Question

Yogesh and Naresh were partners sharing profits equally. They dissolved the firm on 1st April, 2019. Naresh was assigned the responsibility to realise the assets and pay the liabilities at a remuneration of ₹10,000 including expenses. Balance Sheet of the firm as on that date was as follows:

Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Creditors		40,000	Cash/Bank		6,000
Bills Payable		40,000	Investments		30,000
Naresh's Loan		44,000	Debtors	40,000	36,000
Mrs. Yogesh's Loan		42,000	Less: Provision for Doubtful Debts	4,000
Investment Fluctuation Reserve		8,000	Bills Receivable		33,400
Capital A/cs:		42,000	Profit and Loss A/c		1,10,600
Yogesh	21,000
Naresh	21,000
		2,16,000			2,16,000

The firm was dissolved on following terms:

1. Yogesh was to pay his wife's loan.
2. Debtors realised ₹ 30,000.
3. Naresh was to take investments at an agreed value of ₹ 26,000.
4. Creditors and Bills Payable were payable after two months but were paid immediately at a discount of 15% p.a.
5. Bills Receivable were received allowing 5% rebate.
6. A Debtor previously written off as Bad Debt paid ₹ 15,000.
7.  An unrecorded asset realised ₹10,000.

Prepare Realisation Account, Partners' Capital Accounts, Partners' Loan Account and Cash/Bank Account.

Answer 1

Dr.	Realisation A/c				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Investments		30,000	By Investment Fluctuation Reserve		8,000
To Debtors		40,000	By Provision for Doubtful Debts		4,000
To Bills Receivable		33,400	By Creditors		40,000
To Yogesh’s Capital A/c (Wife’s Loan)		42,000	By Bills Payable		40,000
To Cash/Bank A/c:			By Mrs. Yogesh’s Loan		42,000
Creditors `[40,000  – (40,000 × 15/100 × 2/12)]`	39,000	78,000	By Cash/Bank A/c:		86,730
Bills Payable `[40,000  – (40,000 × 15/100 × 2/12)]`	39,000		Debtors	30,000
To Naresh’s Capital A/c (Commission)		10,000	Bills Receivable	31,730
To Realisation Gain transferred to:		13,330	Bad Debt Recovered	15,000
Yogesh’s Capital A/c	6,665		Unrecorded Asset	10,000
Naresh’s Capital A/c	6,665		By Naresh’s Capital A/c (Investment taken over)		26,000
		2,46,730			2,46,730

 

Dr.	Partner’s Capital A/c				Cr.
Particulars	Yogesh (₹)	Naresh (₹)	Particulars	Yogesh (₹)	Naresh (₹)
To Realisation A/c (Asset taken over)	–	26,000	By Balance b/d	21,000	21,000
To Profit and Loss A/c	55,300	55,300	By Realisation A/c (Gain)	6,665	6,665
To Cash/Bank A/c	14,365	–	By Realisation A/c (Liability paid)	42,000	–
			By Realisation A/c (Commission)	–	10,000
			By Naresh’s Loan A/c		43,635
	69,665	81,300		69,665	81,300

 

Dr.	Naresh’s Loan A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Naresh’s Capital A/c	43,635	By balance b/d	44,000
To Cash/Bank A/c	365
	44,000		44,000

 

Dr.	Cash/Bank A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To balance b/d	6,000	By Yogesh’s Capital A/c	14,365
To Realisation A/c (Asset Realised)	86,730	By Naresh’s Loan A/c	365
		By Realisation A/c (Liabilities Paid)	78,000
	92,730		92,730