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Question

On 1st April, 2013,  X, Y and Z started business sharing profit and losses in the ratio of 3  : 2 : 1 respectively. They contributed Rs. 1,00,000, Rs. 80,000 and Rs. 40,000 respectively as their capital which was deposited into bank. Each partner withdrew Rs. 15,000 during the year. The firm was dissolved on 31st March, 2014. X took up the stock at an agreed price of Rs. 25,000. Y took up furniture at Rs. 5,000 and Z took up debtors at Rs. 18,500. Creditors were paid off and then remained a balance of Rs. 14,000 in the bank account.

Prepare the necessary accounts to show the distribution of cash at bank and of the further cash brought in by any of the partners.


Solution

                                                                        BALANCE SHEET
                                                                     as at 31st March, 2014

Capital and LiabilitiesAmt. (Rs.)AssetsAmt. (Rs.)X's Capital:Sundry AssetsOpening                     1,00,000(Balancing figure)1,75,000Less:Drawings              15,000––––––85,000Y's Capital:Opening                        80,000Less:Drawings              15,000––––––65,000Z's Capital:Opening                        40,000Less:Drawings              15,000––––––25,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,75,000––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,75,000––––––––

Dr.                               REALISATION ACCOUNT                                 Cr.ParticularsAmt. (Rs.)ParticularsAmt. (Rs.)Sundry Assets1,75,000X's Capital A/c (Stock)25,000Y's Capital A/c (Furniture)5,000Z's Capital A/c (Debtors)18,500Loss transferred to Capital A/cs    X                               56,250    Y                               37,500    Z                               18,750––––––1,12,500Bank14,000¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,75,000––––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯1,75,000––––––––

Dr.                                              CAPITAL ACCOUNTS                                                             Cr.
ParticularsX(Rs.)Y(Rs.)Z(Rs.)ParticularsX(Rs.)Y(Rs.)Z(Rs.)Realisation A/c25,0005,00018,500Balance b/d85,00065,00025,000(Assets taken)Realisation A/c56,25037,50018,750Bank A/c12,250(Loss)(Deficit brought in)Bank A/c3,75022,500¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯85,000––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯65,000––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯37,250––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯85,000––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯65,000––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯37,250––––––

Dr.                      BANK ACCOUNT                  Cr.ParticularsRs.ParticularsRs.Realisation A/c14,000X's Capital A/c3,750(Net assets realised)Y's Capital A/c22,500Z's Capital A/c12,250¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯26,250––––––¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯26,250––––––

Note: 1 Creditors must have been paid off out of the cash realised on sale of assets. Hence, Rs. 14,000 is the net amount realised on the sale of assets.

Entry will be -

Bank A/c                         Dr.      14,000
   To Realisation A/c                               14,000

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