Question

Following is the Balance Sheet of Vaibhav, Sanjay, and Santosh.

Balance Sheets as on 31st March 2019
Liabilities	Amount ₹	Assets	Amount ₹
Captital Accounts :		Machinery	6,000
Vaibhav	36,000	Goodwill	9,000
Sanjay	27,000	Stock and Debtors	57,000
Creditors	12,000	Profit and Loss Account	18,000
Bank Overdraft	18,000	Santosh’s Capital	3,000
	93,000		93,000

Santosh is declared insolvent so firm is dissolved and assets realised as follows:

1. Stock and Debtors ₹ 54,000, Goodwill - NIL, Machinery at Book value.

2. Creditors allowed discount at 10%.

3. Santosh could pay only 25 paise in rupee of the balance due.

4. Profit-sharing ratio was 8:4:3.

5. A contingent liability against the firm ₹ 9,000 is cleared.

Give Ledger Account to close the books of the firm.

Answer 1

Dr	In the books of Vaibhav, Sanjay and Santosh RealisationAccount				Cr
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets A/c			By Sundry Liabilities A/c – Creditors		12,000
Machinery	6,000		By Bank A/c
Goodwill	9,000		Stock and Debtors	54,000
Stock and Debtors	57,000	72,000	Machinery	6,000	60,000
To Bank A/c			By Partners’ Capital A/c (Loss on realisation transferred
Creditors	10,800		Vaibhav	10,560
Contingent Liability	9,000	19,800	Sanjay	5,280
			Santosh	3,960	19,800
		91,800			91,800

 

Dr	Partners’ Capital Accounts								Cr
Particulars		Vaibhav (₹)	Sanjay (₹)	Santosh (₹)	Particulars	Vaibhav (₹)	Sanjay (₹)	Santosh (₹)
To Balance c/d				3,000	By Balance b/d	36,000	27,000
To Profit and Loss A/c		9,600	4,800	3,600	By Bank A/c  (25 % of due amount)			2,640
To Realisation A/c – Loss		10,560	5,280	3,960	By Vaibhav’s Capital A/c			5,280
To Santosh’s Capital A/c		5,280	2,640		By Sanjay’s Capital A/c			2,640
To Bank A/c		10,560	14,280
		36,000	27,000	10,560		36,000	27,000	10,560

 

Dr	Bank Account				Cr
Particulars		Amount (₹)	Particulars	Amount (₹)
To Realisation A/c – Assets		60,000	By Balance b/d (overdraft)	18,000
To Santosh’s Capital A/c (25 % of amount due received from him)		2,640	By Realisation A/c – Liabilities	19,800
			By Vaibhav’s Capital A/c	10,560
			By Sanjay’s Capital A/c	14,280
		62,640		62,640

Working Notes :

(1) Contingent liability paid, so realisation A/c is debited and Bank A/c is credited.

(2) Santosh could pay only 25 paise in a rupee of the balance due i.e. Balance due from Santosh (Debit side of Partners Capital A/c) = ₹ 10,560 25 % of ₹ 10,560 = ₹ 2,640 (Amount recorded on debit side of Bank A/c) Capital deficiency of Santosh = 10,560 – 2,640 = ₹ 7,920

₹ 7,920 to be distributed among continuing partner in their profit-loss ratio = 8 : 4 i.e. 2 : 1.

` 7,920 xx 2/3` =₹ 5,280

`7,920 × 1/3` = ₹ 2,640