A, B and C were partners sharing profits in the ratio of 2 : 2 : 1 . They decided to dissolve their firm on 31st March, 2018 when the Balance Sheet was :

Liabilities

Amount

(₹)

Assets

Amount

(₹)

Creditors
40,000
Cash
40,000

Bills Payable
46,000
Debtors
70,000

Employees’ Provident Fund
32,000
Furniture
6,000

64,000

Mrs. A’s Loan
38,000
Stock
50,000

C’s Loan
30,000
Investments
60,000

Investments Fluctuation Reserve
16,000
Furniture
42,000

Capitals A/cs: Machinery
1,36,000

A
1,20,000
Land
1,00,000

B
1,00,000
Goodwill
30,000

C
1,00,000

3,20,000

5,22,000

5,22,000

Following transactions took place :
(a) A took over Stock at ₹ 36,000. He also took over his wife's loan.
(b) B took over half of Debtors at ₹ 28,000.
(c) C took over Investments at ₹ 54,000 and half of Creditors at their book value.
(d) Remaining Debtors realised 60% of their book value . Furniture sold for ₹ 30,000; Machinery ₹ 82,000 and Land ₹ 1,20,000.
(e) An unrecorded asset was sold for ₹ 22,000.
(f) Realisation expenses amounted to ₹ 4,000.
Prepare necessary Ledger Accounts to close the books of the firm.

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Solution

Realisation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Debtors

70,000

Provision for Doubtful Debts

6,000

Stock

50,000

Creditors

40,000

Investments

60,000

Bills Payable

46,000

Furniture

42,000

Employee’s Provident Fund

32,000

Machinery

1,36,000

Investment Fluctuation Fund

16,000

Land

1,00,000

Mrs. A’s Loan

38,000

Goodwill

30,000

A’s Capital A/c (Stock)

36,000

A’s Capital A/c (Mrs.A’s Loan)

38,000

B’s Capital A/c (Debtors)

28,000

C’s Capital A/c (Creditors)

20,000

C’s Capital A/c (Investments)

54,000

Cash A/c (Expenses)

4,000

Cash A/c (Debtors) 60% × 35,000

21,000

Cash A/c (Creditors)

20,000

Cash A/c (Furniture)

30,000

Cash A/c (Bills Payable)

46,000

Cash A/c (Machinery)

82,000

Cash A/c (Employees’ Provident Fund)

32,000

Cash A/c (Land)

1,20,000

Cash A/c (Unrecorded Assets)

22,000

Loss on Revaluation transferred to:

A

30,800

B

30,800

C

15,400

77,000

6,48,000

6,48,000

Partners’ Capital Account

Dr.

Cr.

Particulars

A

B

C

Particulars

A

B

C

Realisation A/c (Stock)

36,000

-

-

Balance b/d

1,20,000

1,00,000

1,00,000

Realisation A/c (Debtors)

-

28,000

-

Realisation A/c (Mrs.A’s Loan)

38,000

-

-

Realisation A/c (Investments)

-

-

54,000

Realisation A/c (Creditors)

-

-

20,000

Realisation A/c (Loss)

30,800

30,800

15,400

Cash A/c

91,200

41,200

50,600

1,58,000

1,00,000

1,20,000

1,58,000

1,00,000

1,20,000

C’s Loan A/c

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Cash A/c

30,000

Balance b/d

30,000

30,000

30,000

Cash A/c

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

40,000

Realisation A/c (Creditors)

20,000

Realisation A/c (Debtors)

21,000

Realisation A/c (Expenses)

4,000

Realisation A/c (Furniture)

30,000

Realisation A/c (Bills Payable)

46,000

Realisation A/c (Machinery)

82,000

Realisation A/c (Employees’
Provident Fund)

32,000

Realisation A/c (Land)

1,20,000

C’s Loan A/c

30,000

Realisation A/c
(Unrecorded Assets)

22,000

A’s Capital A/c

91,200

B’s Capital A/c

41,200

C’s Capital A/c

50,600

3,15,000

3,15,000

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Similar questions

Q. A, B and C were partners sharing profits in the ratio of 2 : 2 : 1. They decided to dissolve their firm on 31st March, 2019 when the Balance Sheet was:

