Question

A, B and C started business on 1st April, 2016 with capitals of ₹ 1,00,000; ₹ 80,000 and ₹ 60,000 respectively sharing profits (losses) in the ratio of 4 : 3 : 3 . For the year ended 31st March, 2017, the firm suffered a loss of ₹ 50,000 . Each of the partners withdrew ₹ 10,000 during the year.
On 31st March, 2017, the firm was dissolved, the creditors of the firm stood at ₹ 24,000 on that date and Cash in Hand was ₹ 4,000. The assets realised ₹ 3,00,000 and Creditors were paid ₹ 23,500 in full settlement of their claims .
Prepare Realisation Account and show your workings clearly.

Answer 1

Realisation Account
Dr.						Cr.
Particulars			Amount Rs	Particulars	Amount Rs
Sundry Assets (WN 2)			1,80,000	Sundry Creditors	24,000
Cash A/c (Creditors)			23,500	Cash A/c (Assets)	3,00,000
Profit transferred to:
A’s Capital A/c		48,200
B’s Capital A/c		36,150
C’s Capital A/c		36,150	1,20,500
			3,24,000		3,24,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars		A	B	C	Particulars	A	B		C
					Balance b/d	70,000	55,000		35,000
Cash A/c		1,18,200	91,150	71,150	Realisation A/c	48,200	36,150		36,150
		1,18,200	91,150	71,150		1,18,200	91,150		71,150

Cash Account
Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Balance b/d		4,000	Realisation A/c	23,500
Realisation A/c		3,00,000	A’s Capital A/c	1,18,200
			B’s Capital A/c	91,150
			C’s Capital A/c	71,150
		3,04,000		3,04,000

Working Notes:

WN 1 Calculation of Partners’ Capital as on March 31, 2017

Particulars	X	Y	Z
Capital as on April 01, 2011	1,00,000	80,000	60,000
Less:Drawings	(10,000)	(10,000)	(10,000)
Less: Share of Loss (4 : 3 : 3)	(20,000)	(15,000)	(15,000)
Capital as on April 01, 2012	70,000	55,000	35,000

WN 2

Memorandum Balance Sheet as on March 31, 2017
Liabilities	Amount Rs	Assets	Amount Rs
Capital A/cs:		Cash in Hand	4,000
A	70,000	Sundry Assets	1,80,000
B	55,000	(Balancing figure)
C	35,000
Creditors	24,000
	1,84,000		1,84,000