Question

Prashant and Rajesh are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2026, their Balance Sheet was:

Liabilities	₹	Assets	₹	₹
Bank Overdraft	30,000	Cash in Hand		6,000
General Reserve	56,000	Bank Balance		10,000
Investment Fluctuation Reserve	20,000	Sundry Debtors	26,000	24,000
Loan by Prashant	34,000	Less: Provision for Doubtful Debts	2,000
Capital A/c:		Investments		40,000
Prashant	50,000	Stock		10,000
		Furniture		10,000
		Building		60,000
		Rajesh’s Capital		30,000
	1,90,000			1,90,000

On that date, the partners decide to dissolve the firm. Prashant took Investments for ₹ 35,000. Other assets were realised as follows:

Sundry Debtors: Full amount. The firm could realise Stock at 15% less and Building was sold at ₹ 1,00,000. Compensation to employees paid by the firm was ₹ 10,000. This liability was not provided for in the above Balance Sheet.

You are required to close the books of the firm by preparing Realisation Account, Partners’ Capital Accounts and Bank Account.

Answer 1

Dr.	Realisation Account				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets A/c (Transfer):		1,46,000	By Bank Overdraft A/c (Transfer)		30,000
Sundry Debtors (Gross value)	26,000		By Provision for Doubtful Debts A/c		2,000
Investments	40,000		By Investment Fluctuation Reserve A/c		20,000
Stock	10,000		By Prashant’s Capital A/c (Investments taken)		35,000
Furniture	10,000		By Bank A/c (Assets Realised):		1,34,500
Building	60,000		Sundry Debtors (Full amount)	26,000
To Bank A/c (Liabilities Paid):		40,000	Stock (15% less)	8,500
Bank Overdraft	30,000		Building	1,00,000
Compensation to Employees	10,000
To Gain (Profit) on Realisation transferred to:		45,500
Prashant’s Capital A/c (3/5)	27,300
Rajesh’s Capital A/c (2/5)	18,200
		2,21,500			2,21,500

 

Dr.	Partners’ Capital Accounts				Cr.
Particulars	Prashant (₹)	Rajesh (₹)	Particulars	Prashant (₹)	Rajesh (₹)
To Balance b/d		30,000	By Balance b/d	50,000
To Realisation A/c (Investments)	35,000		By General Reserve (3 : 2)	33,600	22,400
To Bank A/c (Final Payment)	75,900		By Realisation A/c (Gain)	27,300	18,200
			By Bank A/c (Cash brought in)		10,600
	1,10,900	40,600		1,10,900	40,600

 

Dr.	Bank Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d (Bank Balance)	10,000	By Realisation A/c (Liabilities paid)	40,000
To Realisation A/c (Assets realised)	1,34,500	By Loan by Prashant	34,000
To Realisation A/c (Assets realised)	10,600	By Prashant’s Capital A/c (Final payment)	75,900
	1,55,100		1,55,100