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Question
X, Y and Z carrying on business as merchants and sharing profits and losses in the ratio of 2 : 2 : 1, dissolved their firm as at 31st March, 2019 on which date their Balance Sheet was as follows:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Sundry Creditors | 41,500 | Cash at Bank | 22,500 | |||||
| Bills Payable | 20,000 | Stock | 80,000 | |||||
| Bank Loan | 40,000 | Debtors | 50,000 | |||||
| General Reserve | 50,000 | Less: Provision for Doubtful Debts | 2,500 | 47,500 | ||||
| Investments Fluctuation Reserve | 40,000 | Investments | 55,000 | |||||
| Capital A/cs: | Premises | 1,51,500 | ||||||
| X | 75,000 | |||||||
| Y | 75,000 | |||||||
| Z | 15,000 | 1,65,000 | ||||||
| 3,56,500 | 3,56,500 | |||||||
A bill for ₹ 5,000 received from Mohan discounted from bank is not met on maturity.
The assets except Cash at Bank and Investments were sold to a company which paid ₹ 3,25,000 in cash.The Investments were sold and ₹ 56,500 were received. Mohan proved insolvent and a dividend of 50% was received from his estate. Sundry Creditors (including Bills Payable) were paid ₹ 57,500 in full settlement. Realisation Expenses amounted to ₹ 15,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.
Solution
Realisation Account
|
Dr. |
|
Cr. |
||||||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
|||||
|
Stock |
80,000 |
Creditors |
41,500 |
|||||
|
Debtors |
50,000 |
Bills Payable |
20,000 |
|||||
|
Investment |
55,000 |
Bank Loan |
40,000 |
|||||
|
Premises |
1,51,500 |
Investment Fluctuation Reserve |
40,000 |
|||||
|
Bank A/c :- |
|
Provision for Doubtful Debts |
2,500 |
|||||
|
Bill |
5,000 |
|
Bank A/c- |
|
||||
|
Creditors & Bills Payable |
57,500 |
|
Assets |
3,25,000 |
|
|||
|
Expenses |
15,000 |
|
Investments |
56,500 |
|
|||
|
Bank loan |
40,000 |
1,17,500 |
Bill |
2,500 |
3,84,000 |
|||
|
Profit transferred to: |
|
|
|
|||||
|
X’s Capital A/c |
29,600 |
|
|
|
||||
|
Y’s Capital A/c |
29,600 |
|
|
|
||||
|
Z’s Capital A/c |
14,800 |
74,000 |
|
|
||||
|
|
5,28,000 |
|
5,28,000 |
|||||
Partners’ Capital Accounts
|
Dr. |
|
Cr. |
|||||||
|
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
||
|
|
|
|
|
|
|
|
|
||
|
Bank A/c |
1,24,600 |
1,24,600 |
39,800 |
Balance b/d |
75,000 |
75,000 |
15,000 |
||
|
(bal. figure) |
|
|
|
General Reserve |
20,000 |
20,000 |
10,000 |
||
|
|
|
|
|
Realisation A/c |
29,600 |
29,600 |
14,800 |
||
|
|
1,24,600 |
1,24,600 |
39,800 |
|
1,24,600 |
1,24,600 |
39,800 |
||
Bank Account
|
Dr. |
|
Cr. |
|||
|
Particulars |
Amount (₹) |
Particulars |
Amount (₹) |
||
|
Balance b/d |
22,500 |
Realisation A/c |
1,17,500 |
||
|
Realisation A/c |
3,84,000 |
X’s Capital A/c |
1,24,600 |
||
|
|
|
Y’s Capital A/c |
1,24,600 |
||
|
|
|
Z’s Capital A/c |
39,800 |
||
|
|
4,06,500 |
|
4,06,500 |
||
APPEARS IN
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[a] Payment of unrecorded liabilities of Rs 3,200.
[b] Stock worth Rs 7,500 is taken by a partner Rohit.
[c] Profit on Realisation amounting to Rs 18,000 is to be distributed between the partners Ashish and Tarun in the ratio of 5:7.
[d] An unrecorded asset realised Rs 5,500.
All partners wish to dissolve the firm. Yastin, a partner wants that her loan of Rs 2,00,000 must be paid off before the payment of capitals to the partners. But, Amart, another partner wants that the capitals must be paid before the payment of Yastin’s loan. You are required to settle the conflict giving reasons.
