Following is the Balance Sheet of Arvind and Balbir as at 31st March,2018:

Liabilities

Amount

(₹)

Assets

Amount

(₹)

Trade Creditors
45,000
Cash 750

Bills Payable 12,000 Bank 12,000

Mrs. Arvind's Loan 7,500 Stock 7,500

Mrs. Balbir's Loan 15,000 Investments 15,000

Reserve Fund
15,000
Book Debts
30,000

Investments Fluctuation Reserve
1,500
Less: Provision for D. Debts
3,000

27,000

Capital A/cs: Building 22,500

Arvind
15,000

Plant 30,000

Balbir
15,000

30,000
Goodwill
6,000

Profit and Loss A/c
5,250

1,26,000

1,26,000

The firm was dissolved on the above date under the following arrangement:
(a) Arvind promised to pay off Mrs. Arvind's Loan and took Stock at ₹ 6,000.
(b) Balbir took half the Investments @ 10% discount.
(c) Book Debts realised ₹ 28,500.
(d) Trade Creditors and Bills Payable were due on average basis of one month after 31st March,but were paid immediately on 31st March @ 2% discount per annum.
(e) Plant realised ₹ 37,500; Building ₹ 60,000; Goodwill ₹ 9,000 and remaining Investments ₹ 6,750.
(f) An old typewriter , written off completely from the firm's books,now estimated to realise ₹ 450 . It was taken by Balbir at this estimated price.
(g) Realisation expenses were ₹ 1,500.
Show Realisation Account , Capital Accounts of Partners and Bank Account.

Liabilities	Amount (₹)	Assets	Amount (₹)
Trade Creditors	45,000	Cash	750
Bills Payable	12,000	Bank	12,000
Mrs. Arvind's Loan	7,500	Stock	7,500
Mrs. Balbir's Loan	15,000	Investments	15,000
Reserve Fund	15,000	Book Debts	30,000
Investments Fluctuation Reserve	1,500	Less: Provision for D. Debts	3,000	27,000
Capital A/cs:		Building		22,500
Arvind	15,000		Plant	30,000
Balbir	15,000	30,000	Goodwill	6,000
			Profit and Loss A/c	5,250
	1,26,000		1,26,000

Open in App

Solution

Realisation Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Stock

7,500

Provision for Doubtful Debts

3,000

Investments

15,000

Trade Creditors

45,000

Book Debts

30,000

Bills Payable

12,000

Building

22,500

Mrs. Arvid’s Loan

7,500

Plant

30,000

Mrs. Balbir’s Loan

15,000

Goodwill

6,000

Investments Fluctuation Reserve

1,500

Arvind’s Capital A/c (Mrs. Arvind’s Loan)

7,500

Arvind’s Capital A/c (Stock)

6,000

Bank A/c:

Balbir’s Capital A/c (Investments 7500 × 90%)

6,750

Trade Creditors

44,925

Balbir’s Capital A/c (Unrecorded Typewriter )

450

Bills Payable

11,980

Bank A/c:

Expense

1,500

Book Debts

28,500

Mrs. Balbir’s Loan

15,000

73,405

Plant

37,500

Profit transferred to:

Building

60,000

Arvind’s Capital A/c

23,522.50

Goodwill

9,000

Balbir’s Capital A/c

23,522.50

47,045

Investments

6,750

1,41,750

2,38,950

2,38,950

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Arvind

Balbir

Particulars

Arvind

Balbir

Profit and Loss A/c

2,625

2,625

Balance b/d

15,000

15,000

Realisation A/c (Assets)

6,000

7,200

Realisation A/c

7,500

–

Bank A/c

44,897.50

36,197.50

Reserve Fund

7,500

7,500

Realisation A/c (Profit)

23,522.50

23,522.50

53,522.50

46,022.50

53,522.50

46,022.50

Bank Account

Dr.

