Question

X, Y and Z entered into a partnership and contributed ₹ 9,000; ₹ 6,000 and ₹ 3,000 respectively. They agreed to share profits and losses equally. The business lost heavily during the very first year and they decided to dissolve the firm. After realising all assets and paying off liabilities, there remained a cash balance of ₹ 6,000.
Prepare Realisation Account and Partner's Capital Accounts.

Answer 1

Realisation Account
Dr.						Cr.
Particulars		Amount Rs	Particulars		Amount Rs
Sundry Assets (WN 2)		18,000	Cash A/c (Asset realised )		6,000
			Loss transferred to:
			X’s Capital A/c	4,000
			Y’s Capital A/c	4,000
			Z’s Capital A/c	4,000	12,000
		18,000			18,000

Partners’ Capital Accounts
Dr.									Cr.
Particulars		X	Y	Z	Particulars	X	Y	Z
Realisation A/c (Loss)		4,000	4,000	4,000	Balance b/d	9,000	6,000	3,000
Cash A/c		5,000	2,000	–	Cash A/c	–	–	1,000
		9,000	6,000	4,000		9,000	6,000	4,000

Working Notes:

WN 1

Cash Account
Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Realisation A/c		6,000	X’s Capital A/c	5,000
Z’s Capital A/c		1,000	Y’s Capital A/c	2,000
		7,000		7,000

WN 2

Memorandum Balance Sheet
Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Sundry Assets	18,000
X’s Capital A/c	9,000		(Balancing figure)
Y’s Capital A/c	6,000
Z’s Capital A/c	3,000	18,000
		18,000		18,000