Question

The following is the Balance Sheet of A and B as at 31st March, 2023. The profit sharing ratios of the partners are 3 : 2.

Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Creditors		97,500	Land & Buildings		30,000
Capital Accounts:		1,48,000	Motor Vehicles		18,300
A	85,000		Stock		72,800
B	63,000		Debtors	1,13,200	1,10,750
			Less: Provision for Bad Debts	2,450
			Cash at Bank		13,650
		2,45,500			2,45,500

The partners decided to dissolve the firm on and from the date of the Balance Sheet. Motor Vehicles and Stock were sold for cash at ₹ 16,950 and ₹ 77,600 respectively and all Debtors were realised in full. Land & Buildings were sold at ₹ 43,500. Creditors were paid off subject to discount of ₹ 1,700. Expenses of realisation were ₹ 1,250

Prepare Realisation Account, Bank Account and Partner’s Capital Accounts to close the books of the firm as a result of its dissolution.

Hint: Amount realised from Debtors ₹ 1,13,200.

Answer 1

Dr.	Realisation A/c				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets:			By Creditors		97,500
Land & building		30,000	By Provision for Bad Debts		2,450
Motor Vehicles		18,300	By Bank A/c:		2,51,250
Stock		72,800	Motor Vehicles	16,950
Debtors		1,13,200	Stock	77,600
To Bank A/c (Creditors)		95,800	Debtors	1,13,200
To Bank A/c (Realisation expenses)		1,250	Land & building	43,500
To Realisation Profit t/f to Capital A/c:		19,850
A	11,910
B	7,940
		3,51,200			3,51,200

 

Dr.	Partner’s Capital A/c				Cr.
Particulars	A	B	Particulars	A	B
To Balance c/d	96,910	70,940	By Balance b/d	85,000	63,000
			By Realisation A/c - Profit	11,910	7,940
	96,910	70,940		96,910	70,940

 

Dr.	Bank A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	13,650	By Realisation A/c	95,800
To Realisation A/c (Sundry assets realised)	2,51,250	By Realisation A/c  (Realisation expense)	1,250
		By A Capital A/c	96,910
		By B Capital A/c	70,940
	2,64,900		2,64,900