Question

Achad and Vichal were partners in a firm sharing profits in the ratio of 3 : 5. On 31.3.2011 their Balance Sheet was as follows:

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amount (Rs.)}& \text{Assets}& \text{Amount (Rs.)}\\ \text{Capital:}& & \text{Land and Building}& 4,00,000\\ \text{Achal}3,00,000& & \text{Machinery}& 3,00,000\\ \text{Vichal}\underset{–}{5,00,000}& 8,00,000& \text{Debtors}& 2,22,000\\ \text{Creditors}& 1,79,000& \text{Cash at Bank}& 78,000\\ \text{Employees Provident Fund}& 21,000& & \\ & \underset{–}{\overline{10,00,000}}& & \underset{–}{\overline{10,00,000}}\end{array}$

The firm was dissolved on 01.04.2011 and the assets and liabilities were settled as follows :

(i) Land and Building realised Rs. 4,30,000;

(ii) Debtors realised Rs. 2,25,000 (with interest) and Rs. 1,000 were recovered for bad debts written off last year;

(iii) There was an unrecorded investment which was sold for Rs. 25,000;

(iv) Vichal took-over machinery at Rs. 2,80,000 for cash;

(v) 50% of the creditors were paid Rs. 4,000 less in full settlement and the remaining creditors were paid full amount.

Prepare realisation account.

Answer 1

$\text{Dr.}\text{REALISATION ACCOUNT}\text{Cr.}$
$\begin{array}{cccc}\text{Particulars}& \text{Amount (Rs.)}& \text{Particulars}& \text{Amount (Rs.)}\\ \text{Land \& Building A/c}& 4,00,000& \text{Creditors A/c}& 1,79,000\\ \text{Machinery A/c}& 3,00,000& \text{Employees Provident Fund A/c}& 21,000\\ \text{Debtors A/c}& 2,22,000& \text{Bank A/c (Land \& Building}& \\ \text{Bank A/c (Creditors paid)}& & \text{\& Debtors realised)}& 6,55,000\\ (85,500+89,500)& 1,75,000& \text{Bank A/c (Bad debts recovered)}& 1,000\\ \text{Bank A/c (Employees provident}& & \text{Bank A/c (Unrecorded investment}& \\ \text{fund paid)}& 21,000& \text{sold)}& 25,000\\ \text{Profit on Realisation}& & \text{Bank A/c (Machinery taken by}& \\ \text{transferred to:}& & \text{Vichal for cash)}& 2,80,000\\ \text{Achal's Capital A/c}16,125& & & \\ \text{Vichal's Capital A/c}\underset{–}{26,875}& 43,000& & \\ & \underset{–}{\overline{11,61,000}}& & \underset{–}{\overline{11,61,000}}\end{array}$

$\text{Dr.}\text{PARTNER'S CAPITAL ACCOUNTS}\text{Cr.}$
$\begin{array}{cccccc}\text{Particulars}& A(Rs.)& B(Rs.)& \text{Particulars}& A(Rs.)& B(Rs.)\\ \text{Bank A/c}& & & \text{Balance b/d}& 3,00,000& 5,00,000\\ \text{(Final settlement)}& 3,16,125& 5,26,875& \text{Realisation A/c}& & \\ & & & \text{(Profit)}& 16,125& 26,875\\ & \underset{–}{\overline{3,16,125}}& \underset{–}{\overline{5,26,875}}& & \underset{–}{\overline{3,16,125}}& \underset{–}{\overline{5,26,875}}\end{array}$