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Question
The following is the Balance Sheet of Gupta and Sharma as on December 31,2017:
Balance Sheet of Gupta and Sharma as on December 31, 2017
| Liabilities | Amt (Rs.) |
Amt (Rs.) |
Assets | Amt (Rs.) |
| Sundry Creditors | 38,000 | Cash at Bank | 12,500 | |
| Mrs.Gupta’s loan | 20,000 | Sundry Debtors | 55,000 | |
| Mrs.Sharma’s loan | 30,000 | Stock | 44,000 | |
| Reserve fund | 6,000 | Bills Receivable | 19,000 | |
| Provision of doubtful debts | 4,000 | Machinery | 52,000 | |
| Investment | 38,500 | |||
| Capital : | 150,000 | Fixtures | 27,000 | |
| Gupta | 90,000 | |||
| Sharma | 60,000 | |||
| 248,000 | 248,000 |
The firm was dissolved on December 31, 2017 and asset realised and settlements of liabilities as follows:
(a) The Realisation of the assets were as follows:
| Rs. | |
| Sundry Debtors | 52,000 |
| Stock | 42,000 |
| Bills receivable | 16,000 |
| Machinery | 49,000 |
(b) Investment was taken over by Gupta at agreed value of Rs 36,000 and agreed to pay of Mrs. Gupta’s loan.
(c) The Sundry Creditors were paid off less 3% discount.
(d) The Realisation expenses incurred amounted to Rs 1,200.
Journalise the entries to be made on the dissolution and prepare Realisation Account, Bank Account and Partners Capital Accounts.
Solution
Books of Gupta and Sharma
Journal Entries
| Date | Particulars | L.F. |
Amt |
Amt (Rs.) |
| 2012 | ||||
| Dec. 31 | Realisation A/c Dr. To Sundry Debtors A/c To Stock A/c To Bills Receivable A/c To Machinery A/c To Investment A/c To Fixtures A/c (Assets transferred to Realisation Account) |
235,500 | 55,000 44,000 19,000 52,000 38,500 27,000 |
|
| Dec. 31 | Sundry Creditors A/c Dr. Mrs. Gupta’s Loan A/c Dr. Mrs. Sharma’s Loan A/c Dr. Provision for Doubtful Debts Dr. To Realisation A/c (Liabilities transferred to Realisation Account) |
38,000
|
92,000 | |
| Dec. 31 | Bank A/c Dr. To Realisation A/c (Assets realised: Sundry Debtors Rs 52,000, Stock Rs 42,000, Bills Receivable Rs 16,000, Machinery Rs 49,000) |
159,000 | 159,000 | |
| Dec. 31 | Realisation A/c Dr. To Gupta’s Capital A/c (Gupta took over Mrs. Gupta's Loan) |
20,000 | 20,000 | |
| Dec. 31 | Gupta’s Capital A/c Dr To Realisation A/c (Investment taken over by Gupta) |
36,000 | 36,000 | |
| Dec. 31 | Realisation A/c Dr. To Bank A/c (Liabilities paid: Mrs. Sharma's Loan Rs 30,000 and Creditors Rs 38,000 paid off less 3% discount) |
66,860 | 66,860 | |
| Dec. 31 | Realisation A/c Dr. To Bank A/c (Realisation expenses paid) |
1,200 | 1,200 | |
| Dec. 31 | Gupta’s Capital A/c Dr Sharma’s Capital A/c Dr To Realisation A/c (Loss on Realisation transferred to Partners’ capital Account) |
18,280 18,280 |
36,560 | |
| Dec. 31 | Reserve Fund A/c Dr. To Gupta’s Capital A/c To Sharma’s Capital A/c (Reserve fund distributed among partners ratio) |
6,000 | 3,000 3,000 |
|
| Dec. 31 | Gupta’s Capital A/c Dr Sharma’s Capital A/c Dr. To Bank A/c (Final payment made to partners) |
58,720 44,720 |
103,440 |
Realisation Account
Dr. Cr.
|
Particulars |
Amount (Rs.) |
Particulars |
Amount (Rs.) |
||||||
|
Sundry Debtors |
55,000 |
Sundry Creditors |
38,000 |
||||||
|
Stock |
44,000 |
Mrs. Gupta’s Loan |
20,000 |
||||||
|
Bills Receivable |
19,000 |
Mrs. Sharma’s Loan |
30,000 |
||||||
|
Machinery |
52,000 |
Provision for Doubtful Debts |
4,000 |
||||||
|
Investment |
38,500 |
Bank : |
1,59,000 |
||||||
|
Fixtures |
27,000 |
Sundry Debtors |
52,000 |
||||||
|
Gupta’s Capital A/c (Mrs. Gupta Loan) |
20,000 |
Stock |
42,000 |
||||||
|
Bank A/c: |
68,060 |
Bills Receivable |
16,000 |
||||||
|
Creditors |
36,860 |
Machinery |
49,000 |
||||||
|
Mrs. Sharma’s Loan |
30,000 |
Gupta’s Capital A/c (Investment) |
36,000 |
||||||
|
Expense |
1,200 |
Loss transferred to : |
|
||||||
|
|
|
|
Gupta’s Capital A/c |
18,280 |
|
||||
|
|
|
|
Sharma’s Capital A/c |
18,280 |
36,560 |
||||
|
|
|
3,23,560 |
|
3,23,560 |
|||||
Partners’ Capital Account
Dr. Cr.
