PRACTICAL PROBLEMS

Pannalal, Babulal and Hiralal were partners sharing profits and losses in the proportion of 2:2:1, following is their Balance Sheet as on 31^st March, 2008.

Balance Sheet as on 31^st March, 2008

Liabilities

Amount

Rs

Assets

Amount

Rs

Capital Accounts:

Machinery

25,000

Pannalal

30,000

Stock

10,000

Babulal

10,000

Debtors

27,500

Hiralal

10,000

Loss: R.D.D.

1,500

26,000

General Reserve

3,000

Investment

12,000

Creditors

20,000

Profit and Loss A/c

9,000

Pannalal’s Loan A/c

4,000

Bank

2,000

Bills payable

7,000

84,000

84,000

On the above date the partners decided to dissolve the firm:

1) Assets were realised: Machinery Rs 22,500, Stock Rs 9,000, Investment Rs 10,500, Debtors Rs 22,500.

2) Dissolution expenses were Rs 1,500.

3) Goodwill of the firm realised Rs 12,000

Pass the necessary Journal entries in the books of the firm.

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Solution

Journal Entry

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount

Rs

Realisation A/c

Dr.

74,500

To Machinery A/c

25,000

To Stock A/c

10,000

To Debtors A/c

27,500

To Investments A/c

12,000

(Sundry Assets transferred to Realisation A/c)

Creditors A/c

Dr.

20,000

Bills Payable A/c

Dr.

7,000

Reserve for Doubtful Debts A/c

Dr.

1,500

To Realisation A/c

28,500

(Sundry Liabilities transferred to Realisation A/c)

Bank A/c

Dr.

76,500

To Realisation A/c

76,500

(Sundry Assets realised)

Realisation A/c

Dr.

28,500

To Bank A/c

28,500

(Sundry Liabilities paid off)

Realisation A/c

Dr.

2,000

To Pannalal’s Capital A/c

800

To Babulal’s Capital A/c

800

To Hiralal’s Capital A/c

400

(Profit on Realisation transferred to Partner’s Capital Account)

Pannalal’s Capital A/c

Dr.

3,600

Babulal’s Capital A/c

Dr.

3,600

Hiralal’s Capital A/c

Dr.

1,800

To Profit and Loss A/c

9,000

(Profit and Loss A/c (Dr.) transferred to Partner’s Capital A/c)

General Reserve A/c

Dr.

3,000

To Pannalal’s Capital A/c

1,200

To Babulal’s Capital A/c

1,200

To Hiralal’s Capital A/c

600

(General Reserve transferred to Partner’s Capital A/c)

Pannalal’s Loan A/c

Dr.

4,000

To Bank A/c

4,000

(Pannalal’s Loan has been paid)

Pannalal’s Capital A/c

Dr.

28,400

Babulal’s Capital A/c

Dr.

8,400

Hiralal’s Capital A/c

Dr.

9,200

To Bank A/c

46,000

(Amount paid to partners on account of final settlement)

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Similar questions

Q. A,B and C were partners sharing profit and losses in the proportion of 2:2:1. Following is their balance sheet as on

31^{s t}

March, 2013:
On the above date, the partners decide to dissolve the firm.
(1) Asset were realised as -
Machinery Rs. 22,500, stock Rs. 9,000, Investment Rs. 10,500, Debtors Rs. 22,500.
(2) Dissolution expenses were Rs. 1,500.
(3) Goodwill of the firm realised Rs. 12,000.
Pass the necessary Journal entries in the books of the firm.

PRACTICAL PROBLEMS

Ganesh and Chandan were partners sharing profits and losses in the proportion of 3:2. They dissolve the partnership firm on 31^st March, 2011 when their position was as follows:

Balance Sheet as on 31^st March, 2011
Liabilities	Amount Rs	Assets		Amount Rs
Sundry Creditors	25,000	Debtors	1,12,500
Bank overdraft	20,000	Less: R.D.D.	12,500	1,00,000
Reserve Fund	30,000	Stock		2,25,000
Capital Accounts:		Furniture		50,000
Ganesh	2,30,000	Motor Car		75,000
Chandan	1,50,000	Cash in hand		5,000
	4,55,000			4,55,000

The Assets realised as follows: Debtors Rs 90,000, Stock Rs 2,00,000, and Goodwill Rs 25,000, Motor Car was taken over by Ganesh for Rs 70,000 and Furniture by Chandan for Rs 60,000.
The Creditors were paid Rs 22,500 in full settlement. The expenses of realisation amounted to Rs 10,000.

