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.

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Solution

Realisation Account

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

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

(₹)

Particulars

Amount

(₹)

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, 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.

Q. Balance Sheet of P, Q and R as at 31st March, 2019, 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
General Reserve		9,000	Sundry Debtors	42,000
Capital A/cs:			Less: Provision for Doubtful 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.

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, 2019 when the Balance Sheet of the firm as under:


Liabilities		Amount (₹)	Assets	Amount (₹)
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
Current A/cs:
Ashok	10,000
Babu	5,000
Chetan	3,000	18,000


		2,45,500		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.

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, B and C were partners sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2019, A's Capital and B's Capital were ₹ 30,000 and ₹ 20,000 respectively but C owed ₹ 5,000 to the firm. The liabilities were ₹ 20,000. The assets of the firm realised ₹ 50,000.
Prepare Realisation Account, Partner's Capital Accounts and Bank Account.

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Realisation Account
Dr.						Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
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 (₹)	Particulars	Amount (₹)
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