Question

A,B and C were partners sharing profit and losses in the proportion of 2:2:1. Following is their balance sheet as on ${31}^{st}$ March, 2013:
On the above date, the partners decide to dissolve the firm.
(1) Asset were realised as -
Machinery Rs. 22,500, stock Rs. 9,000, Investment Rs. 10,500, Debtors Rs. 22,500.
(2) Dissolution expenses were Rs. 1,500.
(3) Goodwill of the firm realised Rs. 12,000.
Pass the necessary Journal entries in the books of the firm.

Answer 1

1. For transfer of assets to realisation account:
Realisation A/c Dr. 74500
To Machinery A/c 25000
To Stock A/c 10000
To Debtors A/c 27500
To Investment A/c 12000
2. For transfer of liabilities:
Creditors A/c Dr. 20000
Bills Payable A/c Dr. 7000
Reserve for Doubtful Debts A/c Dr. 1500
To Realisation A/c 28500
3. For Assets sold:
Bank A/c Dr. 76500
To Realisation A/c 76500
4. For payment of liabilities:
Realisation A/c Dr. 27000
To Bank A/c 27000
5. For payment of dissolution expenses:
Realisation A/c Dr. 1500
To Bank A/c 1500
6. For distribution of profit among partners:
Realisation A/c Dr. 2000
To A's Capital A/c 800
To B's Capital A/c 800
To C's Capital A/c 400
7. For payment of loan:
A's loan A/c Dr. 4000
To Bank A/c 4000
8. For division of General Reserve:
General Reserve A/c Dr. 3000
To A's Capital A/c 1200
To B's Capital A/c 1200
To C's Capital A/c 600
9. For division of Debit balance of profit and loss:
A's Capital A/c 3600
B's Capital A/c 3600
C's capital A/c 1800
To Profit and loss A/c 9000
10. For payment of capital of partners:
A's Capital A/c 28400
B's Capital A/c 8400
C's Capital A/c 9200
To Bank A/c 46000