Question

A and B dissolve their partnership. Their position as at 31st March, 2024 was as follow:

	₹
A's Capital	60,000
B's Capital	40,000
Sundry Creditors	25,000
Cash at Bank	2,000

The balance of A's Loan Account to the firm stood at ₹ 20,000. The realisation expenses amounted to ₹ 800. Stock realised ₹ ₹ 40,000 and Debtors ₹ 30,000. B took a machine at the agreed valuation of ₹ 20,000. Other fixed assets realised ₹ 60,000.

Prepare necessary accounts.

Answer 1

Total liabilities = A’s Capital ₹60,000 + B’s Capital ₹ 40,000 + Sundry Creditors ₹ 25,000 + A’s Loan ₹ 20,000

= ₹ 1,45,000

Less: Cash at Bank = ₹ 2,000

Book value of assets other than cash = ₹ 1,43,000

Since the profit-sharing ratio is not given, A and B share profit or loss equally.

Realisation Account
Particulars	₹	Particulars	₹
To Sundry Assets A/c	1,43,000	By Sundry Creditors A/c	25,000
To Bank A/c – Creditors paid	25,000	By Bank A/c – Stock realised	40,000
To Bank A/c – Realisation Expenses	800	By Bank A/c – Debtors realised	30,000
		By Bank A/c – Other Fixed Assets realised	60,000
		By B’s Capital A/c – Machine taken over	20,000
		By A’s Capital A/c – Gain on Realisation	3,100
		By B’s Capital A/c – Gain on Realisation	3,100
Total	1,68,800	Total	1,68,800

 

A’s Loan Account
Particulars	₹	Particulars	₹
To Bank A/c	20,000	By Balance b/d	20,000
Total	20,000	Total	20,000

 

Partners’ Capital Accounts
Particulars	A (₹)	B (₹)	Particulars	A (₹)	B (₹)
To Realisation A/c – Machine taken over	—	20,000	By Balance b/d	60,000	40,000
To Bank A/c	63,100	23,100	By Realisation A/c – Gain	3,100	3,100
Total	63,100	43,100	Total	63,100	43,100

 

Bank Account
Particulars	₹	Particulars	₹
To Balance b/d	2,000	By Realisation A/c – Creditors	25,000
To Realisation A/c – Stock	40,000	By Realisation A/c – Expenses	800
To Realisation A/c – Debtors	30,000	By A’s Loan A/c	20,000
To Realisation A/c – Other Fixed Assets	60,000	By A’s Capital A/c	63,100
		By B’s Capital A/c	23,100
Total	1,32,000	Total	1,32,000