Question

A, B and C were partners from 1st April 2022 with capitals of ₹ 3,00,000; ₹ 2,00,000 and ₹ 1,50,000 respectively. They shared profits in the ratio of 2 : 2 : 1. They carried on business for two years. In the first year ending on 31st March, 2023, they made a profit of ₹ 2,00,000 but in the second year ending on 31st March, 2024, a loss of ₹ 60,000 was incurred. As the business was no longer profitable they dissolved the firm on 31st March, 2024. Creditors on that date were ₹ 75,000. The partners withdrew for personal use ₹ 40,000 per partner per year. The assets realised ₹ 4,00,000. The expenses of realisation were ₹ 5,000.

Prepare Realisation Account and show your workings clearly.

Answer 1

Dr.	Realisation A/c			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets	6,25,000	By Creditors A/c		75,000
To Bank A/c (Creditors paid)	75,000	By Bank A/c (Asset realised)		4,00,000
To Bank A/c (Expenses)	5,000	By Loss on Realisation t/f to Capital A/c:		2,30,000
		A	92,000
		B	92,000
		C	46,000
	7,05,000			7,05,000

Working notes:

Dr.	Partner’s Capital A/c								Cr.
Date	Particulars	A	B	C	Date	Particulars	A	B	C
2023					2022
March 31	To Drawings	40,000	40,000	40,000	April 1	By Bank A/c	3,00,000	2,00,000	1,50,000
March 31	To Balance c/d	3,40,000	2,40,000	1,50,000	2023
					March 31	By P & L Appropriation A/c	80,000	80,000	40,000
		3,80,000	2,80,000	1,90,000			3,80,000	2,80,000	1,90,000
2024					2023
March 31	To Drawings	40,000	40,000	40,000	April 1	By Balance b/d	3,40,000	2,40,000	1,50,000
March 31	To P & L Appropriation A/c	24,000	24,000	12,000
March 31	To Balance c/d	2,76,000	1,76,000	98,000
		3,40,000	2,40,000	1,50,000			3,40,000	2,40,000	1,50,000

The following Balance Sheet will be prepared on 31st March, 2018, in order to find out the missing figure of Sundry Assets on the date of dissolution.

Balance sheet
Liabilities	Amount (₹)	Assets	Amount (₹)
Creditors	75,000	Sundry Assets (Balancing figure)	6,25,000
Capital A/cs:
A	2,76,000
B	1,76,000
C	98,000
	6,25,000		6,25,000