Shilpa, Meena and Nanda decided to dissolve their partnership on March 31,2017. Their profit sharing ratio was 3:2:1 and their Balance Sheet was as under:
Balance Sheet of Shilpa, Meena and Nanda as on March 31, 2017
| Liabilities |
Amount |
Assets | Amount (Rs.) |
| Capitals: | Land | 81,000 | |
| Shilpa | 80,000 |
Stock |
56,760 |
| Meena | 40,000 | Debtors | 18,600 |
| Bank loan | 20,000 | Nanda’s Capital Account | 23,000 |
| Creditors | 37,000 |
Cash |
10,840 |
| Provision for doubtful debt | 1,200 | ||
| General Reserve | 12,000 | ||
| 190,200 | 190,200 |
The stock of value of Rs 41,660 are taken over by Shilpa for Rs 35,000 and she agreed to discharge bank loan. The remaining stock was sold at Rs 14,000 and debtors amounting to Rs 10,000 realised Rs 8,000. land is sold for Rs 1,10,000. The remaining debtors realised 50% at their book value. Cost of Realisation amounted to Rs 1,200. There was a typewriter not recorded in the books worth Rs 6,000 which were taken over by one of the Creditors at this value. Prepare Realisation Account.
Surjit and Rahi were sharing profits (losses) in the ratio of 3:2, their Balance Sheet as on March 31, 2017 is as follows:
Balance Sheet of Surjit and Rahi as on March 31, 2017
| Liabilities | Amt (Rs.) | Assets | Amt (Rs.) |
| Creditors | 38,000 | Bank | 11,500 |
| Mrs. Surjit loan | 10,000 | Stock | 6,000 |
| Reserve | 15,000 | Debtors | 19,000 |
| Rahi’s loan | 5,000 | Furniture | 4,000 |
| Capital’s: | Plant | 28,000 | |
| Surjit | 10,000 | Investment | 10,000 |
| Rahi | 8,000 | Profit and Loss | 7,500 |
| 86,000 | 86,000 |
The firm was dissolved on March 31, 2017 on the following terms:
1. Surjitagreed to take the investments at Rs 8,000 and to pay Mrs. Surjit’s loan.
2. Other assets wererealisedas follows:
| Stock | Rs. 5,000 |
| Debtors | Rs. 18,500 |
| Furniture | Rs. 4,500 |
| Plant | Rs. 25,000 |
3. Expenses onRealisationamounted to Rs 1,600.
4. Creditors agreed to accept Rs 37,000 as a final settlement.
You are required to prepare Realisation Account, Partners’ Capital Account and Bank Account.
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.
Pass Journal entries for the following:
(a) Realisation expenses of ₹ 15,000 were to be met by Rahul, a partner, but were paid by the firm.
(b) Ramesh, a partner, was paid remuneration of ₹ 25,000 and he was to meet all expenses.
(c) Anuj, a partner, was paid remuneration of ₹ 20,000 and he was to meet all expenses. Firm paid an expense of ₹ 5,000.
Aman and Harsh were partners in a firm. They decided to dissolve their firm. Pass necessary Journal entries for the following after various assets (other than Cash and Bank) and third party liabilities have been transferred to Realisation Account:
(a) There was furniture worth ₹ 50,000. Aman took over 50% of the furniture at 10% discount and the remaining furniture was sold at 30% profit on book value.
(b) Profit and Loss Account was showing a credit balance of ₹ 15,000 on the date of dissolution.
(c) Harsh's loan of ₹ 6,000 was discharged at ₹ 6,200.
(d) The firm paid realisation expenses amounting to ₹ 5,000 on behalf of Harsh who had to bear these expenses.
(e) There was a bill for 1,200 under discount. The bill was received from Soham who proved insolvent and a first and final dividend of 25% was received from his estate.
(f) Creditors, to whom the firm owed ₹ 6,000, accepted stock of ₹ 5,000 at a discount of 5% and the balance in cash.
Pass necessary Journal entries on the dissolution of a firm in the following cases:
(a) Dharam, a partner, was appointed to look after the process of dissolution at a remuneration of ₹ 12,000 and he had to bear the dissolution expenses. Dissolution expenses ₹ 11,000 were paid by Dharam.
(b) Jay, a partner, was appointed to look after the process of dissolution and was allowed a remuneration of ₹ 15,000. Jay agreed to bear dissolution expenses. Actual dissolution expenses ₹ 16,000 were paid by Vijay, another partner on behalf of Jay.
(c) Deepa, a partner, was to look after the process of dissolution and for this work she was allowed a remuneration of ₹ 7,000. Deepa agreed to bear dissolution expenses. Actual dissolution expenses ₹ 6,000 were paid from the firm's bank account.
(d) Dev, a partner, agreed to do the work of dissolution for ₹ 7,500. He took away stock of the same amount as his commission. The stock had already been transferred to Realisation Account.
(e) Jeev, a partner, agreed to do the work of dissolution for which he was allowed a commission of ₹ 10,000. He agreed to bear the dissolution expenses. Actual dissolution expenses paid by Jeev were ₹ 12,000. These expenses were paid by Jeev by drawing cash from the firm.
