Question

Ram, Shyam and Mohan shared profits in the ratio of 2 : 2 : 1. Following is their Balance Sheet on the date of dissolution :

$\begin{array}{cccc}\text{Capital and Liabilities}& \text{Amount (Rs.)}& \text{Assets}& \text{Amount (Rs.)}\\ \text{Creditors}& 40,000& \text{Cash at Bank}& 44,000\\ \text{Bills Payable}& 2,600& \text{Debtors}& 15,000\\ \text{Provision for Depreciation}& 15,000& \text{Stock}& 50,000\\ \text{Ram's Loan}& 40,000& \text{Plant}& 75,000\\ \text{Capital Accounts :}& & \text{Patents}& 20,000\\ \text{Ram}& 1,35,000& \text{100 Shares in X Co.}& 5,000\\ \text{Shyam}& 30,000& \text{300 Shares in Y Co.}& 18,000\\ \text{Mohan}& 10,000& \text{Goodwill}& 15,600\\ & & \text{Advertisement Suspense A/c}& 30,000\\ & \overline{\underset{–}{\underset{–}{2,72,600}}}& & \overline{\underset{–}{\underset{–}{2,72,600}}}\end{array}$

1. Ram takes over Debtors at Rs 10,000; Stock at a 20% less value; and Plant at Rs 30,000.

2. One of the Creditors took some of the patents whose book value was Rs 8,000, at a valuation of Rs 4,800. Balance of the creditors were paid at a discount of Rs 1,200.

3. Ram's has made full payment of his loan

4. Shares in X Co. were agreed to be taken over by Shyam at Rs 30 per share.

5. Shares in Y Co. were valued at Rs 12,000. All partners divided these shares in their profit sharing ratio.

6. Balance of the Patents realised 70% of their book value.

Prepare realisation account.

Answer 1

$\begin{array}{cccccccc}\text{Dr}& & & & & \text{REALISATION ACCOUNT}& & \text{Cr}\end{array}$

$\begin{array}{cccc}\text{Particulars}& \text{Amount (Rs.)}& \text{Particulars}& \text{Amount (Rs.)}\\ \text{Debtors}& 15,000& \text{Creditors}& 40,000\\ \text{Stock}& 50,000& \text{Bills Payable}& 2,600\\ \text{Plant}& 75,000& \text{Provision for Depreciation}& 15,000\\ \text{Patents}& \text{20,000}& \text{Ram's Capital A/c (Assets)}& \\ \text{100 Shares in X Co.}& 5,000& (10,000+40,000+30,000)& 80,000\\ \text{300 Shares in Y Co.}& 18,000& \text{Ram's Loan A/c}& 40,000\\ \text{Bank (payment to Creditors)}& 34,000& \text{Shyam's Capital A/c (Shares)}& 3,000\\ \text{Bank A/c}& 40,000& \text{Ram's Capital A/c (Shares)}& 4,800\\ & & \text{Shyam's Capital A/c (Shares)}& 4,800\\ & & \text{Mohan's Capital A/c (Shares)}& 2,400\\ & & \text{Bank A/c (Patents)}& 8,400\\ & & \text{Loss transferred to:}& \\ & & \text{Ram}22,400& \\ & & \text{Shyam}22,400& \\ & & \text{Mohan}\underset{–}{11,200}& 56,000\\ & \overline{\underset{–}{\underset{–}{2,57,000}}}& & \overline{\underset{–}{\underset{–}{2,57,000}}}\end{array}$