Question

PRACTICAL PROBLEMS

(When all partners become insolvent)

Shiv, Sadashiv and Sadanand are Partners in a firm sharing Profit and Losses equally whose Balance-sheet as on 31^st December, 2011 stood as follows:

Balance Sheet as on 31st December, 2011
Liabilities	Amount Rs	Assets	Amount Rs
Capital Accounts		Sadanand’s Capital A/c	2,000
Shiv	6,000	Buildings	18,300
Sadashiv	4,000	Machinery	12,700
Parvati’s Loan	10,000	Debtors	9,100
Sundry Creditors	30,000	Bank	7,900
	50,000		50,000

Shiv, Sadashiv and Sadanand were declared bankrupt and hence the firm was dissolved as on that date:

(i) The sundry Assets realised as follows:

Building Rs 10,900, Machinery Rs 8,200, Debtors Rs 6,800.

(ii) Realisation expenses amounted to Rs 1,300.

(iii) Sadanand was unable to contribute anything-

Whereas Rs 1,100 and Rs 900 were recovered from the realisation of private estate of Shiv and Sadashiv respectively.

You are required to close the books of the firm.

Answer 1

Realisation Account
Dr.	Cr.
Particulars			Amount Rs	Particulars		Amount Rs
Sundry Assets:				Bank A/c:
Building		18,300		Building	10,900
Machinery		12,700		Machine	8,200
Debtors		9,100	40,100	Debtors	6,800	25,900
Bank A/c (Realisation Expenses)			1,300	Loss transferred to:
				Shiv’s Capital A/c	5,167
				Sadashiv’s Capital A/c	5,167
				Sadanand’s Capital A/c	5,166	15,500
			41,400			41,400

Partners’ Capital Accounts
Dr.	Cr.
Particulars		Shiv	Sadashiv	Sadanand	Particulars	Shiv	Sadashiv	Sadanand
Balance b/d				2,000	Balance b/d	6,000	4,000
Realisation A/c (Loss)		5,167	5,167	5,166	Bank A/c	1,100	900
Deficiency A/c		1,933			Deficiency A/c		267	7,166
		7,100	5,167	7,166		7,100	5,167	7,166

Bank Account
Dr.	Cr.
Particulars			Amount Rs	Particulars	Amount Rs
Balance b/d			7,900	Realisation A/c (Realisation Expenses)	1,300
Realisation A/c (Assets)			25,900	Sundry Creditors	25,875
				Parvati’s Loan A/c	8,625
Capital A/cs
Shiv		1,100
Sadashiv		900	2,000
			35,800		35,800

Sundry Creditors Account
Dr.	Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Bank A/c		25,875	Balance b/d	30,000
Deficiency A/c		4,125
		30,000		30,000

Parvati’s Loan Account
Dr.	Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Bank A/c		8,625	Balance b/d	10,000
Deficiency A/c		1,375
		10,000		10,000

Deficiency Account
Dr.	Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Sadashiv’s Capital A/c		267	Shiv’s Capital A/c	1,933
Sadanand’s Capital A/c		7,166	Sundry Creditors A/c	4,125
			Parvati’s Loan A/c	1,375
		7,433		7,433

Working Notes: