Question

Asha, Usha, and Nisha were partners sharing Profits and Losses in the ratio of 2:2:1. The following is the Balance Sheet as on 31^st March 2019.

Balance Sheets as on 31st March 2019
Liabilities	Amount (₹)	Assets		Amount (₹)	Amount (₹)
Capital Accounts:		Machinery			1,00,000
Asha	1,20,000	Investment			48,000
Usha	40,000	Debtors		1,10,000	1,04,000
Nisha	40,000	(-) R.D.D.		6,000
General Reserve	12,000	Stock			40,000
Creditors	80,000	Profit and Loss A/c			36,000
Asha’s Loan A/c	16,000	Bank			8,000
Bills payable	28,000
	3,36,000				3,36,000

On the above date, the partners decided to dissolve the firm.

1. Assets were realised as under Machinery ₹ 90,000, Stock  ₹ 36,000, Investment ₹ 42,000 and Debtors ₹ 90,000.
2. Dissolution expenses were ₹ 6,000.
3. Goodwill of the firm realised ₹ 48,000.

Pass Journal Entries to close the books of firm.

Answer 1

In the books of Asha, Usha and Nisha
Journal Entries
Date	Particulars	L. F.	Amount (₹)	Amount (₹)
1	Realisation A/c        ...Dr.		2,98,000	-
	To Machinery A/c		-	1,00,000
	To Investments A/c		-	48,000
	To Debtors A/c		-	1,10,000
	To Stock A/c		-	40,000
	(Being sundry assets transferred to realisation A/c)
2	Creditors A/c       ...Dr.		80,000	-
	Bills Payable A/c      ...Dr.		28,000	-
	R.D.D. A/c          ...Dr.		6,000	-
	To Realisation A/c		-	1,14,000
	(Being sundry liabilities transferred to realisation A/c)
3.	Asha Capital A/c       ...Dr.		14,400	-
	Usha Capital A/c       ...Dr.		14,400	-
	Nisha Capital A/c      ...Dr.		7,200	-
	To Profit & Loss A/c		-	36,000
	(Being Profit and Loss transferred to Partner's Capital A/c)
4.	General reserve A/c         ...Dr.		12,000	-
	To Asha’s Capital A/c		-	4,800
	To Usha’s Capital A/c		-	4,800
	To Nisha’s Capital A/c		-	2,400
	(Being General reserve transferred to Partners’ Capital A/c)
5	Bank A/c            ...Dr.		3,06,000	-
	To Realisation A/c		-	3,06,000
	(Being assets realised)
6.	Realisation A/c         ...Dr.		1,14,000	-
	To Bank A/c		-	1,14,000
	(Being Liabilities paid off)
7.	Asha’s Loan A/c         ...Dr.		16,000	-
	To Bank A/c		-	16,000
	(Being Asha’s Loan fully paid)
8.	Realisation A/c          ...Dr.		8,000	-
	To Asha’s Capital A/c		-	3,200
	To Usha’s Capital A/c		-	3,200
	To Nisha’s Capital A/c		-	1,600
	(Being Realisation profit transferred to Partner’s Capital A/c)
9.	Asha’s Capital A/c        ...Dr.		1,13,600	-
	Usha’s Capital A/c        ...Dr.		33,600	-
	Nisha’s Capital A/c       ...Dr.		36,800	-
	To Bank A/c		-	1,84,000
	(Being final settlement made)

Working Notes:

In the books of Asha, Usha and Nisha
Dr.		Realisation A/c				Cr.
Particulars		Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets A/c			2,98,000	By Sundry Liabilities A/c		1,14,000
Machinery		1,00,000		Creditors	80,000
Investments		48,000		Bills Payable	28,000
Debtors		1,10,000		R.D.D	6,000
Stock		40,000		By Bank A/c		3,06,000
To Bank A/c			1,14,000	Machinery	90,000
Dissolution Expense		6,000		Stock	36,000
Creditors		80,000		Investments	42,000
Bills Payable		28,000		Debtors	90,000
To Partners’ Capital A/c (Profit on realisation transferred)			8,000	Goodwill	48,000
Asha `[8,000 × 2/5]`		3,200
Usha `[8,000 × 2/5]`		3,200
Nisha `[8,000 × 1/5]`		1,600
			4,20,000			4,20,000

 

Dr.	Partners’ Capital Accounts								Cr.
Particulars		Asha (₹)	Usha (₹)	Nisha (₹)	Particulars	Asha (₹)	Usha (₹)	Nisha (₹)
To Profit and Loss A/c		14,400	14,400	7,200	By Balance b/d	1,20,000	40,000	40,000
To Balance c/d		1,13,600	33,600	36,800	By Realisation A/c – Profit	3,200	3,200	1,600
					By General reserve A/c	4,800	4,800	2,400
		1,28,000	48,000	44,000		1,28,000	48,000	44,000

 

Dr.	Asha’s Loan A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Bank A/c	16,000	By Balance b/d	16,000
	16,000		16,000

 

Dr.	Bank Account				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
To Balance b/d		8,000	By Realisation A/c (Liabilities)	1,14,000
To Realisation A/c (Assets)		3,06,000	By Asha’s Loan A/c	16,000
			By Asha’s Capital A/c	1,13,600
			By Usha’s Capital A/c	33,600
			By Nisha’s Capital A/c	36,800
		3,14,000		3,14,000