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Question
Rose and Lily shared profits in the ratio of 2:3. Their Balance Sheet on March 31, 2017 was as follows:
Balance Sheet of Rose and Lily as on March 31, 2017
| Liabilities |
Amount (Rs.) |
Assets | Amount (Rs.) | Amount (Rs.) |
| Creditors | 40,000 | Cash | 16,000 | |
| Lily’s loan | 32,000 | Debtors | 80,000 | 76,400 |
| Profit and Loss | 50,000 |
Less: Provision for doubtful Debts |
3600 | |
| Capitals: | Inventory | 109,600 | ||
| Lily | 160,000 | Bills Receivable | 40,000 | |
| Rose | 240,000 | Buildings | 280,000 | |
| 522,000 | 522,000 |
Rose and Lily decided to dissolve the firm on the above date. Assets (except bills receivables) realised Rs 4,84,000. Creditors agreed to take Rs 38,000. Cost of Realisation was Rs 2,400. There was a Motor Cycle in the firm which was bought out of the firm’s money, was not shown in the books of the firm. It was now sold for Rs 10,000. There was a contingent liability in respect of outstanding electric bill of Rs 5,000, Bill Receivable taken over by Rose at Rs 33,000.
Show Realisation Account, Partners Capital Account, Loan Account and Cash Account.
Solution
Books of Rose and Lily
Realisation Account
Dr. Cr.
| Particulars |
Amount (Rs.) |
Amount (Rs.) | Particulars | Amount (Rs.) | Amount (Rs.) |
| Debtors | 80,000 | Provision for Doubtful Debts | 3,600 | ||
| Inventory | 109,600 | Creditors | 40,000 | ||
| Bills Receivables | 40,000 | Cash: | 494,000 | ||
| Buildings | 280,000 | Motor cycle | 10,000 | ||
| Other Assets | 484,000 | ||||
| Cash: | 45,400 | ||||
| Outstanding Electricity Bill | 5,000 | Rose’s Capital (Bills Receivable) | 33,000 | ||
| Creditors | 38,000 | ||||
| Expenses | 2,400 | ||||
| Profit transferred to: | 15,600 | ||||
| Rose' Capital | 6,240 | ||||
| Lily's Capital | 9,360 | ||||
| 570,600 | 570,600 | ||||
Partners’ Capital Accounts
Dr. Cr.
| Particulars | Rose |
Lily |
Particulars | Rose | Lily |
| Realisation (Bills Receivable) | 33,000 | - | Balance b/d | 2,40,000 | 1,60,000 |
| Cash A/c | 233,240 | 199,360 | Profit and Loss | 20,000 | 30,000 |
| Realisation (Profit) | 6,240 | 9,360 | |||
| 2,66,240 | 1,99,360 | 266,240 | 199,360 |
Lily's Loan Account
Dr. Cr.
| Particulars | Amount (Rs.) |
Particulars | Amount (Rs.) |
| Cash | 32,000 | Balance b/d | 32,000 |
| 32,000 | 32,000 |
Cash Account
Dr. Cr.
| Particulars | Amount (Rs.) |
Amount (Rs.) |
Particulars | Amount (Rs.) |
Amount (Rs.) |
| Balance b/d | 16,000 | Realisation: | 45,400 | ||
| Realisation: | 494,000 | Creditors | 38,000 | ||
| Motor Cycle | 10,000 | Outstanding Electricity Bill | 5,000 | ||
| Other Assets | 484,000 | Expenses | 2,400 | ||
| Lily's Loan | 32,000 | ||||
| Rose’s Capital A/c | 233,240 | ||||
| Lily’s Capital A/c | 199,360 | ||||
| 510,000 | 510,000 |
Note: In the solution Contingent Liability of Electricity Bill has been treated as Electricity Bill Payable.
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|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Creditors |
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|
|
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|
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| Yogesh |
21,000 |
|
|||
| Naresh |
21,000 |
42,000 |
|||
|
2,16,000 |
2,16,000 |
||||
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| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Sundry Creditors | 20,000 | Bank | 7,500 | |||||
| Bills Payable | 25,500 | Sundry Debtors | 58,000 | |||||
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| Capital A/cs: | Machinery | 48,000 | ||||||
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| 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 | |||||||
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|
Particulars |
₹ |
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| Cash in Hand and at Bank | 750 |
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