Question

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		Amount Rs	Assets	Amount 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
Capital			Investment	38,500
Gupta	90,000		Fixtures	27,000
Sharma	60,000	1,50,000
		2,48,000		2,48,000

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.

Answer 1

Books of Gupta and Sharma Journal
Date	Particulars			L.F.	Amount Rs	Amount Rs
2012
Dec. 31	Realisation A/c		Dr.		2,35,500
	To Sundry Debtors A/c					55,000
	To Stock A/c					44,000
	To Bills Receivable A/c					19,000
	To Machinery A/c					52,000
	To Investment A/c					38,500
	To Fixtures A/c					27,000
	(Assets transferred to Realisation Account)
Dec. 31	Sundry Creditors A/c		Dr.		38,000
	Mrs. Gupta’s Loan A/c		Dr.		20,000
	Mrs. Sharma’s Loan A/c		Dr.		30,000
	Provision for Doubtful Debts		Dr.		4,000
	To Realisation A/c					92,000
	(Liabilities transferred to Realisation Account)
Dec. 31	Bank A/c		Dr.		1,59,000
	To Realisation A/c					1,59,000
	(Assets realised: Sundry Debtors Rs 52,000, Stock Rs 42,000, Bills Receivable Rs 16,000, Machinery Rs 49,000)
Dec. 31	Realisation A/c		Dr.		20,000
	To Gupta’s Capital A/c					20,000
	(Gupta took over Mrs. Gupta's Loan)
Dec. 31	Gupta’s Capital A/c		Dr.		36,000
	To Realisation A/c					36,000
	(Investment taken over by Gupta)
Dec. 31	Realisation A/c		Dr.		66,860
	To Bank A/c					66,860
	(Liabilities paid: Mrs. Sharma's Loan Rs 30,000 and Creditors Rs 38,000 paid off less 3% discount)
Dec. 31	Realisation A/c		Dr.		1,200
	To Bank A/c					1,200
	(Realisation expenses paid)
Dec. 31	Gupta’s Capital A/c		Dr.		18,280
	Sharma’s Capital A/c		Dr.		18,280
	To Realisation A/c					36,560
	(Loss on Realisation transferred to Partners’ capital Account)
Dec. 31	Reserve Fund A/c		Dr.		6,000
	To Gupta’s Capital A/c					3,000
	To Sharma’s Capital A/c					3,000
	(Reserve fund distributed among partners ratio)
Dec. 31	Gupta’s Capital A/c		Dr.		58,720
	Sharma’s Capital A/c		Dr.		44,720
	To Bank A/c					1,03,440
	(Final payment made to partners)

Realisation Account
Dr.								Cr.
Particulars				Amount Rs	Particulars		Amount Rs
Sundry Debtors				55,000	Sundry Creditors		38,000
Stock				44,000	Mrs. Gupta’s Loan		20,000
Bills Receivable				19,000	Mrs. Sharma’s Loan		30,000
Machinery				52,000	Provision for Doubtful Debts		4,000
Investment				38,500	Bank :
Fixtures				27,000	Sundry Debtors	52,000
Gupta’s Capital A/c (Mrs. Gupta Loan)				20,000	Stock	42,000
Bank A/c:					Bills Receivable	16,000
Creditors			36,860		Machinery	49,000	1,59,000
Mrs. Sharma’s Loan			30,000		Gupta’s Capital A/c (Investment)		36,000
Expense			1,200	68,060	Loss transferred to
					Gupta’s Capital A/c	18,280
					Sharma’s Capital A/c	18,280	36,560
				3,23,560			3,23,560

Partners’ Capital Account
Dr.							Cr.
Particulars		Gupta	Sharma	Particulars	Gupta	Sharma
Realisation (Investment)		36,000		Balance b/d	90,000	60,000
Realisation (Loss)		18,280	18,280	Realisation (Mrs. Gupta Loan)	20,000
Bank		58,720	44,720	Reserve Fund	3,000	3,000
		1,13,000	63,000		1,13,000	63,000

Bank Account
Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Balance b/d		12,500	Realisation	68,060
Realisation (Assets realised)		1,59,000	(Payment of expenses and liabilities)
			Gupta’s Capital A/c	58,720
			Sharma’s Capital A/c	44,720
		1,71,500		1,71,500

NOTE: As per the solution, the total of Bank Account is Rs 1,71,500. However, the answers for the same has not been mentioned in the book.