Question

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 .

Answer 1

Realisation Account
Dr.								Cr.
Particulars				Amount Rs	Particulars		Amount Rs
Sundry Debtors				26,000	Provision for Doubtful Debts		2,000
Investments				40,000	Bank Overdraft		30,000
Stock				10,000	Investments Fluctuation Reserve		20,000
Furniture				10,000
Building				60,000	A’s Capital A/c (Investments)		35,000
Bank A/c:					Bank A/c:
Compensation to Employees			10,000		Sundry Debtors	26,000
Bank Overdraft			30,000	40,000	Stock	8,500
Profit transferred to:					Furniture	8,000
A’s Capital A/c		29,000			Building	1,00,000	1,42,500
B’s Capital A/c		14,500		43,500
				2,29,500			2,29,500

Partners’ Capital Accounts
Dr.							Cr.
Particulars		A	B	Particulars	A	B
Balance b/d		–	30,000	Balance b/d	50,000	–
Realisation A/c (Investment)		35,000		General Reserve A/c	37,333	18,667
Bank A/c		81,333	3,167	Realisation A/c (Profit )	29,000	14,500
		1,16,333	33,167		1,16,333	33,167

A’s Loan Account
Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
			Balance b/d	34,000
Bank A/c		34,000
		34,000		34,000

Bank Account
Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Balance b/d		10,000	Realisation A/c	40,000
Cash A/c		6,000	A’s Capital A/c	81,333
Realisation A/c		1,42,500	B’s Capital A/c	3,167
			A’s Loan A/c	34,000
		1,58,500		1,58,500