Question

Rose and Lily shared profits in the ratio of 2 : 3. Their Balance sheet on March 31, 2006 was as follows
Balance Sheet of Rose and Lily
As on March 31, 2006
$$\begin{array}{ccccc}\text{Capital and Liabilities}& \text{Amt.}& \text{Assets}& & \text{Amt.}\\ \text{Creditors}& 40,000& \text{Cash}& & 16,000\\ \text{Lily's Loan}& 32,000& \text{Debtors}& 80,000& \\ \text{Profit and Loss}& 50,000& (-)\text{Provision for Doubtful Debts}& \underset{–}{(3,600)}& 76,400\\ \text{Capital:}& & \text{Inventory}& & 1,09,600\\ \text{Lily}& 1,60,000& \text{Bill Receivable}& & 40,000\\ \text{Rose}& 2,40,000& \text{Buildings}& & 2,80,000\\ & \underset{–}{}& & & \underset{–}{}\\ & 5,22,000& & & 5,22,000\\ & \underset{–}{}& & & \underset{–}{}\end{array}$$
Rose and Lily decided to dissolve the firm on the above date. Assets (except bills receivables) realised 4,84,000. Creditors agreed to take Rs. 38,000.
Cost of realisation was Rs. 2400. There was a Motor Cycle in the firm which was brought out of the firm's Money, was not shown in the Books of the firm. It was not sold for Rs. 10,000 There was a continigent liability in respect of outstanding electric bill of Rs. 5,000. Bill receivable taken over by Rose at Rs. 33,000.
Show realisation account, partners' capital account, loan account and cash account.

Answer 1

Dr. Realisation Account Cr.
$$\begin{array}{cccccc}\text{Particulars}& & \text{Amt.}& \text{Particulars}& & \text{Amt.}\\ \text{Debtors}& & 80,000& \text{Provision for Doubtful Debts}& & 36,000\\ \text{Inventory}& & 1,09,600& \text{Creditors}& & 40,000\\ \text{Bills Receivables}& & 40,000& \text{Cash}& & \\ \text{Buildings}& & 2,80,000& \text{Motor cycle}& 10,000& \\ \text{Cash:}& & & \text{Other Assets}& \underset{–}{4,84,000}& 4,94,000\\ \text{Outstanding Electricity Bill}& 5,000& & \text{Rose's Capital (Bills Receivable)}& & 33,000\\ \text{Creditors}& 38,000& & & & \\ \text{Expenses}& \underset{–}{38,000}& 45,000& & & \\ \text{Profit transferred to:}& & & & & \\ \text{Rose's Capital}& 6,240& & & & \\ \text{Lily's Capital}& \underset{–}{9,360}& 15,600& & & \\ & & \underset{–}{}& & & \underset{–}{}\\ & & 5,70,600& & & 5,70,600\\ & & \underset{–}{}& & & \underset{–}{}\end{array}$$
Dr. Partners' Capital Account Cr.
$$\begin{array}{cccccc}\text{Particulars}& \text{Rose}& \text{Lily}& \text{Particulars}& \text{Rose}& \text{Lily}\\ \text{Realisation}& 33,000& & \text{Balance b/d}& 2,40,000& 1,60,000\\ \text{(Bills Receivable)}& & & & & \\ \text{Cash A/c}& 2,33,240& 1,99,360& \text{Profit and Loss}& 20,000& 30,000\\ & & & \text{Realisation (Profit)}& 6,240& 9,360\\ & \underset{–}{}& \underset{–}{}& & \underset{–}{}& \underset{–}{}\\ & 2,66,240& 1,99,360& & 2,66,240& 1,99,360\\ & \underset{–}{}& \underset{–}{}& & \underset{–}{}& \underset{–}{}\end{array}$$
Dr. Lily's Loan Account Cr.
$$\begin{array}{cccc}\text{Particulars}& \text{Amt.}& \text{Particulars}& \text{Amt.}\\ \text{Cash}& 32,000& \text{Balanced b/d}& 32,000\\ & \underset{–}{}& & \underset{–}{}\\ & 32,000& & 32,000\\ & \underset{–}{}& & \underset{–}{}\end{array}$$
Dr. Cash Account Cr.
$$\begin{array}{cccccc}\text{Particulars}& & \text{Amt.}& \text{Particulars}& & \text{Amt.}\\ \text{Balance b/d}& & 16,000& \text{Realisation}& & \\ \text{Realisation}& & & \text{Creditors}& 38,000& \\ \text{Motor Cycle}& 10,000& & \text{Outstanding Electricity Bill}& 5,000& \\ \text{Other Assets}& \underset{–}{4,84,000}& 4,94,000& \text{Expenses}& \underset{–}{2,400}& 45,400\\ & & & \text{Lily's Loan}& & 32,000\\ & & & \text{Rose's Capital A/c}& & 2,33,240\\ & & & \text{Lily's Capital A/c}& & 1,99,360\\ & & \underset{–}{}& & & \underset{–}{}\\ & & 5,10,000& & & 5,10,000\\ & & \underset{–}{}& & & \underset{–}{}\end{array}$$