Balance Sheet of a firm as at 31st March, 2018 , when it was decided to dissolve the same , was:

Liabilities

₹

Assets

₹

Sundry Creditors

14,000

Cash at Bank
640

Reserve for Contingencies 500 Stock 4,740

Capital A/cs: Debtors 5,540

X

4,000

Machinery

10,580

Y 3,000 7,000

21,500

21,500

₹19,500 were realised from all assets except Cash at Bank . The cost of winding up came to ₹ 440. X and Y shared profits in the ratio of 2 : 1 respectively.
Prepare Realisation Account and Capital Accounts of Partners.

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Solution

Realisation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Machinery

10,580

Sundry Creditors

14,000

Stock

4,740

Bank (Assets Realised)

19,500

Debtors

5,540

Bank A/c:

Loss transferred to:

Creditors

14,000

X’s Capital A/c

1,200

Expenses

440

14,440

Y’s Capital A/c

600

1,800

35,300

35,300

Partners’ Capital Accounts

Dr.

Cr.

Particulars

X

Y

Particulars

X

Y

Realisation A/c (Loss)

1,200

600

Balance b/d

4,000

3,000

Reserve for Contingencies

333

167

Bank A/c

3,133

2,567

4,333

3,167

4,333

3,167

Bank Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

640

Realisation A/c

14,440

Realisation A/c

19,500

X’s Capital A/c

3,133

Y’s Capital A/c

2,567

20,140

20,140

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Similar questions

Q. Balance Sheet of a firm as at 31st March, 2019, when it was decided to dissolve the same, was:


Liabilities		Amount (₹)	Assets	Amount (₹)
Sundry Creditors		14,000	Cash at Bank	640
General Reserve		500	Stock	4,740
Capital A/cs:			Debtors	5,540
X	4,000		Machinery	10,580
Y	3,000	7,000

		21,500		21,500

₹19,500 were realised from all assets except Cash at Bank. The cost of winding up came to ₹ 440. X and Y shared profits in the ratio of 2 : 1 respectively.
Prepare Realisation Account and Capital Accounts of Partners.

Q. Anju, Manju and Sanju were partners in a firm sharing profits in the ratio of 2 : 2 : 1 . On 31st March, 2018, their Balance Sheet was:



Liabilities		₹	Assets	₹
Creditors		50,000	Cash	60,000
Bank Loan		35,000	Debtors	75,000
Employees Provident Fund		15,000	Stock	40,000
Investments Fluctuation Reserve		10,000	Investments	20,000
Commission Received in Advance		8,000	Plant	50,000
Capital A/cs:			Profit and Loss A/c	3,000
Anju	50,000
Manju	50,000
Sanju	30,000	1,30,000
		2,48,000		2,48,000

On this date , the firm was dissolved . Anju was appointed to realise the assets . Anju was to receive 5% commission on the sale of assets (except cash) and was to bear all expenses of realisation .
Anju realised the assets as follows : Debtors ₹ 60,000; Stock ₹ 35,500; Investments ₹ 16,000; Plant 90% of the book value . Expenses of Realisation amounted to ₹ 7,500. Commission received in advance was returned to customers after deducting ₹ 3,000.
Firm had to pay ₹ 8,500 for Outstanding Salary, not provided for earlier , Compensation paid to employees amounted to ₹ 17,000. This liability was not provided for in the above Balance Sheet . ₹ 20,000 had to be paid for Employees' Provident Fund.
Prepare Realisation Account , Capital Accounts of Partners and Cash Account.

Q. Balance Sheet of P, Q and R as at 31st March, 2018, who were sharing profits in the ratio of 5 : 3 : 1 , was:

Liabilities		Amount (₹)	Assets		Amount (₹)
Bills Payable		40,000	Cash at Bank		40,000
Loan from Bank		30,000	Stock		19,000
Reserve Fund		9,000	Sundry Debtors	42,000
Capital A/cs:		5,800	Less: Provision for D. Debts	2,000	40,000
P	44,000
Q	36,000		Building		40,000
R	20,000	1,00,000	Plant and Machinery		40,000

		1,79,000			1,79,000

The partners dissolved the business. Assets realised

—

Stock ₹ 23,400; Debtors 50%; Fixed Assets 10% less than their book value . Bills Payable were settled for ₹ 32,000. There was an Outstanding Bill of Electricity ₹ 800 which was paid off. Realisation expenses ₹ 1,250 were also paid.
Prepare Realisation Account , Partner's Capital Accounts and Bank Account .

PRACTICAL PROBLEMS

Sushil and Sumit were in partnership sharing profits and losses in the proportion of 3/5 and 2/5 respectively. On 31^st March, 2005 they decide to dissolve the firm when their Balance Sheet was as under:

Balance Sheet as on 31^st March, 2005
Liabilities	Amount Rs	Assets	Amount Rs
Sushil’s Capital	20,000	Plant and Machinery	15,000
Sumit’s Capital	18,000	Stock	15,000
General Reserve	5,000	Sundry Debtors	22,000
Sumit’s Loan A/c	2,000	Bank	3,000
Sundry Creditors	10,000
	55,000		55,000

The Assets realised as follows: Stock Rs 14,000, Plant and Machinery Rs 12,000 and Debtors Rs 20,000. The Sundry Creditors were paid Rs 9,000 in full settlement.

Prepare: Realisation Account, Partners Capital Accounts and Bank Account.

Q. A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1 . On 31st March, 2018 , their Balance Sheet was:


Liabilities	₹	Assets		₹
Bank Overdraft	30,000	Cash in Hand		6,000
General Reserve	56,000	Bank Balance		10,000
Investments Fluctuation Reserve	20,000	Sundry Debtors	26,000
A's Loan	34,000	Less: Provision for Doubtful Debtors	2,000	24,000
Capital A/c:		Investments		40,000
A	50,000	Stock		10,000
		Furniture		10,000
		Building		60,000
		B's Capital		30,000
	1,90,000			1,90,000

On that date , the partners decide to dissolve the firm . A took over Investments at an agreed valuation of ₹ 35,000. Other assets were realised as follows:
Sundry Debtors: Full amount . The firm could realise Stock at 15% less and Furniture at 20% less than the book value . Building was sold at ₹ 1,00,000.
Compensation to employees paid by the firm amounted to ₹ 10,000. This liability was not provided for in the above Balance Sheet.
You are required to close the books of the firm by preparing Realisation Account , Partners' Capital Accounts and Bank Account .

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Realisation Account
Dr.						Cr.
Particulars		Amount Rs	Particulars		Amount Rs
Machinery		10,580	Sundry Creditors		14,000
Stock		4,740	Bank (Assets Realised)		19,500
Debtors		5,540
Bank A/c:			Loss transferred to:
Creditors	14,000		X’s Capital A/c	1,200
Expenses	440	14,440	Y’s Capital A/c	600	1,800


		35,300			35,300

Partners’ Capital Accounts
Dr.						Cr.
Particulars	X	Y	Particulars	X	Y
Realisation A/c (Loss)	1,200	600	Balance b/d	4,000	3,000
			Reserve for Contingencies	333	167
Bank A/c	3,133	2,567
	4,333	3,167		4,333	3,167

Bank Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	640	Realisation A/c	14,440
Realisation A/c	19,500	X’s Capital A/c	3,133
		Y’s Capital A/c	2,567
	20,140		20,140