Question

Sitaram, Gangaram, and Rajaram are partners sharing Profits and Losses in the ratio of 4:2:3. On. 1^st April 2019 they agreed to dissolve the partnership, their Balance Sheet was as follows :

Balance Sheets as on 31st March 2019
Liabilities	Amount ₹	Assets	Amount ₹
Capital:		Building	55,000
Sitaram	65,000	Machinery	25,000
Gangaram	45,000	Furniture	12,000
Rajaram	7,000	Investment	15,000
Reserve Fund	18,000	Bills Receivable	3,500
Profit and Loss Account	5,400	Sundry Debtors	21,000
Loan from Tukaram	10,000	Stock	28,000
Sundry Creditors	12,000	Cash in hand	5,500
Bills Payable	4,600	Cash at Bank	2000
	1,67,000		1,67,000

The assets realised: Building ₹ 46,750 Machinery ₹ 18,550 Furniture ₹ 9,600; Investment ₹ 10,650 Bill Receivable and Debtors ₹ 20,750; All the liabilities were paid off. The cost of realisation was ₹ 800. Rajaram becomes bankrupt and ₹ 1,100 only was recovered from his estate.

Show Realisation Account, Bank Account, and Capital Account of the partners.

Answer 1

Dr.	In the books of Sitaram, Gangaram and Rajaram Realisation Account						Cr.
Particulars		Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets A/c				By Sundry Liabilities A/c
Building		55,000		Loan from Tukaram	10,000
Machinery		25,000		Sundry Creditors	12,000
Furniture		12,000		Bills Payable	4,600	26,600
Investments		15,000		By Bank A/c
Bills receivable		3,500		Building	46,750
Sundry Debtors		21,000		Machinery	18,550
Stock		28,000	1,59,500	Furniture	9,600
To Bank A/c				Investments	10,650
Loan from Tukaram		10,000		Bills receivable and Debtors	20,750	1,06,300
Realisation Expense		800		By Partners’ Capital A/c (Loss on realisation transferred)
Sundry Creditors		12,000		Sitaram	24,000
Bills Payable		4,600	27,400	Gangaram	12,000
				Rajaram	18,000	54,000
			1,86,900			1,86,900

 

Dr.	Partners’ Capital Accounts								Cr.
Particulars		Sitaram (₹)	Gangaram (₹)	Rajaram (₹)	Particulars	Sitaram (₹)	Gangaram (₹)	Rajaram (₹)
To Realistion A/c – Loss		24,000	12,000	18,000	By Balance b/d	65,000	45,000	7,000
To Rajaram's Capital A/c		1,400	700		By reserve Fund A/c	8,000	4,000	6,000
To Bank A/c		50,000	37,500		By Profit and Loss A/c	2,400	1,200	1,800
					By Bank A/c (Amount recovered)			1,100
					By Sitaram’s Capital A/c			1,400
					By Gangaram’s Capital A/c			700
		75,400	50,200	18,000		75,400	50,200	18,000

 

Dr.	Bank Account				Cr.
Particulars		Amount (₹)	Particulars	Amount (₹)
To Balance b/d		2,000	By Realisation A/c – Liabilities	27,400
To Cash A/c		5,500	By Sitaram’s Capital A/c	50,000
To Realisation A/c – Assets		1,06,300	By Gangaram’s Capital A/c	37,500
To Rajarams’ Capital A/c		1,100
		1,14,900		1,14,900

Working Notes :

(1) ₹ 1,100 is recovered from Rajaram's estate which is recorded in credit side of Rajaram's Capital Account and on debit side of Bank A/c.

(2) Capital deficiency of Rajaram = Debit total of Capital A/c – Credit total of Capital A/c

= 18,000 – 15,900 = ₹ 2,100

Deficit amount of Rajaram A/c  ₹ 2,100 is distributed among continuing partners’ in 2 : 1 ratio.