Question

A, B and C are partners sharing profits and losses in the ratio of 4 : 2 : 1. On 31st March, 2024, their Balance Sheet was as follows:

Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Sundry Creditors		35,400	Goodwill		12,700
Mrs. B’s Loan		15,000	Leasehold Premises		1,00,000
Capital Accounts:		2,37,700	Plant and Machinery		60,000
A	1,30,000		Stock		60,000
B	1,02,700		Sundry Debtors	30,000	29,300
C	5,000		Less: Provision	700
			Cash at Bank		17,700
			Profit & Loss A/c		8,400
		2,88,100			2,88,100

It was decided to dissolve the firm, A agreeing to take over the business (except Cash at Bank) at the following valuations:

Leasehold Premises at ₹ 60,000

Plant and Machinery at ₹ 12,000 less than the book value.

`1/4` th stock at 33`1/3`% more than its book value.

Remaining Stock at 20% more than the book value.

Sundry Debtors subject to a provision of 5%.

Mrs. B’s Loan was paid in full and the creditors were proved at ₹ 32,000 and were taken over by A. Expenses of dissolution came to ₹ 900.

Prepare necessary accounts to close the books of the firm and prepare the Balance Sheet of A.

Answer 1

Dr.	Realisation A/c			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Goodwill A/c	12,700	By Provision for Bad Debts A/c		700
To Leasehold Premises A/c	1,00,000	By Sundry Creditors A/c		35,400
To Plant and Machinery A/c	60,000	By Mrs. B’s Loan A/c		15,000
To Stock A/c	60,000	By A’s Capital A/c:		2,10,500
To Sundry Debtors A/c	30,000	Leasehold Premises	60,000
To Bank A/c (Dissolution Expenses)	900	Plant and Machinery	48,000
To Bank A/c (Mrs. B’s Loan)	15,000	Stock	74,000
To A’s Capital A/c (Creditors taken over)	32,000	Debtors	28,500
		By Loss on Realisation t/f to Capital A/c:		49,000
		A	28,000
		B	14,000
		C	7,000
	3,10,600			3,10,600

 

Dr.	Partner’s Capital A/c						Cr.
Particulars	A	B	C	Particulars	A	B	C
To Profit & loss A/c	4,800	2,400	1,200	By Balance b/d	1,30,000	1,02,700	5,000
To Realisation A/c	1,78,500	-	-	By Realisation A/c (Amount brought in)	81,300	-	3,200
To Realisation A/c (Loss)	28,000	14,000	7,000
To Bank A/c (Final Payment)	-	86,300	-
	2,11,300	1,02,700	8,200		2,11,300	1,02,700	8,200

 

Dr.	Bank A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	17,700	By Realisation A/c	15,900
To Realisation A/c	81,300	By B’s Capital A/c	86,300
	3,200
	1,02,200		1,02,200

 

Balance sheet of A as at 31st March 2024.
Liabilities	Amount (₹)	Assets	Amount (₹)
Sundry Creditors	32,000	Leasehold Premises	60,000
Capital	1,78,500	Plant and Machinery	48,000
		Stock	74,000
		Debtors	28,500
	2,10,500		2,10,500