Question

Ashu and Harish are partners sharing profits and losses as 3 : 2 . They decided to dissolve the firm on 31st March, 2018. Their Balance Sheet on the above date was:

Liabilities				₹	Assets			₹
Capital A/cs:					Building			80,000
Ashu		1,08,000			Machinery			70,000
Harish		54,000		1,62,000	Furniture			14,000
Creditors				88,000	Stock			20,000
Bank Overdraft				50,000	Investments			60,000
					Debtors			48,000
					Cash in Hand			8,000
				3,00,000				3,00,000

The firm was dissolved on 1st April,2018 and the Assets and Liabilities were settled as follows :
(a) Land and Building b realised ₹ 4,30,000.
(b) Debtors realised ₹ 2,25,000 (with interest) and ₹ 1,000 were recovered for Bad Debts written off last year .
(c) There was an Unrecorded Investment which was sold for ₹ 25,000.
(d) Vichal took over Machinery at ₹ 2,80,000 for cash.
(e) 50% of the Creditors were paid ₹ 4,000 less in full settlement and the remaining Creditors were paid full amount .
Pass necessary journal entries for dissolution of the firm.









Ashu is to take over the building at ₹ 95,000 and Machinery and Furniture is taken over by Harish at value of ₹ 80,000. Ashu agreed to pay Creditor and Harish agreed to meet Bank overdraft. Stock and Investments are taken by both partner in profit-sharing ratio. Debtors realised for ₹ 46,000, expenses of realisation amounted to ₹ 3,000. Prepare necessary Ledger Accounts.

Answer 1

Realisation Account
Dr.						Cr.
Particulars			Amount (₹)	Particulars	Amount (₹)
Building			80,000	Creditors	88,000
Machinery			70,000	Bank overdraft	50,000
Furniture			14,000	Ashu’s Capital A/c (see working note)	1,43,000
Stock			20,000	Harish’s Capital A/c (see working note)	1,12,000
Investments			60,000	Cash (Debtors)	46,000
Debtors			48,000
Ashu’s Capital A/c (Creditors)			88,000
Harish’s Capital A/c (Bank Overdraft)			50,000
Cash (Expenses)			3,000
Realisation Profit
Ashu’s Capital A/c		3,600
Harish’s Capital A/c		2,400	6,000
			4,39,000		4,39,000

Partners’ Capital Account
Dr.							Cr.
Particulars		Ashu	Harish	Particulars	Ashu	Harish
Realisation (Assets taken)		1,43,000	1,12,000	Balance b/d	1,08,000	54,000
Cash		56,600		Realisation (Liabilities)	88,000	50,000
				Realisation (Profit)	3,600	2,400
				Cash		5,600
		1,99,600	1,12,000		1,99,600	1,12,000

Cash Account
Dr.					Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
Balance b/d		8,000	Realisation (Expenses)	3,000
Realisation (Debtors)		46,000	Ashu’s Capital A/c	56,600
Harish’s Capital A/c		5,600
		59,600		59,600

Working Notes :

	Ashu	Harish
Building	95,000
Machinery and Furniture		80,000
Stock (3:2)	12,000	8,000
Investment (3:2)	36,000	24,000
	1,43,000	1,12,000