Question

A and B, who were sharing profits and losses in the ratio of 60% and 40% respectively, decided to dissolve the firm on 31st March, 2015 on which date some of the balances were as follows :

$\begin{array}{cc}& \text{Amount (Rs.)}\\ \text{A's Capital}& 2,40,000\\ \text{B's Capital (Debit Balance)}& 25,000\\ \text{Profit \& Loss A/c (Debit Balance)}& 30,000\\ \text{Trade Creditors}& 40,000\\ \text{Loan from Mrs. A}& 20,000\\ \text{Cash at Bank}& 15,000\end{array}$

The assets (other than cash at bank) realised Rs 1,90,000 and all liabilities were paid off less 5% discount. Realisation expenses amounted to Rs 4,000.

Prpare Realisation Account. Capital Accounts and Bank Account assuming that both the partners are solvent.

Answer 1

BALANCE SHEET
as at 31st March, 2015

$\begin{array}{cccc}\text{Liabilities}& \text{Amount (Rs.)}& \text{Assets}& \text{Amount (Rs.)}\\ \text{Trade Creditors}& 40,000& \text{Cash at Bank}& 15,000\\ \text{Loan from Mrs. A}& 20,000& \text{B's Capital}& 25,000\\ \text{A's Capital}& 2,40,000& \text{Profit \& Loss A/c}& 30,000\\ & & \text{Sundry Assets (Balancing figure)}& 2,30,000\\ & \underset{–}{\overline{3,00,000}}& & \underset{–}{\overline{3,00,000}}\end{array}$

$\text{Dr.}\text{REALISATION ACCOUNT}\text{Cr.}$
$\begin{array}{cccc}\text{Particulars}& \text{Amount (Rs.)}& \text{Particulars}& \text{Amount (Rs.)}\\ \text{Sundry Assets A/c}& 2,30,000& \text{Trade Creditors}& 40,000\\ \text{Bank A/c (Trade Creditors}& & \text{Loan from Mrs. A}& 20,000\\ \text{paid off: Rs 40,000 less 5\%)}& 38,000& \text{Bank A/c (Assets Realised)}& 1,90,000\\ \text{Bank A/c (Loan from Mrs. A}& & \text{Capital A/cs}& \\ \text{paid off: Rs 20,000 less 5\%)}& 19,000& \text{(Loss on Realisation)}& \\ \text{Bank A/c (Expenses of}& & A60\%24,600& \\ \text{Realisation)}& 4,000& B40\%\underset{–}{16,400}& 41,000\\ & \underset{–}{\overline{2,91,000}}& & \underset{–}{\overline{2,91,000}}\end{array}$

$\text{Dr.}\text{CAPITAL ACCOUNTS}\text{Cr.}\begin{array}{cccccc}\text{Particulars}& A(Rs.)& B(Rs.)& \text{Particulars}& A(Rs.)& B(Rs.)\\ \text{Balance b/d}& -& 25,000& \text{Balance b/d}& 2,40,000& -\\ \text{Profit \& Loss A/c}& 18,000& 12,000& \text{Bank A/c}& & \\ \text{Realisation A/c (Loss)}& 24,600& 16,400& \text{(Amount brought in)}& -& 53,400\\ \text{Bank A/c}& & & & & \\ \text{(Final Payment)}& 1,97,400& -& & & \\ & \underset{–}{\overline{2,40,000}}& \underset{–}{\overline{53,400}}& & \underset{–}{\overline{2,40,000}}& \underset{–}{\overline{53,400}}\end{array}$

$\text{Dr.}\text{BANK ACCOUNT}\text{Cr.}$
$\begin{array}{cccc}\text{Particulars}& \text{Amount (Rs.)}& \text{Particulars}& \text{Amount (Rs.)}\\ \text{Balance b/d}& 15,000& \text{Realisation A/c (Trade}& \\ \text{Realisation A/c (Assets}& & \text{Creditors paid off)}& 38,000\\ \text{realised)}& 1,90,000& \text{Realisation A/c (Loan from}& \\ \text{B's Capital A/c}& 53,400& \text{Mrs. A paid off)}& 19,000\\ & & \text{Realisation A/c (Expenses)}& 4,000\\ & & \text{A's Capital A/c}& 1,97,400\\ & \underset{–}{\overline{2,58,400}}& & \underset{–}{\overline{2,58,400}}\end{array}$