Question

The partnership between A and B was dissolved on 31st March, 2019. On that date the respective credits to the capitals were A − ₹ 1,70,000 and B − ₹ 30,000. ₹ 20,000 were owed by B to the firm; ₹ 1,00,000 were owed by the firm to A and ₹ 2,00,000 were due to the Trade Creditors. Profits and losses were shared in the proportions of 2/3 to A, 1/3 to B.
The assets represented by the above stated net liabilities realise ₹ 4,50,000 exclusive of ₹ 20,000 owed by B. The liabilities were settled at book figures. Prepare Realisation Account, Partners' Capital Accounts and Cash Account showing the distribution to the partners.

Answer 1

Realisation Account
Dr.					Cr.
Particulars		Amount (₹)	Particulars			Amount (₹)
Sundry Assets (WN)		4,80,000	Trade Creditors			2,00,000
B’s Loan		20,000
			Cash (Assets realised)			4,50,000
Cash A/c (Creditors)		2,00,000	B’s Capital A/c (B’s Loan)			20,000
			Loss transferred to:
			A’s Capital A/c	20,000
			B’s Capital A/c	10,000		30,000
		7,00,000				7,00,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars		A	B	Particulars	A	B
Realisation A/c		–	20,000	Balance b/d	1,70,000	30,000
Realisation A/c (Loss)		20,000	10,000
Cash A/c		1,50,000
		1,70,000	30,000		1,70,000	30,000

Cash Account
Dr.				Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
Realisation A/c (Assets)		4,50,000	Realisation A/c (Creditors)		2,00,000
			A’s Capital A/c		1,50,000
			A’s Loan A/c		1,00,000
		4,50,000			4,50,000

Working Notes:

Memorandum Balance Sheet as at 31st March, 2019
Liabilities		Amount (₹)	Assets	Amount (₹)
Capital A/cs:			B’s Loan	20,000
A	1,70,000
B	30,000	2,00,000	Sundry Assets	4,80,000
A’s Loan		1,00,000	(Balancing figure)
Trade Creditors		2,00,000
		5,00,000		5,00,000