Question

PRACTICAL PROBLEMS

Ganga, Yamuna and Godavari are in Partnership sharing profits and losses equally. Their Balance sheet as on 31^st December, 2011 was as follows:

Balance Sheet as on 31st December, 2011
Liabilities	Amount Rs	Assets	Amount Rs
Capital Accounts		Currnet Accounts
Ganga	25,000	Yamuna	20,000
Yamuna	10,000	Godavari	4,000
Godavari	5,000	Premises	17,200
Ganga’s Currnet A/c	3,000	Machinery	10,800
Sundry Creditors	4,000	Debtors	9,600
Bank loan	3,000	Cash	6,400
	50,000		50,000

Godavari was declared insolvent and hence the firm was dissolved as on that date. Premises was sold at Rs 14,800, Machinery realised Rs 6,400. Bad debts and discount allowed to Debtors amounted to Rs 1,600. Sundry creditors agreed to receive 80 paise in a rupee (Rs) in full satisfaction of their claim. Bank Loan was settled at 60% of book value. During the course of dissolution a liability under an action for damages was settled for Rs 1,400 against Rs 2,100 provided in the books of the firm. The expenses of realisation amounted to Rs 900. Goodwill contributed Rs 1,900 from her private Property.

Prepare necessary ledger accounts in the books of the firm.

Answer 1

Realisation Account
Dr.	Cr.
Particulars			Amount Rs	Particulars		Amount Rs
Sundry Assets:				Sundry Liabilities:
Premises		17,200		Sundry Creditors	4,000
Machinery		10,800		Bank Loan	3,000	7,000
Debtors		9,600	37,600
				Bank A/c:
Bank A/c:				Premises	14,800
Sundry Creditors		3,200		Machinery	6,400
Bank Loan		1,800		Debtors	8,000	29,200
Realiation Expenses		900
Damages		1,400	7,300	Loss transferred to:
				Ganga’s Capital A/c	2,900
				Yamuna’s Capital A/c	2,900
				Godavari’s Capital A/c	2,900	8,700
			44,900			44,900

Partners’ Current Accounts
Dr.	Cr.
Particulars		Ganga	Yamuna	Godavari	Particulars	Ganga	Yamuna	Godavari
Balance b/d			2,000	4,000	Balance b/d	3,000
Realisation A/c (Loss)		2,900	2,900	2,900	Cash A/c			1,900
Capital A/c		100			Capital A/c		4,900	5,000
		3,000	4,900	5,000		3,000	4,900	5,000

Partners’ Capital Accounts
Dr.	Cr.
Particulars		Ganga	Yamuna	Godavari	Particulars	Ganga	Yamuna	Godavari
Current A/c			4,900	5,000	Balance b/d	25,000	10,000	5,000
Cash A/c		25,100	5,100		Current A/c	100
		25,100	10,000	5,000		25,100	10,000	5,000

Cash/Bank Account
Dr.	Cr.
Particulars		Amount Rs	Particulars		Amount Rs
Balance b/d		6,400	Realisation A/c (Liabilities)		7,300
Realiation A/c (Assets)		29,200	Capital A/cs:
Godavari’s Capital A/c		1,900	Ganga	25,100
			Yamuna	5,100	30,200
		37,500			37,500

Working Notes:

Capital deficiency of Godavari	Rs
Capital A/c Cr. Balance	5,000
Add: Amount contributed	1,900
	6,900
Less: Debit Balance of current A/c	4,000
	2,900
Less: Realisation Loss	2,900
It is needless to transfer solvent partner’s capital A/c	NIL