Question

Sangeeta, Anita, and Smita were in partnership sharing Profits and Losses in the ratio 2: 2: 1. Their Balance Sheet as on 31^st March 2019 was as under:

Balance Sheets as on 31st March, 2019
Liabilities	Amount (₹)	Assets	Amount (₹)
Capital:		Land	2,10,000
Sangeeta	60,000	Plant	20,000
Anita	40,000	Goodwill	15,000
Smita	30,000	Debtors	1,25,000
Sangeeta’s Loan A/c	1,20,000	Loans and Advances	15,000
Sundry Creditors	1,20,000	Bank	5,000
Bills Payable	20,000
	3,90,000		3,90,000

They decided to dissolve the firm as follows:

1. Assets realised as; Land recovered ₹ 1,80,000; Goodwill for ₹ 75,000; Loans and Advances realised ₹ 12,000; 10% of the Debts proved bad;

2. Sangeeta took Plant at book value.

3. Creditors and Bills payable paid at 5% discount.

4. Sangeeta’s Loan was discharged along with ₹ 6,000 as Interest.

5. There was a contingent liability in respect of bills of ₹ 1,00,000 which was under discount. Out of them, a holder of one bill of ₹ 20,000 became insolvent

Show Realisation Account, Partners Capital Account, and Bank Account.

Answer 1

In the books of Sangeeta, Anita and Smita 

Dr.	Realisation A/c						Cr.
Particulars		Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets A/c:				By Sundry Liabilities A/c:
Land		2,10,000		Sundry Creditors	1,20,000
Plant		20,000		Bills Payable	20,000	140,000
Goodwill		15,000
Debtors		1,25,000		By Sangeeta’s Capital A/c (Plant)		20,000
Loans and Advances		15,000	3,85,000	By Bank A/c
To Bank A/c				Land	1,80,000
Creditors		1,14,000		Goodwill	75,000
Bills Payable		19,000	1,33,000	Loans and Advances	12,000
To Interest Sungeeta's loan A/c			6,000	Debtors	1,12,500	3,79,500
To Bank A/c (Contingent liability paid)			20,000	By Partners’ Capital A/c (Loss on realisation transferred)
				Sangeeta`[2/5 × 4500]`	1,800
				Anita`[2/5 × 4500]`	1,800
				Smita `[1/5 × 4500]`	900	4,500
			5,44,000			5,44,000

Dr	Partners’ Capital Accounts								Cr
Particulars		Sangeeta (₹)	Anita (₹)	Smita (₹)	Particulars	Sangeeta (₹)	Anita (₹)	Smita (₹)
To Realisation A/c		20,000	–	–	By Balance b/d	60,000	40,000	30,000
To Realisation A/c – Loss		1,800	1,800	900
To Bank A/c		38,200	38,200	29,100
		60,000	40,000	30,000		60,000	40,000	30,000

 

Dr.	Sangeeta’s Loan A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Bank A/c	120,000	By Balance b/d	120,000
	120,000		120,000

 

Dr	Bank Account				Cr
Particulars		Amount (₹)	Particulars	Amount (₹)
To Balance b/d		5,000	By realisation A/c – Liabilities	1,33,000
To realisation A/c – Assets		3,79,500	By Sangeeta’s Loan A/c	1,20,000
			By Interest Loan A/c	6,000
			By realisation A/c - Contingent liability paid	20,000
			By Sangeeta’s Capital A/c	38,200
			By Anita’s Capital A/c	38,200
			By Smita’s Capital A/c	29,100
		3,84,500		3,84,500

Working Notes :

(1) Amount paid towards Sangeeta’s Loan = Loan amount + Interest due on loan

= 1,20,000 + 6,000 = ₹ 1,26,000

(2) Amount received from Debtors = Debtors – Bad debts

= 1,25,000 – 10 % of 1,25,000 = 1,25,000  – 12,500

= ₹ 1,12,500

(3) Amount paid to Creditors = Creditor – 5 % discount

= 1,20,000 – 5 % on 1,20,000

= 1,20,000 – 6,000

= ₹ 1,14,000

(4) Amount paid towards Bills payable = Bills payable  –  5 % discount

= 20,000 –  5 % on 20,000

= 20,000  – 1,000

= ₹ 19,000

(5) Bill of  ₹ 1,00,000 was discounted with the Bank. On the due date bank could not recover ₹ 20,000 from one bill holder as he was declared insolvent. Therefore, we required to settle that contingent liability of ₹ 20,000.