Question

A and B were partners from 1.4.2022 with capitals of ₹ 60,000; ₹ 40,000 respectively. They shared profits in the ratio of 3 : 2. They carried on business for two years. In the first year ending on 31.3.2023, they made a profit of ₹ 50,000 but in the second year ending on 31.3.2024, a loss of ₹ 20,000 was incurred. As the business was no longer profitable they dissolved the firm on 31.3.2024. Creditors on that date were ₹ 20,000. The partners withdrew for personal use ₹ 8,000 per partner per year. The assets realised ₹ 1,00,000. The expenses of realisation were ₹ 3,000.

Prepare Realisation Account, Partner’s Capital Accounts and Bank Account.

Answer 1

Dr.	Realisation A/c			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets	1,18,000	By Creditors A/c		20,000
To Bank A/c (Creditors paid)	20,000	By Bank A/c (Asset realised)		1,00,000
To Bank A/c (Expenses)	3,000	By Loss on Realisation t/f to Capital A/c:		21,000
		A	12,600
		B	8,400
	1,41,000			1,41,000

 

Dr.	Partner’s Capital A/c				Cr.
Particulars	A	B	Particulars	A	B
To Realisation A/c (Loss)	12,600	8,400	By Balance b/d [W.N. 1]	62,000	36,000
To Bank A/c (Final Payment)	49,400	27,600
	62,000	36,000		62,000	36,000

 

Dr.	Bank A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Realisation A/c (Asset realised)	1,00,000	By Realisation A/c (Creditors)	20,000
		By Realisation A/c (Expenses)	3,000
		By A’s Capital A/c	49,400
		By B’s Capital A/c	27,600
	1,00,000		1,00,000

Working Note:

(1)

Dr.	Partner’s Capital A/c						Cr.
Date	Particulars	A	B	Date	Particulars	A	B
2023				2022
March 31	To Drawings	8,000	8,000	April 1	By Bank A/c	60,000	40,000
March 31	To Balance c/d	82,000	52,000	2023
				March 31	By P & L Appropriation A/c	30,000	20,000
		90,000	60,000			90,000	60,000
2024				2023
March 31	To Drawings	8,000	8,000	April 1	By Balance b/d	82,000	52,000
March 31	To P & L Appropriation A/c	12,000	8,000
March 31	To Balance c/d	62,000	36,000
		82,000	52,000			82,000	52,000

(2)

Memorandum Balance sheet as on 31st march 2024.
Liabilities	Amount (₹)	Assets	Amount (₹)
A’s Capital A/c	62,000	Sundry Assets (Balancing figure)	1,18,000
B’s Capital A/c	36,000
Creditors	20,000
	1,18,000		1,18,000