Question

P and were partners in a firm sharing profits and losses equally. On 15th March, 2023 the firm was dissolved. The dissolution resulted in a loss of ₹ 60,000. On the date the Capital Accounts of P and showed credit balances of ₹ 70,000 and ₹ 50,000 respectively. There was a bank balance of ₹ 60,000.

Pass the necessary Journal Entries for (i) the transfer of loss to the Capital accounts of the partners, and (ii) making final payments to the partners.

Answer 1

Journal Entries in the books of firm
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
15-03-2023	P’s Capital A/c Dr.		30,000	—
	Q’s Capital A/c Dr.		30,000	—
	To Realisation A/c		—	60,000
	(Being loss on realisation transferred to partners’ Capital Accounts in equal ratio)
15-03-2023	P’s Capital A/c Dr.		40,000	—
	Q’s Capital A/c Dr.		20,000	—
	To Bank A/c		—	60,000
	(Being final payment made to partners)

Working note:

Loss on Realisation = ₹ 60,000

P’s share = ₹ 30,000

Q’s share = ₹ 30,000

Final amount payable to P = ₹ 70,000 − ₹ 30,000 = ₹ 40,000

Final amount payable to Q = ₹ 50,000 − ₹ 30,000 = ₹ 20,000