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Question
X, Y and Z entered into a partnership and contributed ₹ 9,000; ₹ 6,000 and ₹ 3,000 respectively. They agreed to share profits and losses equally. The business lost heavily during the very first year and they decided to dissolve the firm. After realising all assets and paying off liabilities, there remained a cash balance of ₹ 6,000.
Prepare Realisation Account and Partner's Capital Accounts.
Solution
Realisation Account
|
Dr. |
|
Cr. |
||||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|||
|
Sundry Assets (WN 2) |
18,000 |
Cash A/c (Asset realised ) |
6,000 |
|||
|
|
|
Loss transferred to: |
|
|||
|
|
|
X’s Capital A/c |
4,000 |
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||
|
|
|
Y’s Capital A/c |
4,000 |
|
||
|
|
|
Z’s Capital A/c |
4,000 |
12,000 |
||
|
|
18,000 |
|
18,000 |
|||
Partners’ Capital Accounts
|
Dr. |
|
Cr. |
|||||||
|
Particulars |
X |
Y |
Z |
Particulars |
X |
Y |
Z |
||
|
Realisation A/c (Loss) |
4,000 |
4,000 |
4,000 |
Balance b/d |
9,000 |
6,000 |
3,000 |
||
|
Cash A/c |
5,000 |
2,000 |
– |
Cash A/c |
– |
– |
1,000 |
||
|
|
9,000 |
6,000 |
4,000 |
|
9,000 |
6,000 |
4,000 |
||
Working Notes:
WN 1
Cash Account
|
Dr. |
|
Cr. |
|||
|
Particulars |
Amount Rs |
Particulars |
Amount Rs |
||
|
Realisation A/c |
6,000 |
X’s Capital A/c |
5,000 |
||
|
Z’s Capital A/c |
1,000 |
Y’s Capital A/c |
2,000 |
||
|
|
7,000 |
|
7,000 |
||
WN 2
Memorandum Balance Sheet
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
|
Capital A/cs: |
|
Sundry Assets |
18,000 |
|
|
X’s Capital A/c |
9,000 |
|
(Balancing figure) |
|
|
Y’s Capital A/c |
6,000 |
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|
|
|
Z’s Capital A/c |
3,000 |
18,000 |
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|
|
|
18,000 |
|
18,000 |
|
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| Liabilities |
Amount (Rs.) |
Assets | Amount (Rs.) | Amount (Rs.) |
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3600 | |
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| 522,000 | 522,000 |
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| 86,000 | 86,000 |
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| Debtors | Rs. 18,500 |
| Furniture | Rs. 4,500 |
| Plant | Rs. 25,000 |
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| Capitals: | 160,000 | Cash | 22,500 | |
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| Geeta | 50,000 | Stock | 36,000 | |
|
Ashish |
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| 271,000 | 271,000 |
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| Rs | |
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| Plant |
42,750 |
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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.
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(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.
A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. On 31st March, 2019, their Balance Sheet was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Bank Overdraft | 30,000 | Cash in Hand | 6,000 | |||||
| General Reserve | 56,000 | Bank Balance | 10,000 | |||||
| Investments Fluctuation Reserve | 20,000 | Sundry Debtors | 26,000 | |||||
| A's Loan | 34,000 | Less: Provision for Doubtful Debtors | 2,000 | 24,000 | ||||
| Capital A/c: | ||||||||
| A | 50,000 | Investments | 40,000 | |||||
| Stock | 10,000 | |||||||
| Furniture | 10,000 | |||||||
| Building | 60,000 | |||||||
| B's Capital | 30,000 | |||||||
| 1,90,000 | 1,90,000 | |||||||
On that date, the partners decide to dissolve the firm. A took over Investments at an agreed valuation of ₹ 35,000. Other assets were realised as follows:
Sundry Debtors: Full amount. The firm could realise Stock at 15% less and Furniture at 20% less than the book value. Building was sold at ₹ 1,00,000.
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You are required to close the books of the firm by preparing Realisation Account, Partners' Capital Accounts and Bank Account.
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| 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 | |||
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(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.
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Show Ledger Accounts recording the dissolution in the books of the firm.
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| Creditors | ₹ 40,000 | |
| Ashok's Capital | ₹ 1,00,000 | |
| Kishore's Capital | ₹ 10,000 | (Dr. Balance) |
| Profit and Loss A/c | ₹ 8,000 | (Dr. Balance) |
| Realisation Expenses | ₹ 1,000 |
You are required to close the books of the firm.
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.
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.
