Question

A, B and C were partners in a firm sharing profits & losses in the ratio of 2 : 2 : 1. The Balance Sheet of the firm at the date of dissolution was as follows:

Liabilities	Amount (₹)	Assets	Amount (₹)
Bank Overdraft	21,000	Debtors	40,000
Creditors	86,000	Stock	60,000
Provident Fund	18,000	Investments	25,000
Capital Accounts:		Machinery	80,000
A	1,05,000	Goodwill	42,000
B	42,000	C’s Capital Account	25,000
	2,72,000		2,72,000

You are informed that:

1. They appointed B to realise the assets. He is to receive 5% of the amounts realised from Debtors, Stock and Machinery, and is to bear all expenses of realisation.
2. Bad Debts amounted to ₹ 2,000; Stock realised ₹ 36,000 and Machinery realised ₹ 46,000. There was an unrecorded asset of ₹ 10,000 which was taken over by A at ₹ 8,000.
3. Market value of Investments was ascertained to be ₹ 20,000, and one of the creditors agreed to accept the Investments at this value. Remaining creditors were paid at a discount of ₹ 6,000.
4. An office typewriter, not shown in the books of accounts, realised ₹ 20,000.
5. There were outstanding expenses amounting to ₹ 6,000. These were settled for ₹ 4,500. Expenses of realisation met by B amounted to ₹ 2,000.

Prepare necessary accounts.

Answer 1

Dr.	Realisation A/c				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Debtors A/c		40,000	By Bank overdraft A/c		21,000
To Stock A/c		60,000	By Creditors A/c		86,000
To Investments A/c		25,000	By Provident Fund A/c		18,000
To Machinery A/c		80,000	By Bank A/c: (Assets realised):		1,40,000
To Goodwill A/c		42,000	Debtors	38,000
To Bank A/c (Bank overdraft paid)		21,000	Stock	36,000
To Bank A/c:		60,000	Machinery	46,000
Creditors	86,000		Office typewriter	20,000
Less: Investments taken over	20,000		By A’s Capital A/c (Unrecorded asset taken over)		8,000
	66,000		By Loss on Realisation t/f to Capital A/c:		83,500
Less: Discount	6,000		A	33,400
To Bank A/c:		22,500	B	33,400
Outstanding expenses	4,500		C	16,700
Provident Fund	18,000
To B’s Capital A/c		6,000
		3,56,500			3,56,500

 

Dr.	Partner’s Capital A/c						Cr.
Particulars	A	B	C	Particulars	A	B	C
To Balance b/d	-	-	25,000	By Balance b/d	1,05,000	42,000	-
To Realisation A/c (Assets taken over)	8,000	-	-	By Realisation A/c (Commission)	-	6,000	-
To Realisation A/c (Loss)	33,400	33,400	16,700	By Bank A/c (Amount brought in)	-	-	41,700
To Bank A/c (Final Payment)	63,600	14,600	-
	1,05,000	48,000	41,700		1,05,000	48,000	41,700

 

Dr.	Bank A/c			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Realisation A/c (Assets realised)	1,40,000	By Realisation A/c (Bank overdraft)		21,000
To C’s Capital A/c	41,700	By Realisation A/c (Creditors paid)		60,000
		By Realisation A/c		22,500
		Outstanding expenses	4,500
		Provident Fund	18,000
		By A’s Capital A/c		63,600
		By B’s Capital A/c		14,600
	1,81,700			1,81,700