Question

Following is the Balance Sheet as on 31st March 2019 of a firm having three equal partners Priti, Priya, and Prachi.

Balance Sheets as on 31st March 2019
Liabilities	Amount (₹)	Assets	Amount (₹)
Capital		Machinery	23,000
Priti	40,000	Furniture	16,000
Priya	35,000	Stock	47,000
Prachi	25,000	Cash at Bank	10,000
Trade Creditors	50,000	Profit and Loss Account	84,000
Loan (secured by Machinery)	30,000
	1,80,000		1,80,000

The firm was dissolved due to insolvency of all the partners. Machinery was sold for ₹ 18,000, while Furniture fetched ₹ 14,000, Stock realised ₹ 35,000. Realisation expenses amounted to ₹ 2,000. Nothing could be recovered from Priya and Prachi, but ₹ 3,400 could be collected from Priti’s private estate.

Close the books of accounts of the firm.

Answer 1

In the books of Priti, Priya and Prachi 

Dr.	Realisation Account						Cr.
Particulars		Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets A/c				By Bank A/c
Machinery		23,000		Machinery	18,000
Furniture		16,000		Furniture	14,000
Stock		47,000	86,000	Stock	35,000	67,000
To Bank A/c (realisation Expense)			2,000	By Partners’ Capital A/c (Loss on realisation transferred
				Priti	7,000
				Priya	7,000
				Prachi	7,000	21,000
			88,000			88,000

 

Dr.	Partners’ Capital Accounts								Cr.
Particulars		Priti (₹)	Priya (₹)	Prachi (₹)	Particulars	Priti (₹)	Priya (₹)	Prachi (₹)
To Profit and Loss A/c		28,000	28,000	28,000	By Balance b/d	40,000	35,000	25,000
To realisation A/c – Loss		7,000	7,000	7,000	By Bank A/c (Asset)	3,400	-	-
To Deficiency A/c		8,400	-	-	By Deficiency A/c	-	-	10,000
		43,400	35,000	35,000		43,400	35,000	35,000

 

Dr.	Trade Creditors A/c				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
To Deficiency A/c		1,290	By Balance b/d	50,000
To Bank A/c		48,710
		50,000		50,000

 

Dr.	Loan A/c				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
To Deficiency A/c		310	By Balance b/d	30,000
To Bank A/c		29,690
		30,000		30,000

 

Dr.	Deficiency Account				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
To Prachi’s Capital A/c		10,000	By Priti’s Capital A/c	8400
			By Trade Creditors A/c	1,290
			By Loan A/c	310
		10,000		10,000

 

Dr	Bank Account				Cr
Particulars		Amount (₹)	Particulars	Amount (₹)
To Balance b/d		10,000	By Sundry Creditors A/c	48,710
To Priti’s Capital A/c		3,400	By realisation Expense A/c	2,000
To realisation A/c (Assets)		67,000	By Loan A/c	29,690
		80,400		80,400

Working Notes :

1) Amount paid to loan from sale of machinery = ₹ 18,000

Balance of Loan = 30,000 – 18,000 = ₹ 12,000

(2) Ratio of Trade creditors and Loan = 50,000 : 12,000
= 50 : 12 i.e. 25 : 6

(3) Balance of cash available = 10,000 + 67,000 + 3,400 – 18,000 – 2,000

= 80,400 – 20,000

= ₹ 60,400

Amount paid towards loan = `6/31 × 60,400` = ₹ 11,690

Amount paid to Trade creditors = `25/31 × 60,400` = ₹ 48,710

Amount paid towards loan = 18,000 + 11,690 = ₹  29,690.