Question

Ashok and Kishore were in partnership sharing profits in the ratio of 3 : 1. They agreed to dissolve the firm. The assets (other than cash of ₹ 2,000) of the firm realised ₹ 1,10,000. The liabilities and other particulars of the firm on that date were as follow:

	₹
Creditors	40,000
Ashok’s Capital	1,00,000
Kishore’s Capital	10,000	(Dr. balance)
Profit & Loss Account	8,000	(Dr. balance)
Realisation Expenses were	1,000

Creditors were settled in full settlement at ₹ 38,000. Prepare Realisation and Cash Account.

Answer 1

Dr.	Realisation A/c			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets	1,20,000	By Creditors		40,000
To Bank A/c (Creditors)	38,000	By Bank A/c		1,10,000
To Bank A/c (Realisation expenses)	1,000	By Loss on Realisation t/f to Capital A/c:		9,000
		Ashok	6,750
		Kishore	2,250
	1,59,000			1,59,000

 

Dr.	Partner’s Capital A/c				Cr.
Particulars	Ashok	Kishore	Particulars	Ashok	Kishore
To Balance b/d	-	10,000	By Realisation A/c	1,00,000	-
To Realisation A/c (Loss)	6,750	2,250	By Bank A/c	-	14,250
To Profit & loss A/c	6,000	2,000
To Bank A/c	87,250	-
	1,00,000	14,250		1,00,000	14,250

 

Dr.	Cash A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	2,000	By Realisation A/c (Creditors)	38,000
To Realisation A/c (Sundry Assets realised)	1,10,000	By Realisation A/c (Realisation expense)	1,000
To Kishore’s Capital A/c	14,250	By Ashok’s Capital A/c	87,250
	1,26,250		1,26,250

Working note:

Balance sheet
Liabilities	Amount (₹)	Assets	Amount (₹)
Ashok Capital A/c	1,00,000	By Sundry Assets (Balancing figure)	1,20,000
Creditors	40,000	Cash	2,000
		Kishore’s Capital A/c	10,000
		Profit & loss A/c	8,000
	1,40,000		1,40,000