Question

Prachi, Ritika and Ishita were partners in a firm sharing profits and losses in the ratio of 5 : 3: 2. In spite of repeated reminders by the authorities, they kept dumping hazardous material into a nearby river. The court ordered for the dissolution of their partnership firm on 31st March 2012. Prachi was deputed to realise the assets and pay the liabilities. She was aid Rs 1,000 as the commission for her services. The financial position of the firm was as follows:

Liabilities	Rs	Assets	Rs
Creditors Investment Fluctuation Fund Capitals Prachi Ritika	2,00,000 30,000 30,000 40,000	Furniture Stock Investments Cash Ishita's Capital	37,000 5,500 15,000 9,000 18,000
	84,500		84,500

Answer 1

Realisation Account
Dr.			Cr.
Particulars	Rs	Particulars	Rs
To Furniture A/c	37,000	By Investment Fluctuation Funds A/c	4,500
To Stock A/c	5,500	By Creditors A/c	10,000
To Investments A/c	15,000	By Parchi Capital A/c (Investments taken over)	12,500
To Cash A/c (Employee Compensation Paid)	8,000	By Cash A/c (Stock and Furniture taken over)	41,500
To Cash A/c (Creditors Paid)	10,000	Ritika's Capital A/c (Old Furniture Taken over)	3,000
To Prachi's Capital A/c (commission for services)	1,000	By Loss on Realisation transferred to:
Cash A/c (Realisation Expenses)	1,000	Prachi's Capital A/c      3,000 Ritika's Capital A/c       1,800 Ishita's Capital A/c       1,200	6,000
	77,500		77,500

 

Partners’ Capital Account
Dr.							Cr.
Particulars	Prachi	Ritika	Ishita	Particulars	Prachi	Ritika	Ishita
To Balance b/d			18,000	By Balance b/d	40,000	30,000
To Realistion A/c	12,500	3,000		By Realisation A/c	1,000
To Realisation A/c (Loss)	3,000	1,800	1,200	By Cash A/c (Balancing Figure)			19,200
To Cash A/c (Balancing Figure)	25,500	25,200
	41,000	30,000	19,200		41,000	30,000	19,200

 

Cash Account
Dr.			Cr.
Particulars	Rs	Particulars	Rs
To Balance b/d	9,000	By Realisation A/c (Employee Compensation paid)	8,000
To Realisation A/c (Stock and Furniture Realised)	41,500	By Realisation A/c (Creditors paid)	10,000
To Ishita's Capital A/c	19,200	By Realisation A/c (Commission for Services	1,000
		By Prachi's Capital A/c	25,500
		By Ritika's Capital A/c	25,200
	69,700		69,700

The following are the values involved in the scenario depicted in the question.

• Making people aware of the water pollution.
• Environmental degradation
• Violation of rules and regulations and overlooking the repeated notifications by the authorities.
• Violating the social values