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Question

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.

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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

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