Question

A and B were partners sharing profits and losses in 2 : 1. Their Balance Sheet as at 31st March, 2024 was as follows:

Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Sundry Creditors		2,10,000	Cash at Bank		60,000
A’s Loan @ 12% p.a.		50,000	Sundry Debtors	1,80,000	1,70,000
General Reserve		90,000	Less: Provision for Doubtful Debts	10,000
A’s Capital	4,00,000	6,50,000	Stock		2,00,000
B’s Capital	2,50,000		Investments		1,50,000
			Plant & Machinery		4,00,000
			B’s Loan		20,000
		10,00,000			10,00,000

Partners decide to dissolve the firm on the above date. Assets and liabilities realised as follows:

1. Plant & Machinery was taken over by A at 60% of the book value.
2. Investments were taken over by B at 120%.
3. Sundry Creditors were paid off by giving them stock at 75% of the book value and the balance in cash.
4. Debtors realised 20% less of the amount due from them.
5. A's loan was paid off with interest for six months.
6. Realisation expenses amounted to ₹ 1,000.

You are required to prepare:

1. Realisation Account
2. A’s Loan Account and B’s Loan Account
3. Partner’s Capital Accounts, and
4. Bank Account.

Hint: Payment to Sundry Creditors ₹ 60,000.

Answer 1

Dr.	Realisation A/c			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets:		By Sundry Creditors		2,10,000
Sundry Debtors	1,80,000	By Provision for Bad Debts		10,000
Stock	2,00,000	By Bank A/c (Sundry Debtors)		1,44,000
Investments	1,50,000	By A’s Capital A/c		2,40,000
Plant & Machinery	4,00,000	By B’s Capital A/c		1,80,000
To Bank A/c (2,10,000 – 2,00,000 × 75%)	60,000	To Realisation Loss t/f to Capital A/c:		2,10,000
To A’s Loan A/c (Interest)	3,000	A	1,40,000
To Bank A/c	1,000	B	70,000
	9,94,000			9,94,000

 

Dr.	Partner’s Capital A/c				Cr.
Particulars	A	B	Particulars	A	B
To Realisation A/c - Loss	1,40,000	70,000	By Balance b/d	4,00,000	2,50,000
To Realisation A/c (Plants & machinery taken over)	2,40,000	-	By General Reserve A/c	60,000	30,000
To B’s loan A/c	-	20,000
To Realisation A/c (Investment)	-	1,80,000
To Bank A/c	80,000	10,000
	4,60,000	2,80,000		4,60,000	2,80,000

 

Dr.	A’s loan A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Bank A/c	53,000	By Balance b/d	50,000
		By Realisation A/c	3,000
	53,000		53,000

 

Dr.	B’s loan A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	20,000	By B’s Capital A/c	20,000
	20,000		20,000

 

Dr.	Bank A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	60,000	By Realisation A/c (Sundry Creditors paid off)	60,000
To Realisation A/c (Sundry debtors realised)	1,44,000	By Realisation A/c (Realisation Expense paid)	1,000
		By A Capital A/c	80,000
		By B Capital A/c	10,000
		By A loan A/c	53,000
	2,04,000		2,04,000