firm. On 31st March 2013 their Balance Sheet was as follows:
| Balance Sheet of Jayant and Ramakant as on 31st March 2013 | |||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
|
Creditors Workman Compensation Fund Satya’s Current Account Capital's: Jayant Ramaknat |
75,000 45,000 15,000
|
Bank Debtors Stock Furniture Machinery Shanti’s Current Account |
70,000 2,00,000 20,000 20,000 3,12,000 13,000 |
|
|
6,35,000 |
|
6,35,000 |
On the above date the firm was dissolved:
1. Jayant took over 40% of the stock at 20% less than its book value and the remaining stock was sold for Rs 15,000. Furniture realized Rs 20,000.
2. An unrecorded asset was sold for Rs 3,000. Machinery was sold at a loss of Rs 75,000.
3. Debtors realized Rs 10,000.
4. There was an outstanding bill for repairs for which Rs 38,000 were paid.
Prepare Realisation Account
Solution
| Realisation Account | |||
| Particulars | Rs | Particulars | Rs |
|
To Sundry Assets: Debtors 2,00,000 Stock 20,000 Furniture 20,000 Machinery 3,12,000
To Cash A/c (Liabilities) Creditors 75,000 Outstanding Bill 38,000
|
5,52,000
1,13,000
|
By Creditors A/c By Jayant’s Current A/c By Cash A/c Stock 15,000 Furniture 20,000 Unrecorded Asset 3,000 Machinery 2,37,000 Debtors 1,90,000
By Realisation Loss trfd: Jayant’s Current A/c 59,300 Ramakant’s Current A/c 59,300
|
75,000 6,400
4,65,000
1,18,600
|
|
|
6,65,000 |
|
6,65,000 |
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RELATED QUESTIONS
Shanti and Satya were partners in firm in a sharing profit in the ratio of 4:1. On 31st march ,2013 their Balance Sheet was as follows:
Balance Sheet of Shanti and Satya as on 31st March, 2013
| Liabilities | Amount(Rs.) | Assets | Amount(Rs.) |
|
Creditors Workman Compention Fund Satya’s Current Account Capital’s: Shanti Satya
|
45,000 40,000 65,000
2,00,000 1,00,000
|
Bank Debtors Stock Furniture Machinery Shanti’s Current Account
|
55,000 60,000 85,000 1,00,000 1,30,000 20,000
|
| 4,50,000 | 4,50,000 |
On the above date the firm was dissolved:
1. Shanti took over 40% of the stock at 10% less than its book value and the remaining stock was sold for Rs.40,000. Furniture realized Rs.80,000.
2. An unrecorded investment was sold for Rs.20,000. Machinery was sold at a loss of Rs.60,000.
3. Debtors realized Rs.55,000.
4. There was an outstanding bill for repairs for which Rs.19,000 were paid.
Prepare Realisation Account.
Mala, Neela and Kala were partners sharing profits in the ratio of 3: 2: 1. On 1.3.2015 their firm was dissolved. The assets were realized and liabilities were paid off. The accountant prepared Realisation Account, Partners' Capital Accounts and Cash Account, but forgot to post few amounts in these accounts.
You are required to complete these below-given accounts by posting correct amounts.
| Realisation Account | |||
| Dr. | Cr. | ||
| Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
To Sundry Assets : Machinery 10,000 Stock 21,000 Debtors 20,000 Prepaid Insurance 400 Investment 3,000 To Mala’s Capital A/c Sheela Loan To Cash – Creditors paid To Cash – Dishonored bill paid To Cash Expenses |
54,400 13,000
15,000 5,000 800 |
By Provision for bad debts By Sundry Creditors By Sheela’s Loan By Repairs and Renewals Reserve By Cash – Assets sold Machinery 8,000 Stock 14,000 Debtors 16,000 By Mala’s Capital Investments By ___________
|
1,000 15,000 13,000 1,200
38,000 2,000 ______
|
|
|
88,200 |
|
88,200 |
| Capital Account | |||||||
| Dr. | Cr. | ||||||
| Particulars |
Mala Rs |
Neela Rs |
Kala Rs |
Particulars |
Mala Rs |
Neela Rs |
Kala Rs |
|
---------- ---------- To Cash |
----- ----- 12,000 |
----- ----- 9,000 |
----- -----
|
--------- --------- To Cash |
----- -----
|
----- -----
|
----- ----- 1000 |
| 23,000 | 15,000 | 3,000 | 23,000 | 15,000 | 3,000 | ||
| Cash Account | |||
| Dr. | Cr. | ||
| Particulars |
Amount Rs |
Particulars |
Amount Rs |
|
To Balance b/d To Realisation A/c Sale of Assets To Kala’s Capital A/c
|
2,800 38,000
1,000
|
By Realisation A/c Creditors paid By Dishonoured bill _____________ By Mala’s Capital A/c By Neela’s Capital A/c |
15,000
5,000
12,000 9,000 |
|
|
41,800 |
|
41,800 |
Kumar and Gaurav were partners in the firm in a sharing profit in the ratio of their capitals. On 31st March 2013 their Balance Sheet was as follows:
| Balance Sheet of Kumar and Gaurav as on 31st March 2013 | |||
| Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors Workman Compensation Fund Satya’s Current Account Capital’s: Kumar 1,50,000 Gaurav 1,00,000 |
80,000 25,000 24,000
2,50,000 |
Bank Debtors Stock Machinery Shanti’s Current Account
|
79,000 1,70,000 34,000 79,000 17,000
|
|
|
3,79,000 |
3,79,000 | |
On the above date the firm was dissolved:
