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Question
P, Q and R are partners sharing profits and losses in the ratio of 3 : 3 : 2 respectively. Their respective capitals are in their profit-sharing proportions. On 1st April, 2018, the total capital of the firm and the balance of General Reserve are ₹ 80,000 and ₹ 20,000 respectively. During the year 2018-19, the firm made a profit of ₹ 28,000 before charging interest on capital @ 5%. The drawings of the partners are P___________₹ 8,000; Q___________₹ 7,000; and R__________₹ 5,000. On 31st March, 2019, their liabilities were ₹ 18,000.
On this date, they decided to dissolve the firm. The assets realised ₹ 1,08,600 and realisation expenses amounted to ₹ 1,800.
Prepare necessary Ledger Accounts to close the books of the firm.
Solution
Realistationn Account
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
|||
|
Sundry Assets (WN 1) |
1,26,000 |
Creditors |
18,000 |
|||
|
|
|
Cash A/c (Assets Realised) |
1,08,600 |
|||
|
Cash A/c: |
|
Loss transferred to: |
|
|||
|
Creditors |
18,000 |
|
P’s Capital A/c |
7,200 |
|
|
|
Expenses |
1,800 |
19,800 |
Q’s Capital A/c |
7,200 |
|
|
|
|
|
R’s Capital A/c |
4,800 |
19,200 |
||
|
|
1,45,800 |
|
1,45,800 |
|||
Partners’ Capital Accounts
|
Dr. |
|
Cr. |
|||||||
|
Particulars |
P |
Q |
R |
Particulars |
P |
Q |
R |
||
|
Drawings A/c |
8,000 |
7,000 |
5,000 |
Balance b/d |
30,000 |
30,000 |
20,000 |
||
|
Realisation A/c (Loss) |
7,200 |
7,200 |
4,800 |
Interest on Capital A/c |
1,500 |
1,500 |
1,000 |
||
|
Cash A/c |
32,800 |
33,800 |
22,200 |
P/L Appropriation A/c (WN 3) |
9,000 |
9,000 |
6,000 |
||
|
|
|
|
|
General Reserve |
7,500 |
7,500 |
5,000 |
||
|
|
48,000 |
48,000 |
32,000 |
|
48,000 |
48,000 |
32,000 |
||
Cash Account
|
Dr. |
|
Cr. |
|||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
||
|
Realisation A/c |
1,08,600 |
Realisation A/c |
19,800 |
||
|
|
|
P’s Capital A/c |
32,800 |
||
|
|
|
Q’s Capital A/c |
33,800 |
||
|
|
|
R’s Capital A/c |
22,200 |
||
|
|
1,08,600 |
|
1,08,600 |
||
Working Note:
WN 1
Memorandum Balance Sheet
as on 31st March, 2019
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
|
|
Capital A/cs: |
|
Sundry Assets |
1,26,000 |
|
|
P (WN 2) |
22,000 |
|
(Balancing figure) |
|
|
Q (WN 2) |
23,000 |
|
|
|
|
R (WN 2) |
15,000 |
60,000 |
|
|
|
General Reserve |
20,000 |
|||
|
Profit and Loss A/c |
28,000 |
|||
|
Creditors |
18,000 |
|
|
|
|
|
1,26,000 |
|
1,26,000 |
|
WN 2
Computatation of Partners' Capital after drawings as on 31st March, 2019
|
Dr. |
|
Cr. |
|||||||
|
Particulars |
P |
Q |
R |
Particulars |
P |
Q |
R |
||
|
Drawings A/c |
8,000 |
7,000 |
5,000 |
Balance b/d |
30,000 |
30,000 |
20,000 |
||
|
Adjusted Capital |
22,000 |
23,000 |
15,000 |
||||||
|
|
30,000 |
30,000 |
20,000 |
|
30,000 |
30,000 |
20,000 |
||
WN 3
Profit and Loss Appropriation Account
for the year ending 31st March, 2019
| Dr. |
Cr. |
|||||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
|||
|
Interest on Capital A/cs: |
|
Profit and Loss A/c |
28,000 |
|||
|
P |
1,500 |
|
|
|
||
|
Q |
1,500 |
|
|
|
||
|
R |
1,000 |
4,000 |
|
|
||
|
Profit transferred to: |
|
|
|
|||
|
P’s Capital A/c |
9,000 |
|
|
|
||
|
Q’s Capital A/c |
9,000 |
|
|
|
||
|
R’s Capital A/c |
6,000 |
24,000 |
|
|
||
|
|
28,000 |
|
28,000 |
|||
APPEARS IN
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| Liabilities | Amt (Rs.) | Amt (Rs.) | Assets | Amt (Rs.) |
| Capitals: | 162,000 | Building | 80,000 | |
| Ashu | 108,000 | Machinery | 70,000 | |
| Harish | 54,000 | Furniture | 14,000 | |
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| Bank overdraft | 50,000 | Investments | 60,000 | |
| Debtors | 48,000 | |||
| Cash in hand | 8,000 | |||
| 300,000 | 300,000 |
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Ashok, Babu and Chetan are in partnership sharing profit in the proportion of 1/2, 1/3, 1/6 respectively. They dissolve the partnership of the December 31, 2017, when the balance sheet of the firm as under:
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 |
30,000 |
Stock |
39,500 |
||
|
Capital’s: |
1,52,000 |
Machinery |
48,000 |
||
|
Ashok |
70,000 |
Investment |
42,000 |
||
|
Babu |
55,000 |
Freehold Property |
50,500 |
||
|
Chetan |
27,000 |
|
|
||
|
Current Accounts : |
18,000 |
|
|||
|
Ashok |
10,000 |
|
|||
|
Babu |
5,000 |
|
|||
|
Chetan |
3,000 |
|
|||
|
|
|
2,45,500 |
|
2,45,500 |
|
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(c) Paras agreed to takeover the firm's goodwill (not recorded in the books of the firm), at a valuation of ₹ 30,000.
