Question

A, B and C are partners in a firm sharing profits and losses in the ratio of $$\frac{1}{2} : \frac{1}{3} : \frac{1}{6}$$. At 31st March, 2024 their Balance Sheet was as follows:

Liabilities		₹	Assets		₹
Sundry Creditors		24,500	Plant		50,000
Mrs. C's Loan		20,000	Freehold Property		1,14,000
Workmen Compensation Reserve		12,000	Patents		6,000
Capital Accounts :			Stock		40,000
A	1,00,000		Sundry Debtors	40,000
B	80,000		Less : Provision	1,500	38,500
C	40,000	2,20,000	Cash at Bank		28,000
		2,76,500			2,76,500

It was decided to dissolve the firm, A agreeing to take over the business (except cash at bank) at the following Valuations:

Plant at a depreciation of 20%; Freehold Property at ₹1,50,000; Goodwill at ₹10,000; Patents at book value; Sundry Debtors at ₹35,000 (Net); Half the Stock at 30% more than its book value and the remaining half at 50% less than the book value.

Mrs. C's loan was to be repaid and the Creditors were proved at ₹22,000 and were taken over by A. Expenses of dissolution came to ₹1,000.

Close the books of the firm and prepare the Balance Sheet of A.

Answer 1

Dr.	REALISATION ACCOUNT				Cr.
Particulars	₹	₹	Particulars	₹	₹
To Plant		50,000	By Provision for Doubtful Debts		1,500
To Freehold Property		1,14,000	By Sundry Creditors		24,500
To Patents		6,000	By Mrs. C's Loan		20,000
To Stock		40,000	By A's Capital A/c :
To Sundry Debtors		40,000	Plant	40,000
To Bank (Mrs. C's Loan)		20,000	Freehold Property	1,50,000
To Bank (Expenses)		1,000	Goodwill	10,000
To Gain on Realisation :			Patents	6,000
A's Capital A/c 1/2	15,000		Sundry Debtors	35,000
B's Capital A/c 1/3	10,000		Stock	36,000
C's Capital A/c 1/6	5,000	30,000		2,77,000
			Less : Creditors	22,000	2,55,000
		3,01,000			3,01,000

 

Dr.	CAPITAL ACCOUNTS						Cr.
Particulars	A ₹	B ₹	C ₹	Particulars	A ₹	B ₹	C ₹
To Realisation	2,55,000			By Balance b/d	1,00,000	80,000	40,000
To Bank		94,000	47,000	By Workmen Compensation Reserve	6,000	4,000	2,000
				By Realisation (Profit)	15,000	10,000	5,000
				By Bank	1,34,000
	2,55,000	94,000	47,000		2,55,000	94,000	47,000

 

Dr.	BANK ACCOUNT		Cr.
Particulars	₹	Particulars	₹
To Balance b/d	28,000	By Mrs. C's Loan	20,000
To A's Capital A/c	1,34,000	By Realisation (Expenses)	1,000
		By B's Capital A/c	94,000
		By C's Capital A/c	47,000
	1,62,000		1,62,000

 

BALANCE SHEET OF A as at 31st March, 2024
Liabilities	₹	Assets	₹	₹
Sundry Creditors	22,000	Goodwill		10,000
Capital	2,55,000	Freehold Property		1,50,000
		Plant		40,000
		Patents		6,000
		Stock		36,000
		Sundry Debtors	40,000
		Less : Provision	5,000	35,000
	2,77,000			2,77,000