A and B dissolve their partnership. Their position as at 31st March, 2018 was:
Particulars Rs.
A's Capital 25,000
B's Capital 15,000
Sundry Creditors 20,000
Cash in Hand and at Bank 750
The balance of A's Loan Account to the firm stood at Rs. 10,000. The realisation expenses amounted to Rs. 350. Stock realised Rs. 20,000 and Debtors Rs. 25,000. B took a machine at the agreed valuation of Rs. 7,500. Other fixed assets realised Rs. 20,000.
You are required to close the books of the firm.

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Solution

Realization Account
Particulars Amount Particulars Amount
To Sundry Assets
(working notes) 69250 By Sundry Creditors 20000
To Bank A/c
Creditors- 20000
Expenses- 350 20350 By Bank A/c
Stock- 20000
Debtors- 25000
Other Assets- 20000 65000
To Profit
(transferred to partner's
capital a/c)
A- 1450
B- 1450 2900 By B's Capital A/c 7500
Total 92500 Total 92500
A's Loan Account
Particulars Amount Particulars Amount
To Bank A/c 10000 By Balance b/d 10000
Total 10000 Total 10000
Partner's Capital Accounts
Particulars A B Particulars A B
To Realisation A/c (machinery) 7500 By Balance b/d 25000 15000
To Bank A/c 26450 8950 By Realisation A/c
(profits) 1450 1450
Total 26450 16450 Total 26450 16450
Bank Account
Particulars Amount Particulars Amount
To Balance b/d 750 By Realisation A/c 20350
To Realisation A/c 65000 By A's Loan A/c 10000
By A's Capital A/c 26450
By B's Capital A/c 8950
Total 65750 Total 65750
Working Notes: 1 Memorandum Balance Sheet
Liabilities Amount Assets Amount
Capital
A- 25000
B- 15000 40000 Cash in Hand
and at Bank 750
Sundry Creditors 20000 Sundry Assets
(balancing figure) 69250
A's Loan 10000
Total 70000 Total 70000

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Similar questions

Q. A and B dissolve their partnership. Their position as at 31st March, 2019 was:

Particulars	₹

A's Capital	25,000
B's Capital	15,000
Sundry Creditors	20,000
Cash in Hand and at Bank	750

The balance of A's Loan Account to the firm stood at ₹ 10,000. The realisation expenses amounted to ₹ 350. Stock realised ₹ 20,000 and Debtors ₹ 25,000. B took a machine at the agreed valuation of ₹ 7,500. Other fixed assets realised ₹ 20,000.
You are required to close the books of the firm.

PRACTICAL PROBLEMS

Ganesh and Chandan were partners sharing profits and losses in the proportion of 3:2. They dissolve the partnership firm on 31^st March, 2011 when their position was as follows:

Balance Sheet as on 31^st March, 2011
Liabilities	Amount Rs	Assets		Amount Rs
Sundry Creditors	25,000	Debtors	1,12,500
Bank overdraft	20,000	Less: R.D.D.	12,500	1,00,000
Reserve Fund	30,000	Stock		2,25,000
Capital Accounts:		Furniture		50,000
Ganesh	2,30,000	Motor Car		75,000
Chandan	1,50,000	Cash in hand		5,000
	4,55,000			4,55,000

The Assets realised as follows: Debtors Rs 90,000, Stock Rs 2,00,000, and Goodwill Rs 25,000, Motor Car was taken over by Ganesh for Rs 70,000 and Furniture by Chandan for Rs 60,000.
The Creditors were paid Rs 22,500 in full settlement. The expenses of realisation amounted to Rs 10,000.

Pass necessary journal entries in the books of the firm.

PRACTICAL PROBLEMS

Mahesh, Suresh and Jayesh were partners of the firm. They decided to dissolve the firm on 31^st March, 2012. Their Balance Sheet as on that date was as under:

Balance Sheet as on 31^st March, 2012
Liabilities	Amount Rs	Assets		Amount Rs
Creditors	18,000	Cash at Bank		9,600
Loan	4,500	Sundry Assets		51,000
Capitals		Debtors	72,600
Mahesh	82,500	Less: R.D.D.	3,600	69,000
Suresh	30,000	Stock		23,400
Jayesh	21,000	Furniture		3,000
	1,56,000			1,56,000

The firm was dissolved as follows:

1) Mahesh will accept furniture for Rs 2,000 and agreed accept the debtors of book value of Rs 60,000 at on agreed value of Rs 51,000.

2) Suresh will accept stock at an agreed value Rs 20,000, and Sundry Assets of Book value Rs 24,000 at Rs 23,500.

3) Jayesh will accept remaining Sundry Assets for Rs 25,000 He will further accept the liability of loan along with due interest at 12% p.a.

Interest for three months on this loan was outstanding and was not recorded in the books.

4) Expenses of dissolution were Rs 1,000 and outstanding expenses of Rs 1,200 were to be paid from the firm.

5) The remaining debtors were realised Rs 7,000.

Prepare:

1) Realisation A/c

2) Partner’s Capital A/c

3) Bank A/c

Q. A and B dissolve their partnership . Their position as at 31st March , 2018 was:

Particulars	₹

A's Capital	25,000
B's Capital	15,000
Sundry Creditors	20,000
Cash in Hand and at Bank	750

The balance of A's Loan Account to the firm stood at ₹ 10,000. The realisation expenses amounted to ₹ 350. Stock realised ₹ 20,000 and Debtors ₹ 25,000 . B took a machine at the agreed valuation of ₹ 7,500.
You are required to close the books of the firm.

A and B were partners in a business sharing profits and losses in the ratio of 3 : 1, They decided to dissolve the partnership on March 31, 2015. On that date, their Capitals stood at Rs 1,00,000 and Rs 50,000 respectively. Amount owing by A to the firm was Rs 42,000 and the amount owed by the firm to B was Rs 15,000; Creditors were Rs 25,000 and Cash Rs 5,000. The assets other than the amount owing by A to the firm realised Rs 64,000. The expenses of realisation amounted to Rs 1,000.

Prepare the Memorandum Balance Sheet of the firm immediately prior to dissolution and necessary ledger accounts to close the books of the firm.

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Particulars	Amount	Particulars	Amount
To Sundry Assets (working notes)	69250	By Sundry Creditors	20000
To Bank A/c Creditors- 20000 Expenses- 350	20350	By Bank A/c Stock- 20000 Debtors- 25000 Other Assets- 20000	65000
To Profit (transferred to partner's capital a/c) A- 1450 B- 1450	2900	By B's Capital A/c	7500
Total	92500	Total	92500

Particulars	A	B	Particulars	A	B
To Realisation A/c (machinery)		7500	By Balance b/d	25000	15000
To Bank A/c	26450	8950	By Realisation A/c (profits)	1450	1450
Total	26450	16450	Total	26450	16450