Question

Punam and Puja were partners sharing profits and losses in the ratio of 3:2. Inspite of repeated losses they kept running the firm. The court ordered for the dissolution of their partnership firm on 31st March, 2015. Puja took the responsibility of realisation. She was paid Rs 1,000 as commission for this service. Their Balance Sheet as on that date stood as foollows :

$\begin{array}{cccc}\text{Liabilities}& \text{Amount}& \text{Assets}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{Outstanding Expenses}& 12,000& \text{Cash at Bank}& 29,000\\ \text{Creditors}& 34,000& \text{Debtors}& 38,000\\ \text{Emplyoyee's Provident Fund}& 12,000& \text{Stock}& 52,000\\ \text{Bank Loan}& 70,000& \text{Furniture}& 20,000\\ \text{Capital Accounts :}& & \text{Machinery}& 33,000\\ \text{Punam}& 50,000& \text{Profit and Loss A/c}& 36,000\\ \text{Puja}& 30,000& & \\ \text{Total}& 2,08,000& \text{Total}& 2,08,000\end{array}$

Following was agreed upon:

(i) Punam agreed to take over furniture at 90% of the book value.

(ii) Rs 5,000 of debtors proved bad.

(iii) Puja took over Rs 30,000 worth of the stock at Rs 22,800. The remaining stock was sold at a loss of 10%

(iv) Machinery was taken over by creditors in full settlement of their claim.

(v) The Bank Loan was paid along with interest of Rs 3,000.

(vi) Other liabilites were paid in full.

(vii) The expenses on realisation amounted to Rs 800. Prepare Realisation Account, Partner's Capital Accounts and Bank Account, to close the books of the firm.

Answer 1

$\text{Dr}REALISATIONACCOUNT\text{Cr}\begin{array}{ccccc}\text{Particulars}& & \text{Amount}& \text{Particulars}& \text{Amount}\\ & & \text{(Rs)}& & \text{(Rs)}\\ \text{Sundry Assets:}& & & \text{By Outstanding}& \\ \text{Debtors}& 38,000& & \text{Expenses}& 12,000\\ \text{Stock}& 52,000& & \text{By Creditors}& 34,000\\ \text{Furniture}& 20,000& & \text{By Employee Provident}& \\ \text{Machinery}& \underset{–}{33,000}& 1,43,000& \text{Fund}& 12,000\\ \text{To Puja's Capital}& & 1,000& \text{By Bank :}& \\ \text{(Commission)}& & & \text{Debtors}33,000& \\ \text{To Bank :}& & & \text{Stock}\underset{–}{19,800}& 52,800\\ \text{Bank Loan}& 73,000& & \text{By Punam's Capital}& 18,000\\ \text{Outstanding Expenses}& 12,000& & \text{(Furniture)}& \\ \text{Employee Provident Fund}& 12,000& & \text{By Puja's Capital (Stock)}& 22,800\\ \text{Expenses}& \underset{–}{800}& 97,800& \text{By Loss transferred:}& \\ & & & \text{Punam's Capital A/c}& 12,120\\ & & & \text{Puja's Capital A/c}& 8,080\\ & & \overline{2,41,800}& & \overline{2,41,800}\end{array}$

Dr. PARTNER'S CAPITAL ACCOUNT Cr.
$\begin{array}{cccccc}\text{Particulars}& \text{Punam}& \text{Puja}& \text{Particulars}& \text{Punam}& \text{Puja}\\ & \left(RS\right)& \left(RS\right)& & \left(RS\right)& \left(RS\right)\\ \text{To Realisation A/c (Furniture)}& 18,000& -& \text{By Balance b/d}& 50,000& 30,000\\ \text{To Realisation A/c (Stock)}& -& 22,800& \text{By Realisation A/c}& -& 1,000\\ \text{To Profit and Loss A/c}& 21,600& 14,400& \text{(Commission)}& & \\ \text{To Realisation A/c (Loss)}& 12,120& 8,080& \text{By Bank A/c}& 1,720& 14,280\\ & \text{51,720}& 45,280& & 51,720& 45,280\end{array}$

Dr. BANK ACCOUNT Cr.
$\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ & \left(Rs\right)& & \left(Rs\right)\\ \text{To Balance b/d}& 29,000& \text{By Realisatino A/c (Liabilities)}& 97,800\\ \text{To Realisation A/c (Assets)}& 52,800& & \\ \text{To Punam's Capital A/c}& 1,720& & \\ \text{To Puja's Capital A/c}& 14,280& & \\ & \overline{97,800}& & \overline{97,800}\end{array}$

No entry has been made for payment to Creditors as they have accepted Machinery in full settlement of their claim.