(d) There was an old typewriter which had been written off completely from the books. It was estimated to realise ₹ 400. It was taken by Priya at an estimated price less 25%.
(e) There were 100 shares of ₹ 10 each in Star Limited acquired at a cost of ₹ 2,000 which had been written-off completely from the books. These shares are valued @ ₹ 6 each and divided among the partners in their profit-sharing ratio.
Bale and Yale are equal partners of a firm. They decide to dissolve their partnership on 31st March, 2019 at which date their Balance Sheet stood as:
| Liabilities | ₹ | Assets | ₹ | |
| Capital A/cs: | Building | 45,000 | ||
| Bale | 50,000 | Machinery | 15,000 | |
| Yale | 40,000 | 90,000 | Furniture | 12,000 |
| General Reserve | 8,000 | Debtors | 8,000 | |
| Bale's Loan A/c | 3,000 | Stock | 24,000 | |
| Creditors | 14,000 | Bank | 11,000 | |
| 1,15,000 | 1,15,000 | |||
(a) The assets realised were:
Stock ₹ 22,000; Debtors ₹ 7,500; Machinery ₹ 16,000; Building ₹ 35,000.
(b) Yale took over the Furniture at ₹ 9,000.
(c) Bale agreed to accept ₹ 2,500 in full settlement of his Loan Account.
(d) Dissolution Expenses amounted to ₹ 2,500.
Prepare the:
(i) Realisation Account; (ii) Capital Accounts of Partners;
(iii) Bale's Loan Account; (iv) Bank Account.
A, B and C were equal partners. On 31st March, 2019, their Balance Sheet stood as:
| 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 | |||
The firm was dissolved on the above date on the following terms:
(a) For the purpose of dissolution, Investments were valued at ₹ 18,000 and A took over the Investments at this value.
(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.
(e) One Bill receivable for ₹ 1,500 under discount was dishonoured as the acceptor had become insolvent and was unable to pay anything and hence the bill had to be met by the firm.
Prepare Realisation Account, Partner's Capital Accounts and Cash Account showing how the accounts would finally be settled among the partners.
A, B and C are in partnership sharing profits and losses in the proportions of 1/2, 1/3 and 1/6 respectively. On 31st March, 2019, they decided to dissolve the partnership and the position of the firm on this date is represented by the following Balance Sheet:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Creditors | 40,000 | Cash at Bank | 3,000 | |
| Loan A/c: | Stock | 50,000 | ||
| A | 10,000 | Sundry Debtors | 50,000 | |
| Workmen Compensation Reserve | 21,000 | Land and Building | 57,000 | |
| Capital A/cs: | Profit and Loss A/c | 15,000 | ||
| A | 60,000 | Advertisement Suspense A/c | 6,000 | |
| B | 40,000 | |||
|
C |
10,000 | 1,10,000 | ||
| 1,81,000 | 1,81,000 | |||
During the course of realisation, a liability under a suit for damages is settled at ₹ 20,000 as against ₹ 5,000 only provided for in the books of the firm.
Land and Building were sold for ₹ 40,000 and the Stock and Sundry Debtors realised ₹ 30,000 and ₹ 42,000 respectively. The expenses of realisation amounted to ₹ 1,200.
There was a car in the firm, which was completely written off from the books. It was taken by A for ₹ 20,000. He also agreed to pay Outstanding Salary of ₹ 20,000 not provided in books.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.
