Question

Mike and Ajay are partners sharing profits and losses in ratio of the capitals. They decided to dissolve their firm on 31st March, 2026, the date on which the Balance Sheet stood as under:

Liabilities	₹	₹	Assets	₹
Capital A/cs:		10,00,000	Sundry Assets	16,30,000
Mike	6,00,000		Cash	70,000
Ajay	4,00,000
Workmen Compensation Reserve		1,00,000
Sundry Creditors		2,00,000
Bills Payable		60,000
Others		3,40,000
		17,00,000		17,00,000

Following additional information is given:

Sundry assets realised ₹ 14,00,000 and the liabilities were discharged as follows:

1. Creditors due on 31st May, 2026, were paid at a discount of 3% per annum.
2. Bills Payable were discharged at a rebate of ₹ 1,000.
3. Workmen Compensation Claim of ₹ 40,000 was met.
4. Expenses of dissolution amounting to ₹ 30,000 were paid.

You are required to prepare:

1. Realisation Account.
2. Partners’ Capital Accounts.

Answer 1

Dr.	Realisation A/c				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets A/c		16,30,000	By Sundry Liabilities A/c:		6,40,000
To Cash A/c:		6,38,000	Creditors	2,00,000
Creditors	1,99,000		Bills Payables	60,000
Bills Payables	59,000		Workmen Compensation Reserve	40,000
Workmen Compensation Claim	40,000		Other Liabilities	3,40,000
Other Liabilities	3,40,000		By Cash A/c (Assets Realised)		14,00,000
To Cash A/c (Exp.)		30,000	By Loss on Realisation t/f to Capital A/c:		2,58,000
			Mike	1,54,800
			Ajay	1,03,200
		22,98,000			22,98,000

 

Dr.	Partner’s Capital A/c				Cr.
Particulars	Mike	Ajay	Particulars	Mike	Ajay
To Realisation A/c	1,54,800	1,03,200	By Balance b/d	6,00,000	4,00,000
To Cash A/c	4,81,200	3,20,800	By Workmen Compensation Reserve A/c	36,000	24,000
	6,36,000	4,24,000		6,36,000	4,24,000

Working Note:

(1)

Memorandum Balance Sheet as at 31st March, 2019
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)
Capitals:		10,00,000	Cash	70,000
Mike	6,00,000		Sundry Assets (Balancing figure)	16,30,000
Ajay	4,00,000
Workmen Compensation Reserve		1,00,000
Creditors		2,00,000
Bills Payables		60,000
Other Liabilities		3,40,000
		17,00,000		17,00,000

(2)

Discount on Creditors: `2,00,000xx3/100xx2/12`

= ₹ 1,000