Liabilities		Amount (₹)	Assets		Amount (₹)
Creditors		40,000	Cash		40,000
Bills Payable		46,000	Debtors	70,000
Employees’ Provident Fund		32,000	Less: Provision for Doubtful Debts	6,000	64,000
Mrs. A’s Loan		38,000	Stock		50,000
C’s Loan		30,000	Investments		60,000
Investments Fluctuation Reserve		16,000	Furniture		42,000
Capitals A/cs:			Machinery		1,36,000
A	1,20,000		Land		1,00,000
B	1,00,000		Goodwill		30,000
C	1,00,000	3,20,000

		5,22,000			5,22,000

Following transactions took place:
(a) A took over Stock at ₹ 36,000. He also took over his wife's loan.
(b) B took over half of Debtors at ₹ 28,000.
(c) C took over Investments at ₹ 54,000 and half of Creditors at their book value.
(d) Remaining Debtors realised 60% of their book value. Furniture sold for ₹ 30,000; Machinery ₹ 82,000 and Land ₹ 1,20,000.
(e) An unrecorded asset was sold for ₹ 22,000.
(f) Realisation expenses amounted to ₹ 4,000.
Prepare necessary Ledger Accounts to close the books of the firm.

Q. P, Q and R were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. They agreed to dissolve their partnership firm on 31st March, 2019. P was deputed to realise the assets and pay the liabilities. He was paid ₹ 1,000 as commission for his services. The financial position of the firm was:

	Balance Sheet as at 31st March, 2019
Liabilities			Amount (₹)	Assets		Amount (₹)
Creditors			10,000	Stock		5,500
Bills Payable			3,700	Investments		15,000
Investments Fluctuation Reserve			4,500	Debtors	7,100
Capital A/cs:				Less: Provision for Doubtful Debtors	450	6,650
P		37,550		Cash		5,600
Q		15,000	52,550	R's Capital A/c		8,000
				Plant and Machinery		30,000

			70,750			70,750

P took over Investments for ₹ 12,500. Stock and Debtors realised ₹ 11,500. Plant and Machinery were sold to Q for ₹ 22,500 for cash. Unrecorded assets realised ₹ 1,500. Realisation expenses paid amounted to ₹ 900.
Prepare necessary Ledger Accounts to close the books of the firm.

Q. Ashok, Babu and Chetan are in partnership sharing profit in the proportion of 1/2, 1/3, 1/6 respectively.They dissolve the partnership of the 31st March,2018 when the Balance Sheet of the firm as under:


Liabilities		₹	Assets	₹
Sundry Creditors		20,000	Bank	7,500
Bills Payable		25,500	Sundry Debtors	58,000
Babu's Loan		30,000	Stock	39,500
Capital A/cs:			Machinery	48,000
Ashok	70,000		Investments	42,000
Babu	55,000		Freehold Property	50,500
Chetan	27,000	1,52,000

Capital A/cs:
Ashok	10,000
Babu	5,000
Chetan	3,000	18,000


		2,45,000		2,45,500

The Machinery was taken over by Babu for ₹ 45,000, Ashok took over the Investments for ₹ 40,000 and Freehold property took over by Chetan at ₹ 55,000. The remaining Assets realised as follows:
Sundry Debtors ₹ 56,500 and Stock ₹ 36,500 . Sundry Creditors were settled at discount of 7% . A office computer, not shown in the books of accounts realised ₹ 9,000. Realisation expenses amounted to ₹ 3,000.
Prepare Realisation Account , Partners' Capital Accounts and Bank Account.

Q. Shilpa, Meena and Nanda decided to dissolve their partnership on 31st March, 2018. Their profit-sharing ratio was 3 : 2 : 1 and their Balance Sheet was as under:

Liabilities		₹	Assets	₹
Capital A/cs:			Land	81,000
Shilpa	80,000		Stock	56,760
Meena	40,000	1,20,000	Debtors	18,600
Bank Loan		20,000	Nanda's Capital	23,000
Creditors		37,000	Cash	10,840
Provision For Doubtful Debts		1,200
General Reserve		12,000

		1,90,200		1,90,200

It is agreed as follows:
The stock of value of ₹ 41,660 are taken over by Shilpa for ₹ 35,000 and she agreed to discharge bank loan. The remaining stock was sold at ₹ 14,000 and debtors amounting to ₹ 10,000 realised ₹ 8,000. Land is sold for ₹ 1,10,000. The remaining debtors realised 50% at their book value . Cost of realisation amounted to ₹ 1,200 . There was a typewriter not recorded in the books worth of ₹ 6,000 which were taken over by one of the Creditors at this value . Prepare Realisation Account , Partners' Capital Accounts, and Cash Account to close the books of the firm.