|
Particulars |
Gupta |
Sharma |
Particulars |
Gupta |
Sharma |
|||
|
Realisation |
36,000 |
|
Balance b/d |
90,000 |
60,000 |
|||
|
Realisation |
18,280 |
18,280 |
Realisation |
20,000 |
|
|||
|
Bank |
58,720 |
44,720 |
Reserve Fund |
3,000 |
3,000 |
|||
|
|
1,13,000 |
63,000 |
|
1,13,000 |
63,000 |
|||
Bank Account
Dr. Cr.
|
Particulars |
Amt |
Particulars |
Amt (Rs.) |
|||
|
Balance b/d |
12,500 |
Realisation |
68,060 |
|||
|
Realisation |
1,59,000 |
Gupta’s Capital A/c |
58,720 |
|||
|
|
|
Sharma’s Capital A/c |
44,720 |
|||
|
|
1,71,500 |
|
1,71,500 |
|||
NOTE: As per the solution, the total of Bank Account is Rs 1,71,500. However, the answers for the same has not been mentioned in the book.
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Balance Sheet of Ashok, Babu and Chetan as on December 31, 2017
|
Liabilities |
Amt (Rs.) |
Assets |
Amt (Rs.) |
||
|
Sundry Creditors |
20,000 |
Bank |
7,500 |
||
|
Bills payable |
25,500 |
Sundry Debtors |
58,000 |
||
|
Babu’s loan |
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Stock |
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||
|
Capital’s: |
1,52,000 |
Machinery |
48,000 |
||
|
Ashok |
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Investment |
42,000 |
||
|
Babu |
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Freehold Property |
50,500 |
||
|
Chetan |
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|
|
||
|
Current Accounts : |
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|
|||
|
Ashok |
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|
|||
|
Babu |
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|
|||
|
Chetan |
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|
|||
|
|
|
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|
2,45,500 |
|
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| Liabilities | ₹ | Assets | ₹ | |
| Capital A/cs: | Land | 81,000 | ||
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| BALANCE SHEET as at 31st March, 2019 | ||||
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Creditors | 38,000 | Cash at Bank | 11,500 | |
| Mrs. A's Loan | 10,000 | Stock | 6,000 | |
| B's Loan | 15,000 | Debtors | 19,000 | |
| Reserve | 5,000 | Furniture | 4,000 | |
| A's Capital | 10,000 | Plant | 28,000 | |
| B's Capital | 8,000 | 18,000 | Investments | 10,000 |
| Profit and LossA/C | 7,500 | |||
| 86,000 | 86,000 | |||
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| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Creditors | 50,400 | Cash | 3,700 | |
| Reserve | 12,000 | Stock | 20,100 | |
| Capital A/cs: | Debtors | 62,600 | ||
| A | 40,000 | Loan to A | 10,000 | |
| B | 25,000 | Investments | 16,000 | |
| C | 15,000 | 80,000 | Furniture | 6,500 |
| Building | 23,500 | |||
| 1,42,400 | 1,42,400 | |||
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(b) Fixed Assets realised ₹ 29,700 whereas Stock and Debtors realised ₹ 80,000.
(c) Expenses of realisation amounted to ₹ 1,300.
(d) Creditors allowed a discount of ₹ 800.
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Prepare Realisation Account, Partner's Capital Accounts and Cash Account showing how the accounts would finally be settled among the partners.
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|
Particulars |
₹ |
| A's Capital | 25,000 |
| B's Capital | 15,000 |
| Sundry Creditors | 20,000 |
| Cash in Hand and at Bank | 750 |
The balance of A's Loan Account to the firm stood at ₹ 10,000. The realisation expenses amounted to ₹ 350. Stock realised ₹ 20,000 and Debtors ₹ 25,000. B took a machine at the agreed valuation of ₹ 7,500. Other fixed assets realised ₹ 20,000.
You are required to close the books of the firm.
A, B and C were in partnership sharing profits and losses in the ratio of 2 : 1 : 1. They decided to dissolve the partnership. On that date of dissolution, Sundry Assets (including cash ₹ 5,000) amounted to ₹ 88,000, assets realised ₹ 80,000 (including an unrecorded asset which realised ₹ 4,000). A contingent liability on account of bills discounted ₹ 8,000 was paid by the firm. The Capital Accounts of A, B and C showed a balance of ₹ 20,000 each.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account.
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X and Y were partners sharing profits and losses in the ratio of 3 : 2. They decided to dissolve the firm on 31st March, 2019. On that date, their Capitals were X − ₹ 40,000 and Y − ₹ 30,000. Creditors amounted to ₹ 24,000.
Assets were realised for ₹ 88,500. Creditors of ₹ 16,000 were taken over by X at ₹ 14,000. Remaining Creditors were paid at ₹ 7,500. The cost of realisation came to ₹ 500.
Prepare necessary accounts.