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Balance b/d

12,000

Realisation A/c

73,405

Cash A/c

750

Arvind’s Capital A/c

44,897.5

Realisation A/c

1,41,750

Balbir’s Capital A/c

36,197.5

1,54,500

1,54,500

Working Notes:

Creditors

45,000

Less:2% discount for 1 month

(75)

Payment made to Creditors

44,925

Bills Payable

12,000

Less: 2% discount for 1 month

(20)

Payment made for Bills Payable

11,980

Suggest Corrections

Similar questions

Q. Following is the Balance Sheet of Arvind and Balbir as at 31st March, 2019:

Liabilities		Amount (₹)	Assets		Amount (₹)
Trade Creditors		45,000	Cash		750
Bills Payable		12,000	Bank		12,000
Mrs. Arvind's Loan		7,500	Stock		7,500
Mrs. Balbir's Loan		15,000	Investments		15,000
Reserve Fund		15,000	Book Debts	30,000
Investments Fluctuation Reserve		1,500	Less: Provision for Doubtful Debts	3,000	27,000
Capital A/cs:			Building		22,500
Arvind	15,000		Plant		30,000
Balbir	15,000	30,000	Goodwill		6,000
			Profit and Loss A/c		5,250
		1,26,000			1,26,000

The firm was dissolved on the above date under the following arrangement:
(a) Arvind promised to pay off Mrs. Arvind's Loan and took Stock at ₹ 6,000.
(b) Balbir took half the Investments @ 10% discount.
(c) Book Debts realised ₹ 28,500.
(d) Trade Creditors and Bills Payable were due on average basis of one month after 31st March, but were paid immediately on 31st March @ 2% discount per annum.
(e) Plant realised ₹ 37,500; Building ₹ 60,000; Goodwill ₹ 9,000 and remaining Investments ₹ 6,750.
(f) An old typewriter, written off completely from the firm's books, now estimated to realise ₹ 450. It was taken by Balbir at this estimated price.
(g) Realisation expenses were ₹ 1,500.
Show Realisation Account, Capital Accounts of Partners and Bank Account.

PRACTICAL PROBLEMS

Anil and Sunil were partners sharing profits and losses in the ratio of 3:2. Their Balance Sheet as on 31^st March, 2009.

Balance Sheet as on 31^st March, 2009
Liabilities	Amount Rs	Assets	Amount Rs
Capital Account		Bank	30,000
Anil	50,000	Stock	25,000
Sunil	30,000	Debtors	70,000
Current Account		Plant	45,000
Anil	15,000	Building	35,000
Sunil	10,000
Creditors	87,000
Bills payable	13,000
	2,05,000		2,05,000

The firm was dissolved on the above date and the assets realised as under:

1) Stock Rs 20,000, Debtors Rs 60,000, Plant Rs 40,000 and Building Rs 30,000.

2) Anil agreed to pay off the bills payable.

3) Creditors were paid in full.

4) Dissolution expenses were Rs 7,000.

Prepare:

(i) Realisation Account

(ii) Bank Account

(iii) Current Account and Capital Account of the partners.

Q. Yogesh and Naresh were partners sharing profits equally. They dissolved the firm on 1st April, 2019. Naresh was assigned the responsibility to realise the assets and pay the liabilities at a remuneration of ₹10,000 including expenses. Balance Sheet of the firm as on that date was as follows:

Liabilities		Amount (₹)	Assets		Amount (₹)
Creditors		40,000	Cash/Bank		6,000
Bills Payable		40,000	Investments		30,000
Naresh's Loan		44,000	Debtors	40,000
Mrs. Yogesh's Loan		42,000	Less: Provision for Doubtful Debts	4,000	36,000
Investment Fluctuation Reserve		8,000	Bills Receivable		33,400
Capital A/cs:			Profit and Loss A/c		1,10,600
Yogesh	21,000
Naresh	21,000	42,000

		2,16,000			2,16,000

The firm was dissolved on following terms:
(a) Yogesh was to pay his wife's loan.
(b) Debtors realised ₹ 30,000.
(c) Naresh was to take investments at an agreed value of ₹ 26,000.
(d) Creditors and Bills Payable were payable after two months but were paid immediately at a discount of 15% p.a.
(e) Bills Receivable were received allowing 5% rebate.
(f) A Debtor previously written off as Bad Debt paid ₹ 15,000.
(g) An unrecorded asset realised ₹10,000.
Prepare Realisation Account, Partners' Capital Accounts, Partners' Loan Account and Cash/Bank Account.