(f) A debtor of ₹ 8,000 already transferred to Realisation Account agreed to pay the realisation expenses of ₹ 7,800 in full settlement of his account.
Ashu and Harish are partners sharing profit and losses as 3 : 2 . They decided to dissolve the firm on 31st March, 2019. Their Balance Sheet on the above date was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Capital A/cs: | Building | 80,000 | ||||||
| Ashu | 1,08,000 | Machinery | 70,000 | |||||
| Harish | 54,000 | 1,62,000 | Furniture | 14,000 | ||||
| Creditors | 88,000 | Stock | 20,000 | |||||
| Bank Overdraft | 50,000 | Investments | 60,000 | |||||
| Debtors | 48,000 | |||||||
| Cash in Hand | 8,000 | |||||||
| 3,00,000 | 3,00,000 | |||||||
Ashu is to take over the building at ₹ 95,000 and Machinery and Furniture is taken over by Harish at value of ₹ 80,000. Ashu agreed to pay Creditor and Harish agreed to meet Bank overdraft. Stock and Investments are taken by both partner in profit-sharing ratio. Debtors realised for ₹ 46,000, expenses of realisation amounted to ₹ 3,000. Prepare necessary Ledger Accounts.
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.
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.
Anju, Manju and Sanju were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2019, their Balance Sheet was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Creditors | 50,000 | Cash | 60,000 | |
| Bank Loan | 35,000 | Debtors | 75,000 | |
| Employees' Provident Fund | 15,000 | Stock | 40,000 | |
| Investments Fluctuation Reserve | 10,000 | Investments | 20,000 | |
| Commission Received in Advance | 8,000 | Plant | 50,000 | |
| Capital A/cs: | Profit and Loss A/c | 3,000 | ||
| Anju | 50,000 | |||
| Manju | 50,000 | |||
|
Sanju |
30,000 | 1,30,000 | ||
| 2,48,000 | 2,48,000 | |||
On this date, the firm was dissolved. Anju was appointed to realise the assets. Anju was to receive 5% commission on the sale of assets (except cash) and was to bear all expenses of realisation.
Anju realised the assets as follows: Debtors ₹ 60,000; Stock ₹ 35,500; Investments ₹ 16,000; Plant 90% of the book value. Expenses of Realisation amounted to ₹ 7,500. Commission received in advance was returned to customers after deducting ₹ 3,000.
Firm had to pay ₹ 8,500 for Outstanding Salary, not provided for earlier, Compensation paid to employees amounted to ₹ 17,000. This liability was not provided for in the above Balance Sheet. ₹ 20,000 had to be paid for Employees' Provident Fund.
Prepare Realisation Account, Capital Accounts of Partners and Cash Account.
A, B and C were in partnership sharing profits in the ratio of 7 : 2 : 1 and the Balance Sheet of the firm as at 31st March, 2019 was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital A/cs: | Building | 20,000 | ||
| A | 12,410 | Plant | 31,220 | |
| B | 8,650 | Goodwill | 10,000 | |
| C | 80,620 | 1,01,680 | 100 Shares in X Ltd. (At cost) | 2,400 |
| Creditors | 11,210 | 1,000 Shares in Y Ltd. (At cost) | 10,000 | |
| Reserve for Depreciation on Plant | 20,000 | Stock | 11,240 | |
| Debtors | 8,740 | |||
| Bank | 1,210 | |||
| Patents | 38,080 | |||
| 1,32,890 | 1,32,890 | |||
It was agreed to dissolve the partnership as on 31st March, 2019 and the terms of dissolution were−
(a) A to take over the Building at an agreed amount of ₹ 31,500.
(b) B, who was to carry on the business, to take over the Goodwill, Stock and Debtors at book value, the Patents at ₹ 30,000 and Plant at ₹ 5,000. He was also to pay the Creditors.
(c) C to take over shares in X Ltd. at ₹ 15 each.
(d) The shares in Y Ltd. to be divided in the profit-sharing ratio.
Show Ledger Accounts recording the dissolution in the books of the firm.
A, B and C started business on 1st April, 2018 with capitals of ₹ 1,00,000; ₹ 80,000 and ₹ 60,000 respectively sharing profits (losses) in the ratio of 4 : 3 : 3. For the year ended 31st March, 2019, the firm suffered a loss of ₹ 50,000. Each of the partners withdrew ₹ 10,000 during the year.
On 31st March, 2019, the firm was dissolved, the creditors of the firm stood at ₹ 24,000 on that date and Cash in Hand was ₹ 4,000. The assets realised ₹ 3,00,000 and Creditors were paid ₹ 23,500 in full settlement of their claims.
Prepare Realisation Account and show your workings clearly.
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.
