Question

A and B dissolve their partnership. Their position as at 31st March, 2019 was:

Particulars	₹
A's Capital	25,000
B's Capital	15,000
Sundry Creditors	20,000
Cash in Hand and at Bank	750

The balance of A's Loan Account to the firm stood at ₹ 10,000. The realisation expenses amounted to ₹ 350. Stock realised ₹ 20,000 and Debtors ₹ 25,000. B took a machine at the agreed valuation of ₹ 7,500. Other fixed assets realised ₹ 20,000.
You are required to close the books of the firm.

Answer 1

 

Realisation Account

Dr.								Cr.
Particulars				Amount Rs	Particulars		Amount Rs
Sundry Assets (WN)				69,250	Sundry Creditors		20,000
Bank A/c:					Bank A/c:
S. Creditors		20,000			Stock	20,000
Expenses		350		20,350	Debtors	25,000
Profit transferred to:					Other Assets	20,000	65,000
A’s Capital A/c			1,450		B’s Capital A/c (Machinery)		7,500
B’s Capital A/c			1,450	2,900
				92,500			92,500

 

A’s Loan Account

Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Bank A/c		10,000	Balance b/d	10,000
		10,000		10,000

 

Partners’ Capital Accounts

Dr.							Cr.
Particulars		A	B	Particulars	A	B
Realisation A/c (Machinery)		–	7,500	Balance b/d	25,000	15,000
Bank A/c		26,450	8,950	Realisation A/c (Profit)	1,450	1,450
		26,450	16,450		26,450	16,450

 

Bank Account

Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Balance b/d		750	A’s Loan A/c	10,000
Realisation A/c		65,000	A’s Capital A/c	26,450
			B’s Capital A/c	8,950
			Realisation A/c	20,350
		65,750		65,750

Working Note: 

Memorandum Balance Sheet

as on March 31, 2019

Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Cash in Hand and at Bank	750
A	25,000
B	15,000	40,000	Sundry Assets
Sundry Creditors		20,000	(other than Cash and Bank)	69,250
A’s Loan		10,000
		70,000		70,000