1. Kumar took over 50% of stock at 10% less than its book value. The remaining stock was sold for Rs 10,000.
2. Debtors were realized at a discount of 5%.
3. An unrecorded asset was sold for Rs 9,000 and machinery was sold for Rs 18,000.
4. Creditors were paid in full.
5. There was an outstanding bill for repairs for amounting to Rs 14,000 which was settled at Rs 12,000.
Prepare Realisation Account
Pass the necessary journal entries for the following transaction of the dissolution of the firm of James and Haider who were sharing profits and losses in the ratio of 2 : 1.
The various assets (other than cash) and outside liabilities have been transferred to Realisation Account:
(i) James agreed to pay off his brother’s loan Rs 10,000
(ii) Debtors realized Rs 12,000
(iii) Haider took over all investment at Rs 12,000
(iv) Sundry creditors Rs 20,000 were paid at 5% discount
(v) Realisation expenses amounted to Rs 2,000
(vi) Loss on realization was Rs 10,200.
Which accounts are not transferred to Realisation Account?
Who is called Insolvent person?
In what proportion is the balance on Realisation Account transferred to Partner's Capital Account?
Write the word/term /phrase, which can substitute the following statements.
"Debit balance in realisation account."
Unrecorded liability when paid on the dissolution of a firm is transferred to ______
At the time of dissolution of the firm, "Loan of partners" (Loans given by partners to the firm) is paid out of the amount realised on the sale of assets:
On dissolution, the final balance of the Partner's Capital Account is transferred to ______.
On dissolution, if a partner undertakes to make payment of a liability of the firm is debited to ______.
If in case of dissolution of the partnership, there was no Workmen Compensation Fund and firm had to pay ₹ 3,000 as compensation to workers where will be this ₹ 3,000 recorded in the books of accounts?
Give the necessary Journal entries for the following transactions on dissolution of the firm of Sonu and Monu on 31st March, 2021, after transfer of various assets (other than cash and bank balance) and the third party liabilities to Realisation Account. They shared profits and losses in the ratio of 2 : 1.
- Sonu agreed to take over the firm's goodwill (not recorded in the books of the firm) at a valuation of ₹ 40,000.
- Bills payable of ₹ 30,000 falling due on 30th April, 2021 were discharged at ₹ 29,550.
- Stock worth ₹ 8,00,000 was taken over by partner, Sonu at 10% discount.
- Creditors off ₹ 2,00,000 accepted machinery valued at ₹ 2,20,000 in full settlement of their claim.
- Expenses of realisation ₹ 10,000 were paid by partner, Sonu.
G and M were partners in a firm sharing profits and losses in the ratio of 3 : 2. on 31st March 2022, their balance sheet was as follows:
| Balance Sheet of G and M as on 31st March, 2022 | ||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) |
| Creditors | 50,000 | Bank | 75,000 | |
| Outstanding Expenses | 45,000 | Other Current Assets | 4,80,000 | |
| Provision for Doubtful Debts | 5,000 | Machinery | 7,00,000 | |
| 9% Loan | 15,00,000 | Land and Building | 15,00,000 | |
| Capitals: | Patents | 10,000 | ||
| G | 6,00,000 | Profit and Loss Account | 15,000 | |
| M | 7,00,000 | Goodwill | 1,20,000 | |
| Total | 29,00,000 | Total | 29,00,000 | |
On the above date, the firm was dissolved. Other current assets realised 10% less. Land and building and machinery were sold at their book value. 9% loan was discharged with unrecorded interest of ₹1,35,000. Expenses on dissolution amounted to ₹10,000.
Prepare Realisation Account.
C, D, E were partners in a firm sharing profits in the ratio of 3 :1: 1. Their Balance Sheet as at 31st March, 2022 were as follows:
| Balance Sheet of C, D and E as at 31st March,2022 | ||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) |
| Capitals: | Machinery | 3,20,000 | ||
| C | 4,00,000 | 7,00,000 | Investments | 3,00,000 |
| D | 2,00,000 | Stock | 2,00,000 | |
| E | 1,00,000 | Debtors | 1,00,000 | |
| C's Loan | 1,20,000 | Cash at Bank | 2,00,000 | |
| Sundry Creditors | 1,00,000 | |||
| Bills Payable | 2,00,000 | |||
| 11,20,000 | 11,20,000 | |||
On the above date the firm was dissolved due to certain disagreements among the partners:
- Machinery of ₹ 3,00,000 were given to creditor in full settlement of their amount and remaining machinery was sold for ₹ 10,000.
- Investments realised ₹ 2,90,000.
- Stock was sold for ₹ 1,80,000.
- Debtors for ₹ 20,000 proved bad.
- Realisation expenses amounted at ₹ 10,000
Prepare Realisation Account.
