Question

X, Y and Z entered into partnership on 1st April, 2016. They contributed capital ₹ 40,000, ₹ 30,000 and ₹ 20,000 respectively and agreed to share profits in the ratio of 3 : 2 : 1. Interest on capital was to be allowed @ 15% p.a. and interest on drawings was to be charged at an average rate of 5%. During the two years ended 31st March, 2018, the firm made profit of ₹ 21,600 and ₹ 25,140 respectively before allowing or charging interest on capital and drawings. The drawings of each partner were ₹ 6,000 per year.
On 31st March, 2018, the partners decided to dissolve the partnership due to difference of opinion. On that date, the creditors amounted to ₹ 20,000. The assets, other than cash ₹ 2,000, realised ₹ 1,21,000. Expenses of dissolution amounted to ₹ 760.
Draw up necessary Ledger Accounts to close the books of the firm.

Answer 1

Profit and Loss Appropriation

for the year ended March 31, 2017 

Dr.							Cr.
Particulars				Amount Rs	Particulars			Amount Rs
Interest on Capital A/c:					Profit and Loss A/c			21,600
X    (40,000 × 15%)			6,000		Interest on Drawings
Y (30,000 × 15%)			4,500		X (6,000 × 5%)	300
Z (20,000 × 15%)			3,000	13,500	Y (6,000 × 5%)	300
					Z (6,000 × 5%)	300		900
Profit transferred to:
X’s Capital A/c		4,500
Y’s Capital A/c		3,000
Z’s Capital A/c		1,500		9,000
				22,500				22,500

 

Partners’ Capital Accounts

for the year 2016-17

Dr.							Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Drawings A/c	6,000	6,000	6,000	Cash A/c	40,000	30,000	20,000
Interest on Drawings	300	300	300	Interest on Capital A/c	6,000	4,500	3,000
				P/L Appropriation A/c	4,500	3,000	1,500
Balance c/d	44,200	31,200	18,200
	50,500	37,500	24,500		50,500	37,500	24,500

 

Profit and Loss Appropriation Account 

for the year ended March 31, 2018

Dr.							Cr.
Particulars			Amount Rs	Particulars		Amount Rs
Interest on Capital  A/c				Profit and Loss		25,140
X (44,200 × 15%)		6,630		Interest on Drawings
Y (31,200 × 15%)		4,680		X (6,000 × 5%)	300
Z (18,200 × 15%)		2,730	14,040	Y (6,000 × 5%)	300
Profit transferred to :				Z (6,000 × 5%)	300	900
X’s Capital A/c		6,000
Y’s Capital A/c		4,000
Z’s Capital A/c		2,000	12,000
			26,040			26,040

 

Partners’ Capital Accounts

for the year ended March 31,2018

Particulars		X	Y	Z	Particulars	X	Y	Z
Drawings A/c		6,000	6,000	6,000	Balance b/d	44,200	31,200	18,200
Interest on Drawing		300	300	300	Interest on Capital A/c	6,630	4,680	2,730
Balance c/d		50,530	33,580	16,630	P/L Appropriation A/c	6,000	4,000	2,000
		56,830	39,880	22,930		56,830	39,880	22,930
					Balance b/d	50,530	33,580	16,630
Cash A/c		51,280	34,080	16,880	Realisation A/c (Profit)	750	500	250
		51,280	34,080	16880		51,280	34,080	16,880

 

Realisation Account

Dr.							Cr.
Particulars				Amount Rs	Particulars	Amount Rs
Sundry Assets				1,18,740	Creditors	20,000
Cash A/c:					Cash (Assets realised)	1,21,000
Creditors		20,000
Expanses		760		20,760
Profit transferred to:
X’s Capital A/c			750
Y’s Capital A/c			500
Z’s Capital A/c			250	1,500
				1,41,000		1,41,000

 

Partners’ Capital Accounts

Dr.									Cr.
Particulars		X	Y	Z	Particulars	X	Y	Z
					Balance b/d	50,530	33,580	16,630
Cash A/c		51,280	34,080	16,880	Realisation A/c (Profit)	750	500	250
		51,280	34,080	16880		51,280	34,080	16,880

 

Cash Account

Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Balance b/d		2,000	Realisation A/c	20,760
Realisation A/c		1,21,000	X’s Capital A/c	51,280
			Y’s Capital A/c	34,080
			Z’s Capital A/c	16,880
		1,23,000		1,23,000

 

Memorandum Balance Sheet

as on March 31, 2018

Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Cash	2,000
X	50,530		Sundry Assets	1,18,740
Y	33,580
Z	16,630	1,00,740
Creditors		20,000
		1,20,740		1,20,740