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Question
Rita and Sobha are partners in a firm, Fancy Garments Exports, sharing profits and losses equally. On 1st April, 2019, the Balance Sheet of the firm was:
| Sundry Creditors | 75,000 | Cash | 6,000 | |||||
| Bills Payable | 30,000 | Bank | 30,000 | |||||
| Rita's Loan | 15,000 | Stock | 75,000 | |||||
| Reserve | 24,000 | Book Debts | 66,000 | |||||
| Capital A/cs: | Less: Provision for Doubtful Debts | 6,000 | 60,000 | |||||
| Rita | 90,000 | |||||||
| Sobha | 30,000 | 1,20,000 | Plant and Machinery | 45,000 | ||||
| Land and Building | 48,000 | |||||||
| 2,64,000 | 2,64,000 | |||||||
The firm was dissolved on the date given above. The following transactions took place:
(a) Rita took 25% of the Stock at a discount of 20% in settlement of her loan.
(b) Book Debts realised ₹ 54,000; balance of the Stock was sold at a profit of 30% on cost.
(c) Sundry Creditors were paid out at a discount of 10%. Bills Payable were paid in full .
(d) Plant and Machinery realised ₹ 75,000. Land and Building ₹ 1,20,000.
(e) Rita took the goodwill of the firm at a value of ₹ 30,000.
(f) An unrecorded asset of ₹ 6,900 was handed over to an unrecorded liability of ₹ 6,000 in full settlement.
(g) Realisation expenses were ₹ 5,250.
Show Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.
Solution
Realisation Account
|
Dr. |
Cr. |
|||||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
|||
|
Stock |
75,000 |
Provision for Doubtful Debts |
6,000 |
|||
|
Book Debts |
66,000 |
Sundry Creditors |
75,000 |
|||
|
Plant and Machinery |
45,000 |
Bills Payable |
30,000 |
|||
|
Land and building |
48,000 |
|||||
|
Rita’s Capital A/c |
30,000 |
|||||
|
(Goodwill taken over) |
||||||
|
Bank A/c: |
Rita’s Loan A/c (Stock taken over) |
15,000 |
||||
|
Sundry Creditors |
67,500 |
|||||
|
Bills Payable |
30,000 |
Bank A/c: |
||||
|
Expenses |
5,250 |
1,02,750 |
Book Debts |
54,000 |
||
|
Profit transferred to: |
Stock |
73,125 |
||||
|
Rita’s Capital A/c |
70,688 |
Plant and Machinery |
75,000 |
|||
|
Sobha’s Capital A/c |
70,687 |
1,41,375 |
Land and Building |
1,20,000 |
3,22,125 |
|
|
4,78,125 |
4,78,125 |
|||||
Partners’ Capital Accounts
|
Dr. |
Cr. |
||||||
|
Particulars |
Rita (₹) |
Sobha (₹) |
Particulars |
Rita (₹) |
Sobha (₹) |
||
|
Realisation A/c (Assets) |
30,000 |
– |
Balance b/d |
90,000 |
30,000 |
||
|
Reserve Fund |
12,000 |
12,000 |
|||||
|
Bank A/c |
1,42,688 |
1,12,687 |
Realisation A/c (Profit) |
70,688 |
70,687 |
||
|
1,72,688 |
1,12,687 |
1,72,688 |
1,12,687 |
||||
Rita’s Loan A/c
|
Dr. |
Cr. |
||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
|
To Realisation A/c |
15,000 |
Balance b/d |
15,000 |
|
15,000 |
15,000 |
||
Bank Account
|
Dr. |
Cr. |
||||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
||
|
Balance b/d |
30,000 |
Realisation A/c |
1,02,750 |
||
|
Cash A/c |
6,000 |
Rita’s Capital A/c |
1,42,688 |
||
|
Realisation A/c |
3,22,125 |
Sobha’s Capital A/c |
1,12,687 |
||
|
3,58,125 |
3,58,125 |
||||
Working Notes:
WN1: Value Of Stock Taken Over by Rita
`"Stock taken over by Rita"= ("Book Value of Stock" xx 25/100 xx 80/100)`
`"Stock taken over by Rita" = ₹(75,000 xx 25/100 xx 80/100) = ₹15,000`
WN2: Value of Stock Sold
Book value of balance of stock sold = Value of stock - Stock taken over by rita
Book Value of Balance of stock sold = ₹ (75,000 - 18,750) = ₹56,250
Value of stock sold = ₹ `(56,250 xx130/100) = ₹73,123 `[sold at 30%]
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Assets | Amount (₹) |
|||||
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Assets | Amount (₹) |
|
| Capital A/cs: | Building | 20,000 | ||
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| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capitals: | Capital: Manan | 10,000 | ||
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| 5,00,000 | 5,00,000 | |||
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(b)
| Assets were realised as follows: | ₹ |
| Plant | 85,000 |
| Stock | 33,000 |
| Debtors | 47,000 |
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Prepare Realisation Account, Partner's Capital Accounts and Bank Account.