Ashok, Babu and Chetan are in partnership sharing profit in the proportion of 1/2, 1/3, 1/6 respectively. They dissolve the partnership of the 31st March, 2019 when the Balance Sheet of the firm as under:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Sundry Creditors | 20,000 | Bank | 7,500 | |||||
| Bills Payable | 25,500 | Sundry Debtors | 58,000 | |||||
| Babu's Loan | 30,000 | Stock | 39,500 | |||||
| Capital A/cs: | Machinery | 48,000 | ||||||
| Ashok | 70,000 | Investments | 42,000 | |||||
| Babu | 55,000 | Freehold Property | 50,500 | |||||
| Chetan | 27,000 | 1,52,000 | ||||||
| Current A/cs: | ||||||||
| Ashok | 10,000 | |||||||
| Babu | 5,000 | |||||||
| Chetan | 3,000 | 18,000 | ||||||
| 2,45,500 | 2,45,500 | |||||||
The Machinery was taken over by Babu for ₹ 45,000, Ashok took over the Investments for ₹ 40,000 and Freehold property took over by Chetan at ₹ 55,000. The remaining Assets realised as follows:
Sundry Debtors ₹ 56,500 and Stock ₹ 36,500. Sundry Creditors were settled at discount of 7%. A Office computer, not shown in the books of accounts realised ₹ 9,000. Realisation expenses amounted to ₹ 3,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.
Srijan, Raman and Manan were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. On 31st, March, 2017 their Balance Sheet was as follows:
BALANCE SHEET OF SRIJAN, RAMAN AND MANAN as on 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capitals: | Capital: Manan | 10,000 | ||
| Srijan | 2,00,000 | Plant | 2,20,000 | |
| Raman | 1,50,000 | 3,50,000 | Investments | 70,000 |
| Creditors | 75,000 | Stock | 50,000 | |
| Bills Payable | 40,000 | Debtors | 60,000 | |
| Outstanding Salary | 35,000 | Bank | 10,000 | |
| Profit and Loss Account | 80,000 | |||
| 5,00,000 | 5,00,000 | |||
On the above date they decided to dissolve the firm.
(a) Srijan was appointed to realise the assets and discharge the liabilities. Srijan was to receive 5% commission on sale of assets (except cash) and was to bear all expenses of realisation.
(b)
| Assets were realised as follows: | ₹ |
| Plant | 85,000 |
| Stock | 33,000 |
| Debtors | 47,000 |
(c) Investments were realised at 95% of the book value.
(d) The firm had to pay ₹ 7,500 for an outstanding repair bill not provided for earlier.
(e) A contingent liabillity in respect of bills receivable, discounted with the bank had also materialised and had to be discharged for ₹ 15,000.
(f) Expenses of realisation amounting to ₹ 3,000 were paid by Srijan.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.
Krishna and Arjun are partners in a firm. They share profits in the ratio of 4 : 1. They decide to dissolve the firm on 31st March, 2019 at which date their Balance Sheet stood as:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
|
Bank Loan |
1,500 |
Trademarks |
1,200 |
||
|
Creditors for Goods |
8,000 |
Machinery |
12,000 |
||
|
Bills Payable |
500 |
Furniture |
400 |
||
|
Capital A/cs: |
Stock |
6,000 |
|||
|
Krishna |
16,000 |
Debtors |
9,000 |
||
|
Arjun |
6,000 |
22,000 |
Less: Provision for Bad Debts |
400 |
8,600 |
|
Cash at Bank |
2,800 |
||||
|
Advertisement Suspense |
1,000 |
||||
|
32,000 |
32,000 |
||||
The realisation shows the following results:
(a) Goodwill was sold for ₹ 1,000.
(b) Debtors were realised at book value less 10%.
(c) Trademarks realised ₹ 800.
(d) Machinery and Stock-in-Trade were taken by Krishna for ₹ 14,400 and ₹ 3,600 respectively.
(e) An unrecorded asset estimated at ₹ 500 was sold for ₹ 200.
(f) Creditors for goods were settled at a discount of ₹ 80. The expenses on realisation were ₹ 800.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.
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.
On 1st April, 2018, A, B and C commenced business in partnership sharing profits and losses in proportion of 1/2, 1/3 and 1/6 respectively. They paid into their Bank A/c as their capitals ₹ 22,000; ₹ 10,000 by A, ₹ 7,000 by B and ₹ 5,000 by C. During the year, they drew ₹ 5,000; being ₹ 1,900 by A, ₹ 1,700 by B and ₹ 1,400 by C.
On 31st March, 2019, they dissolved their partnership, A taking up Stock at an agreed valuation of ₹ 5,000, B taking up Furniture at ₹ 2,000 and C taking up Debtors at ₹ 3,000. After paying up their Creditors, there remained a balance of ₹ 1,000 at Bank. Prepare necessary accounts showing the distribution of the cash at the Bank and of the further cash brought in by any partner or partners as the case required.