PRACTICAL PROBLEMS

X, Y and Z were carrying on business. They share profits and losses in the ratio of 5:3:2 respectively. Their Balance Sheet as on 31^st March, 2010 was as under:

Balance Sheet as on 31^st March, 2010
Liabilities	Amount Rs	Assets		Amount Rs
Sundry Creditors	21,000	Plant and Machinery		20,000
Y’s loan	5,000	Investment		8,000
Reserve fund	20,000	Stock		30,000
Capital Account:		Debtors	18,000
X	20,000	Less: R.D.D.	1,000	17,000
Y	10,000	Cash in hand		2,000
Z	4,000	Cash at Bank		3,000
	80,000			80,000

On the above date the firm was dissolved and the assets realised as under:

1) Investment Rs 5,000, Stock Rs 24,000 and Debtors Rs 15,000.

2) The Plant and Machinery was taken over by Mr. ‘X’ at book value.

3) Sundry Creditors and Mr. ‘Y’ loan were paid in full.

4) Realisation expenses incurred Rs 1,000.

Prepare Realisation Account, Partner’s Capital Account and Bank Account

Q. Mrs. Rita chowdhary and Miss Sobha are partners in a firm , Fancy Garments Exports , sharing profits and losses equally . On 1st April, 2018, the Balance Sheet of the firm was:


Liabilities	₹	Assets		₹
Sundry Creditors	75,000	Cash		6,000
Bills Payable	30,000	Bank		30,000
Mr. Chowdhary's Loan	15,000	Stock		75,000
Reserve Fund	24,000	Book Debts	66,000
Mrs. Rita Chowdhary's Capital	90,000	Less: Provision for Doubtful Debts	6,000	60,000
Miss Sobha's Capital	30,000	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) Mrs. Rita Chowdhary undertook to pay Mr.Chowdhary's Loan and took over 50% of the Stock at a discount of 20%.
(b) Book Debts realised ₹ 54,000; balance of the Stock was sold off 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) Mrs. Rita Chowdhary took over the goodwill of the firm at a valuation 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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Realisation Account
Dr.							Cr.
Particulars			Amount Rs	Particulars		Amount Rs
Stock			7,500	Provision for Doubtful Debts		3,000
Investments			15,000	Trade Creditors		45,000
Book Debts			30,000	Bills Payable		12,000
Building			22,500	Mrs. Arvid’s Loan		7,500
Plant			30,000	Mrs. Balbir’s Loan		15,000
Goodwill			6,000	Investments Fluctuation Reserve		1,500
Arvind’s Capital A/c (Mrs. Arvind’s Loan)			7,500	Arvind’s Capital A/c (Stock)		6,000
Bank A/c:				Balbir’s Capital A/c (Investments 7500 × 90%)		6,750
Trade Creditors		44,925		Balbir’s Capital A/c (Unrecorded Typewriter )		450
Bills Payable		11,980		Bank A/c:
Expense		1,500		Book Debts	28,500
Mrs. Balbir’s Loan		15,000	73,405	Plant	37,500
Profit transferred to:				Building	60,000
Arvind’s Capital A/c	23,522.50			Goodwill	9,000
Balbir’s Capital A/c	23,522.50		47,045	Investments	6,750	1,41,750

			2,38,950			2,38,950

Partners’ Capital Accounts
Dr.						Cr.
Particulars	Arvind	Balbir	Particulars	Arvind	Balbir
Profit and Loss A/c	2,625	2,625	Balance b/d	15,000	15,000
Realisation A/c (Assets)	6,000	7,200	Realisation A/c	7,500	–
Bank A/c	44,897.50	36,197.50	Reserve Fund	7,500	7,500
			Realisation A/c (Profit)	23,522.50	23,522.50

	53,522.50	46,022.50		53,522.50	46,022.50

Bank Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	12,000	Realisation A/c	73,405
Cash A/c	750	Arvind’s Capital A/c	44,897.5
Realisation A/c	1,41,750	Balbir’s Capital A/c	36,197.5

	1,54,500		1,54,500

Creditors	45,000
Less:2% discount for 1 month	(75)
Payment made to Creditors	44,925

Bills Payable	12,000
Less: 2% discount for 1 month	(20)
Payment made for Bills Payable	11,980