Q. Rita and Sobha are partners in a firm, Fancy Garments Exports, sharing profits and losses equally. On 1st April, 2019, the Balance Sheet of the firm was:


Liabilities		Amount (₹)	Assets		Amount (₹)
Sundry Creditors		75,000	Cash		6,000
Bills Payable		30,000	Bank		30,000
Rita's Loan		15,000	Stock		75,000
Reserve		24,000	Book Debts	66,000
Capital A/cs:			Less: Provision for Doubtful Debts	6,000	60,000
Rita	90,000
Sobha	30,000	1,20,000	Plant and Machinery		45,000
			Land and Building		48,000

		2,64,000			2,64,000

The firm was dissolved on the date given above. The following transactions took place:
(a) Rita took 25% of the Stock at a discount of 20% in settlement of her loan.
(b) Book Debts realised ₹ 54,000; balance of the Stock was sold at a profit of 30% on cost.
(c) Sundry Creditors were paid out at a discount of 10%. Bills Payable were paid in full .
(d) Plant and Machinery realised ₹ 75,000. Land and Building ₹ 1,20,000.
(e) Rita took the goodwill of the firm at a value of ₹ 30,000.
(f) An unrecorded asset of ₹ 6,900 was handed over to an unrecorded liability of ₹ 6,000 in full settlement.
(g) Realisation expenses were ₹ 5,250.
Show Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.

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C’s Loan A/c
Dr.		Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Cash A/c	30,000	Balance b/d	30,000
	30,000		30,000

Realisation Account
Dr.		Cr.
Particulars	Amount Rs	Particulars		Amount Rs
Debtors	70,000	Provision for Doubtful Debts		6,000
Stock	50,000	Creditors		40,000
Investments	60,000	Bills Payable		46,000
Furniture	42,000	Employee’s Provident Fund		32,000
Machinery	1,36,000	Investment Fluctuation Fund		16,000
Land	1,00,000	Mrs. A’s Loan		38,000
Goodwill	30,000	A’s Capital A/c (Stock)		36,000
A’s Capital A/c (Mrs.A’s Loan)	38,000	B’s Capital A/c (Debtors)		28,000
C’s Capital A/c (Creditors)	20,000	C’s Capital A/c (Investments)		54,000
Cash A/c (Expenses)	4,000	Cash A/c (Debtors) 60% × 35,000		21,000
Cash A/c (Creditors)	20,000	Cash A/c (Furniture)		30,000
Cash A/c (Bills Payable)	46,000	Cash A/c (Machinery)		82,000
Cash A/c (Employees’ Provident Fund)	32,000	Cash A/c (Land)		1,20,000
		Cash A/c (Unrecorded Assets)		22,000
		Loss on Revaluation transferred to:
		A	30,800
		B	30,800
		C	15,400	77,000
	6,48,000			6,48,000

Partners’ Capital Account
Dr.				Cr.
Particulars	A	B	C	Particulars	A	B	C
Realisation A/c (Stock)	36,000	-	-	Balance b/d	1,20,000	1,00,000	1,00,000
Realisation A/c (Debtors)	-	28,000	-	Realisation A/c (Mrs.A’s Loan)	38,000	-	-
Realisation A/c (Investments)	-	-	54,000	Realisation A/c (Creditors)	-	-	20,000
Realisation A/c (Loss)	30,800	30,800	15,400
Cash A/c	91,200	41,200	50,600
	1,58,000	1,00,000	1,20,000		1,58,000	1,00,000	1,20,000

Cash A/c
Dr.		Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	40,000	Realisation A/c (Creditors)	20,000
Realisation A/c (Debtors)	21,000	Realisation A/c (Expenses)	4,000
Realisation A/c (Furniture)	30,000	Realisation A/c (Bills Payable)	46,000
Realisation A/c (Machinery)	82,000	Realisation A/c (Employees’ Provident Fund)	32,000
Realisation A/c (Land)	1,20,000	C’s Loan A/c	30,000
Realisation A/c (Unrecorded Assets)	22,000	A’s Capital A/c	91,200
		B’s Capital A/c	41,200
		C’s Capital A/c	50,600
	3,15,000		3,15,000