Question

Rita, Geeta and Ashish were partners in a firm sharing profits/losses in the ratio of 3:2:1. On March 31, 2017 their balance sheet was as follows:

Liabilities		Amount Rs	Assets	Amount Rs
Capitals:			Cash	22,500
Rita	80,000		Debtors	52,300
Geeta	50,000		Stock	36,000
Ashish	30,000	1,60,000	Investments	69,000
Creditors		65,000	Plant	91,200
Bills payable		26,000
General reserve		20,000
		2,71,000		2,71,000

On the date of above mentioned date the firm was dissolved:

1. Rita was appointed to realise the assets. Rita was to receive 5% commission on the rate of assets (except cash) and was to bear all expenses of Realisation,

2. Assets were realised as follows:

	Rs
Debtors	30,000
Stock	26,000
Plant	42,750

3. Investments were realised at 85% of the book value,

4. Expenses of Realisation amounted to Rs 4,100,

5. Firm had to pay Rs 7,200 for outstanding salary not provided for earlier,

6. Contingent liability in respect of bills discounted with the bank was also materialised and paid off Rs 9,800,

Prepare Realisation Account, Capital Accounts of Partners’ and Cash Account.

Answer 1

In the books of Rita, Geeta and Ashish Realisation Account
Dr.								Cr.
Particulars				Amount Rs	Particulars		Amount Rs
Debtors				52,300	Creditors		65,000
Stock				36,000	Bills Payable		26,000
Investment				69,000	Cash:
Plant				91,200	Debtors	30,000
Cash:					Stock	26,000
Outstanding Salaries			7,200		Plant	42,750
Discounted Bill			9,800		Investment	58,650	1,57,400
Creditors			65,000
Bills Payable			26,000	1,08,000	Loss transferred to
Rita’s Capital A/c				7,870	Rita’s Capital A/c	57,985
(Commission- 1,57,400 ´ 5/100)					Geeta’s Capital A/c	38,657
					Ashish’s Capital A/c	19,328	1,15,970
				364370			364370

Partners’ Capital Account
Dr.								Cr.
Particulars		Rita	Geeta	Ashish	Particulars	Rita	Geeta	Ashish
Realisation (Loss)		57,985	38,657	19,328	Balance b/d	80,000	50,000	30,000
Bank		39,885	18,010	14,005	General Reserve	10,000	6,667	3,333
					Realisation	7,870
		97,870	56667	33333		97870	56,667	33,333

Cash Account
Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Balance b/d		22,500	Realisation A/c	1,08,000
Realisation		1,57,400	Rita’s Capital	39,885
			Geeta’s Capital A/c	18,010
			Ashish’s Capital A/c	14,005
		1,79,900		1,79,900

NOTE: As per the solution, the total of Cash Account should be Rs 1,79,900; however, the answer given in the book shows Rs 1,65,705.