A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2 . On 31st March, 2018, their Balance Sheet was as follows:

Liabilities

₹

Assets

₹

Creditors

38,000

Cash at Bank

11,500

Mrs. A's Loan 10,000 Stock 6,000

B's Loan 15,000 Debtors 19,000

Reserve 5,000 Furniture 4,000

A's Capital

10,000

Plant

28,000

B's Capital

8,000

18,000

Investments

10,000

Profit and LossA/C

7,500

86,000

86,000

The firm was dissolved on 31st March, 2018 and both the partners agreed to the following :
(a) A took Investments at an agreed value of ₹ 8,000. He also agreed to settle Mrs. A's Loan.
(b) Other assets realised as : Stock $—$ ₹ 5,000; Debtors $—$ ₹ 18,500; Furniture $—$ ₹ 4,500; Plant $—$ ₹ 25,000.
(c) Expenses of realisation came to ₹ 1,600.
(d) Creditors agreed to accept ₹ 37,000 in full settlement of their claims .
Prepare Realisation Account, Partners' Capital Accounts and Bank Account .

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Solution

Realisation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

6,000

Creditors

38,000

Debtors

19,000

Mrs. A’s Loan

10,000

Furniture

4,000

Plant

28,000

A’s Capital A/c (Investments)

8,000

Investments

10,000

Bank A/c:

A’s Capital A/c (Mrs. A’s loan)

10,000

Stock

5,000

Bank A/c :

Debtors

18,500

Expenses

1,600

Furniture

4,500

Creditors

37,000

38,600

Plant

25,000

53,000

Loss transferred to:

A’s Capital A/c

3,960

B’s Capital A/c

2,640

6,600

1,15,600

1,15,600

Partners’ Capital Accounts

Dr.

Cr.

Particulars

A

B

Particulars

A

B

Realisation (loss)

3,960

2,640

Balance b/d

10,000

8,000

Realisation A/c

8,000

–

Reserve A/c

3,000

2,000

Profit and Loss A/c

4,500

3,000

Realisation A/c

10,000

–

Bank A/c

6,540

4,360

23,000

10,000

23,000

10,000

B’s Loan Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

15,000

Bank A/c

15,000

15,000

15,000

Bank Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

11,500

Realisation A/c

38,600

Realisation A/c

53,000

A’s Capital A/c

6,540

B’s Capital A/c

4,360

B’s Loan A/c

15,000

64,500

64,500

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Similar questions

Q. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2019, their Balance Sheet was as follows:

BALANCE SHEET as at 31st March, 2019
Liabilities		Amount (₹)	Assets	Amount (₹)
Creditors		38,000	Cash at Bank	11,500
Mrs. A's Loan		10,000	Stock	6,000
B's Loan		15,000	Debtors	19,000
Reserve		5,000	Furniture	4,000
A's Capital	10,000		Plant	28,000
B's Capital	8,000	18,000	Investments	10,000
			Profit and LossA/C	7,500



		86,000		86,000

The firm was dissolved on 31st March, 2019 and both the partners agreed to the following:
(a) A took Investments at an agreed value of ₹ 8,000. He also agreed to settle Mrs. A's Loan.
(b) Other assets realised as: Stock − ₹ 5,000; Debtors − ₹ 18,500; Furniture − ₹ 4,500; Plant − ₹ 25,000.
(c) Expenses of realisation came to ₹ 1,600.
(d) Creditors agreed to accept ₹ 37,000 in full settlement of their claims.
Prepare Realisation Account, Partners' Capital Accounts and Bank 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	Amount Rs	Assets	Amount 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. Surjit agreed to take the investments at Rs 8,000 and to pay Mrs. Surjit’s loan.

2. Other assets were realised as follows:

Stock	Rs	5,000
Debtors	Rs	18,500
Furniture	Rs	4,500
Plant	Rs	25,000

3. Expenses on Realisation amounted 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.

PRACTICAL PROBLEMS

Anil and Sunil were partners sharing profits and losses in the ratio of 3:2. Their Balance Sheet as on 31^st March, 2009.

Balance Sheet as on 31^st March, 2009
Liabilities	Amount Rs	Assets	Amount Rs
Capital Account		Bank	30,000
Anil	50,000	Stock	25,000
Sunil	30,000	Debtors	70,000
Current Account		Plant	45,000
Anil	15,000	Building	35,000
Sunil	10,000
Creditors	87,000
Bills payable	13,000
	2,05,000		2,05,000

The firm was dissolved on the above date and the assets realised as under:

1) Stock Rs 20,000, Debtors Rs 60,000, Plant Rs 40,000 and Building Rs 30,000.

2) Anil agreed to pay off the bills payable.

3) Creditors were paid in full.

4) Dissolution expenses were Rs 7,000.

Prepare:

(i) Realisation Account

(ii) Bank Account

(iii) Current Account and Capital Account of the partners.

Q. 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.
Compensation to employees paid by the firm amounted to ₹ 10,000. This liability was not provided for in the above Balance Sheet.
You are required to close the books of the firm by preparing Realisation Account, Partners' Capital Accounts and Bank Account.

Q. A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1 . On 31st March, 2018 , their Balance Sheet was:


Liabilities	₹	Assets		₹
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:		Investments		40,000
A	50,000	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.
Compensation to employees paid by the firm amounted to ₹ 10,000. This liability was not provided for in the above Balance Sheet.
You are required to close the books of the firm by preparing Realisation Account , Partners' Capital Accounts and Bank Account .

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B’s Loan Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
		Balance b/d	15,000
Bank A/c	15,000
	15,000		15,000

Realisation Account
Dr.						Cr.
Particulars		Amount Rs	Particulars		Amount Rs
Stock		6,000	Creditors		38,000
Debtors		19,000	Mrs. A’s Loan		10,000
Furniture		4,000
Plant		28,000	A’s Capital A/c (Investments)		8,000
Investments		10,000	Bank A/c:
A’s Capital A/c (Mrs. A’s loan)		10,000	Stock	5,000
Bank A/c :			Debtors	18,500
Expenses	1,600		Furniture	4,500
Creditors	37,000	38,600	Plant	25,000	53,000
			Loss transferred to:
			A’s Capital A/c	3,960
			B’s Capital A/c	2,640	6,600
		1,15,600			1,15,600

Partners’ Capital Accounts
Dr.						Cr.
Particulars	A	B	Particulars	A	B
Realisation (loss)	3,960	2,640	Balance b/d	10,000	8,000
Realisation A/c	8,000	–	Reserve A/c	3,000	2,000
Profit and Loss A/c	4,500	3,000	Realisation A/c	10,000	–
Bank A/c	6,540	4,360
	23,000	10,000		23,000	10,000

Bank Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	11,500	Realisation A/c	38,600
Realisation A/c	53,000	A’s Capital A/c	6,540
		B’s Capital A/c	4,360
		B’s Loan A/c	15,000
	64,500		64,500