Question

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.

Answer 1

MEMORANDUM BALANCE SHEET
as at March 31, 2015

$\begin{array}{cccc}\text{Liabilities}& \text{Amount (Rs.)}& \text{Assets}& \text{Amount (Rs.)}\\ \text{Creditors}& 25,000& \text{Cash}& 5,000\\ \text{B's Loan}& 15,000& \text{A's Loan}& 42,000\\ \text{Capitals:}& & \text{Other Assets (Balancing figure)}& 1,43,000\\ A1,00,000& & & \\ B\underset{–}{50,000}& 1,50,000& & \\ & \underset{–}{\overline{1,90,000}}& & \underset{–}{\overline{1,90,000}}\end{array}$

$\text{Dr.}\text{REALISATION ACCOUNT}\text{Cr.}\begin{array}{cccc}\text{Particulars}& \text{Amount (Rs.)}& \text{Particulars}& \text{Amount (Rs.)}\\ \text{Sundry Assets}& 1,43,000& \text{Creditors}& 25,000\\ \text{A's Loan}& 42,000& \text{B's Loan}& 15,000\\ \text{Cash A/c (Creditors paid)}& 25,000& \text{Cash A/c (Assets realised)}& 64,000\\ \text{Cash A/c (B's Loan)}& 15,000& \text{Cash A/c (A's Loan)}& 42,000\\ \text{Cash A/c (Expenses)}& 1,000& \text{Capital Accounts}& \\ & & \text{(Loss transferred):}& \\ & & A\frac{3}{4}th60,000& \\ & & B\frac{1}{4}th\underset{–}{20,000}& 80,000\\ & \underset{–}{\overline{2,26,000}}& & \underset{–}{\overline{2,26,000}}\end{array}$

$\text{Dr.}\text{CAPITAL ACCOUNTS}\text{Cr.}$
$\begin{array}{cccccc}\text{Particulars}& A(Rs.)& B(Rs.)& \text{Particulars}& A(Rs.)& B(Rs.)\\ \text{Realisation A/c (Loss)}& 60,000& 20,000& \text{Balance b/d}& 1,00,000& 50,000\\ \text{Cash A/c}& 40,000& 30,000& & & \\ & \underset{–}{\overline{1,00,000}}& \underset{–}{\overline{50,000}}& & \underset{–}{\overline{1,02,000}}& \underset{–}{\overline{50,000}}\end{array}$

$\text{Dr.}\text{CASH ACCOUNT}\text{Cr.}$
$\begin{array}{cccc}\text{Particulars}& \text{Amount (Rs.)}& \text{Particulars}& \text{Amount (Rs.)}\\ \text{Balance b/d}& 5,000& \text{Realisation A/c (Creditors)}& 25,000\\ \text{Realisation A/c}& & \text{Realisation A/c (Expenses)}& 1,000\\ \text{(Assets realised)}& 64,000& \text{Realisation A/c (B's Loan)}& 15,000\\ \text{Realisation A/c (A's Loan)}& 42,000& \text{A's Capital A/c}& 40,000\\ & & \text{B's Capital A/c}& 30,000\\ & \underset{–}{\overline{1,11,000}}& & \underset{–}{\overline{1,11,000}}\end{array}$