Question

A, B and C were in partnership sharing profits in the ratio of 7 : 2 : 1 and the Balance Sheet of the firm as at 31st March, 2019 was:
 

Liabilities		Amount (₹)	Assets	Amount (₹)
Capital A/cs:			Building	20,000
A	12,410		Plant	31,220
B	8,650		Goodwill	10,000
C	80,620	1,01,680	100 Shares in X Ltd. (At cost)	2,400
Creditors		11,210	1,000 Shares in Y Ltd. (At cost)	10,000
Reserve for Depreciation on Plant		20,000	Stock	11,240
			Debtors	8,740
			Bank	1,210
			Patents	38,080
		1,32,890		1,32,890

​
It was agreed to dissolve the partnership as on 31st March, 2019 and the terms of dissolution were−
(a) A to take over the Building at an agreed amount of ₹ 31,500.
(b) B, who was to carry on the business, to take over the Goodwill, Stock and Debtors at book value, the Patents at ₹ 30,000 and Plant at ₹ 5,000. He was also to pay the Creditors.
(c) C to take over shares in X Ltd. at ₹ 15 each.
(d) The shares in Y Ltd. to be divided in the profit-sharing ratio.
Show Ledger Accounts recording the dissolution in the books of the firm.

Answer 1

Realisation Account

Dr.								Cr.
Particulars		Amount Rs	Particulars				Amount Rs
Building		20,000	Creditors				11,210
Plant		31,220	Reserve for Depreciation on Plant				20,000
Good will		10,000	A’s Capital A/c:
100 Shares in X Ltd.		2,400	Building	31,500
1,000 Shares in Y Ltd.		10,000	Shares of Y Ltd.	7,000			38,500
Stock		11,240	B’s Capital A/c:
Debtors		8,740	Good will	10,000
Patents		38,080	Stock	11,240
B’s Capital A/c (Creditors)		11,210	Debtors	8,740
			Patents	30,000
			Plant	5,000
			Shares of Y Ltd.	2,000			66,980
			C’s Capital:
			Shares of X Ltd.			1,500
			Shares of Y Ltd.			1,000	2,500
			Loss transferred to:
			A’s Capital A/c		2,590
			B’s Capital A/c		740
			C’s Capital A/c		370		3,700
		1,42,890					1,42,890

 

Partners’ Capital Accounts

Dr.								Cr.
Particulars		A	B	C	Particulars	A	B	C
Realisation A/c (Assets)		38,500	66,980	2,500	Balance b/d	12,410	8,650	80,620
Realisation A/c (Loss)		2,590	740	370	Realisation A/c (Creditors)	–	11,210	–
Bank A/c		–	–	77,750	Bank A/c	28,680	47,860
		41,090	67,720	80,620		41,090	67,720	80,620

 

Bank Account 

Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Balance b/d		1,210	C’s Capital A/c	77,750
A’s Capital A/c		28,680
B’s Capital A/c		47,860
		77,750		77,750

Working Notes:
Distribution of Shares in Y Ltd.

`"Distribution of shares in Y Ltd. among the partners:"`

`"A's Share" = 10,000 xx 7/10 = Rs 7,000`

`"B's Share" = 10,000 xx 2/10 = Rs 2,000`

`"C's Share" = 10,000 xx 1/10 = Rs 1,000`