Question

A, B and C were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 1.4.2022 they decided to dissolve the firm. On that date A's Capital was ₹ 2,00,000, B's Capital was 10,000 (Dr.) and C's Capital was ₹ 25,000 (Dr.) The Creditors amounted to ₹ 80,000 and Cash balance was ₹ 12,000. The assets realised ₹ 2,00,000 Creditors were paid at a discount of 10% and the expenses of dissolution were ₹ 1,240. All partners were solvent. Prepare realisation account, partner's capital accounts and the cash account.

Answer 1

Book value of assets other than cash:

Total of Balance Sheet

= Creditors ₹ 80,000 + A’s Capital ₹ 2,00,000

= ₹ 2,80,000

Less: Cash ₹ 12,000 + B’s Capital (Dr.) ₹ 10,000 + C’s Capital (Dr.) ₹ 25,000

= ₹ 47,000

Book Value of Assets = ₹ 2,33,000

Creditors paid at 10% discount:

₹ 80,000 × 90% = ₹ 72,000

Realisation Account
Particulars	₹	Particulars	₹
To Sundry Assets A/c	2,33,000	By Creditors A/c	80,000
To Cash A/c – Creditors paid	72,000	By Cash A/c – Assets realised	2,00,000
To Cash A/c – Realisation Expenses	1,240	By A’s Capital A/c – Loss	13,120
		By B’s Capital A/c – Loss	7,872
		By C’s Capital A/c – Loss	5,248
Total	3,06,240	Total	3,06,240

Loss on Realisation = ₹ 26,240

Loss shared in the ratio 5 : 3 : 2:

A = ₹ 26,240 × `5/10` = ₹ 13,120

B = ₹ 26,240 × `3/10` = ₹ 7,872

C = ₹ 26,240 × `2/10` = ₹ 5,248

Partners’ Capital Accounts
Particulars	A (₹)	B (₹)	C (₹)	Particulars	A (₹)	B (₹)	C (₹)
To Balance b/d	—	10,000	25,000	By Balance b/d	2,00,000	—	—
To Realisation A/c – Loss	13,120	7,872	5,248	By Cash A/c – Cash brought in	—	17,872	30,248
To Cash A/c	1,86,880	—	—
Total	2,00,000	17,872	30,248	Total	2,00,000	17,872	30,248

 

Cash Account
Particulars	₹	Particulars	₹
To Balance b/d	12,000	By Realisation A/c – Creditors	72,000
To Realisation A/c – Assets realised	2,00,000	By Realisation A/c – Expenses	1,240
To B’s Capital A/c	17,872	By A’s Capital A/c	1,86,880
To C’s Capital A/c	30,248
Total	2,60,120	Total	2,60,120