Pass necessary journal entries in the books of the firm.

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.

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.

PRACTICAL PROBLEMS

A, B and C were partners sharing profits and losses in the ratio of 3:2:1. On 31^st March, 2010. Their Balance Sheet was as follows:

Balance Sheet as on 31^st March, 2010
Liabilities	Amount Rs	Assets		Amount Rs
Sundry Creditors	15,400	Cash at Bank		3,500
Bills payable	3,600	Stock		19,800
A’s loan A/c	10,000	Debtors	15,000
Capital Account:		Less: Provision	1,000	14,000
A	20,000	Join Life Policy		4,000
B	16,000	Plant and Machinery		43,700
C	8,000
Reserve Fund	12,000
	85,000			85,000

The firm was dissolved on 31^st March, 2010 and the assets realised as follows:

1) Join Life Policy was taken over by Mr. A at Rs 5,000.

2) Stock realised Rs 18,000, Debtors realised Rs 14,500, Plant and Machinery was sold for Rs 36,000.

3) Liabilities were paid in full. In addition one bill for Rs 700 under discount was dishonoured and had to be taken up by the firm.

4) There were no realisation expenses.

Give the Journal entries and necessary Ledger Accounts to close the books of the firm.

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Balance Sheet as on 31^st March, 2008
Liabilities	Amount Rs	Assets		Amount Rs
Capital Accounts:		Machinery		25,000
Pannalal	30,000	Stock		10,000
Babulal	10,000	Debtors	27,500
Hiralal	10,000	Loss: R.D.D.	1,500	26,000
General Reserve	3,000	Investment		12,000
Creditors	20,000	Profit and Loss A/c		9,000
Pannalal’s Loan A/c	4,000	Bank		2,000
Bills payable	7,000
	84,000			84,000

	Journal Entry
Date		Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

		Realisation A/c	Dr.		74,500
		To Machinery A/c				25,000
		To Stock A/c				10,000
		To Debtors A/c				27,500
		To Investments A/c				12,000
		(Sundry Assets transferred to Realisation A/c)

		Creditors A/c	Dr.		20,000
		Bills Payable A/c	Dr.		7,000
		Reserve for Doubtful Debts A/c	Dr.		1,500
		To Realisation A/c				28,500
		(Sundry Liabilities transferred to Realisation A/c)

		Bank A/c	Dr.		76,500
		To Realisation A/c				76,500
		(Sundry Assets realised)

		Realisation A/c	Dr.		28,500
		To Bank A/c				28,500
		(Sundry Liabilities paid off)

		Realisation A/c	Dr.		2,000
		To Pannalal’s Capital A/c				800
		To Babulal’s Capital A/c				800
		To Hiralal’s Capital A/c				400
		(Profit on Realisation transferred to Partner’s Capital Account)

		Pannalal’s Capital A/c	Dr.		3,600
		Babulal’s Capital A/c	Dr.		3,600
		Hiralal’s Capital A/c	Dr.		1,800
		To Profit and Loss A/c				9,000
		(Profit and Loss A/c (Dr.) transferred to Partner’s Capital A/c)

		General Reserve A/c	Dr.		3,000
		To Pannalal’s Capital A/c				1,200
		To Babulal’s Capital A/c				1,200
		To Hiralal’s Capital A/c				600
		(General Reserve transferred to Partner’s Capital A/c)

		Pannalal’s Loan A/c	Dr.		4,000
		To Bank A/c				4,000
		(Pannalal’s Loan has been paid)

		Pannalal’s Capital A/c	Dr.		28,400
		Babulal’s Capital A/c	Dr.		8,400
		Hiralal’s Capital A/c	Dr.		9,200
		To Bank A/c				46,000
		(Amount paid to partners on account of final settlement)