Maharashtra State BoardHSC Commerce 12th Board Exam
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A, B and C Were Partners Sharing Profits and Losses in the Ratio of 3:2:1. on 31st March, 2010. Their Balance Sheet Was as Follows: - Book Keeping and Accountancy

Journal Entry
Ledger

A, B and C were partners sharing profits and losses in the ratio of 3:2:1. On 31st March, 2010. Their Balance Sheet was as follows:

              Balance Sheet as on 31st March, 2010

Liabilities Amount (Rs) Assets Amount (Rs)
Sundry Creditors 15400 Cash at Bank 3500
Bills payable 3600 Stock 19800
A’s loan A/c 10000 Debtors 15000 14000
Capital Account:   Less : Provision 1000
A 20000 Join Life Policy 4000
B 16000 Plant and Machinery 43700
C 8000    
Reserve Fund 12000  
  85000   85000

The firm was dissolved on 31st March, 2010 and the assets realised as follows:

1) Join Life Policy was taken over by Mr. A at Rs 5,000.

2) Stock realised Rs 18,000, Debtors realised Rs 14,500, Plant and Machinery was sold for Rs 36,000.

3) Liabilities were paid in full. In addition one bill for Rs 700 under discount was dishonoured and had to be taken up by the firm.

4) There were no realisation expenses.

Give the Journal entries and necessary Ledger Accounts to close the books of the firm.

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Solution

                               Journal Entry

Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
  Realisation A/c    Dr.
  To Stock A/c
  To Debtors A/c
  To Joint Life Policy A/c
  To Plant and Machinery A/c
(Being Sundry Assets transferred to Realisation A/c) 
  82500

19000

15000

4000

43700

  Sundry Creditors A/c                  Dr.
Bills Payable A/c Dr
Provision on Debtors A/c      Dr
  To Realisation A/c
(Being Sundry Liabilities transferred to Realisation A/c)
 

15400

3600

1000

20000
  Bank A/c          Dr.
   To Realisation A/c
(Being Assets realised)
  68500 68500
  Realisation A/c  Dr
  To  Bank A/c
(Being Liabilities paid off)
  19700 19700
  A’s Capital A/c  Dr
  To Realisation A/c
(Being Joint Life Policy taken over by Mr. A for Rs 5,000)
  5000 5000
  A’s Capital A/c  Dr.
B’s Capital A/c  Dr
C’s Capital A/c  Dr
  To Realisation A/c
(Being Loss on realization transferred to Partner’s Capital A/c)
 

4350

2900

1450

8700
  Reserve Fund    Dr
  To A’s Capital A/c
  To B’s Capital A/c
  To C’s Capital A/c
(Being Reserve Fund transferred to Partner’s Capital A/c)
  12000

6000

4000

2000

  A's Loan A/c      Dr
  To Bank A/c
(Being A’s Loan has been paid off)
  10000 10000
  A’s Capital A/c  Dr
B’s Capital A/c  Dr
C's Capital A/c  Dr
  To Bank A/c
(Being Amount Paid off to partner on account of final settlement)
 

16650

17100

8550

42300

                         Realisation Account
Dr.                                                                                Cr.

Particulars Amount (Rs) Particulars Amount (Rs)
Sundry Assets:   Sundry Liabilities:  
Stock 19,800 82,500 Provision on Debtors

1,000

20,000
Debtors 15,000 Bills Payable 3,600
Joint Life Policy 4,000 Sundry Creditors 15,400
Plant and Machinery 43,700 Mr. A’s Capital A/c (Joint Life Policy) 5,000
Bank A/c:   Bank A/c:  
Creditors 15,400 19700 Stock 18,000 68,500
Bills Payable 3,600 Debtors 14,500
Bill Dishonoured 700 Plant and Machinery 36,000
    Loss transferred to:  
  A’s Capital A/c 4,350 8,700
  B’s Capital A/c

2,900

  C’s Capital A/c

1,450

  93,500   93,500

                            Partners’ Capital Accounts
Dr.                                                                                 Cr.

Particulars A B C Particulars A B C
Realisation A/c (Loss) 4350 2900 1450 Balance c/d 20000 16000 8000
Realisation A/c (Joint Life Policy) 5000    

Reserve fund

6000 4000 2000
Balance c/d 16650 17100 8550        
  26000 20000 10000   26000 20000 10000

                                    Bank Account
Dr.                                                                                 Cr.

Particulars Amount (Rs) Particulars Amount (Rs)
Balance b/d 3,500 Realisation A/c (Liabilities) 19700
Realisation A/c (Assets)  68500 Capital A/cs:  
    A 16650 42300
  B 17100
  C 8550
  A's Loan A/c 10000
  72000   72000

                            A’s Loan Account
Dr.                                                                                 Cr.

Particulars Amount (Rs) Particulars Amount (Rs)
Bank A/c 10000 Balance b/d 10000
  10000   10000

Note: As per the book amounts paid to A, B and C is Rs 16,650, Rs 16,700 and Rs 8,950 respectively but as per our solution it should be Rs 16,650, Rs 17,100 and Rs 8,550 respectively.

Concept: Dissolution of Partnership Firm
  Is there an error in this question or solution?
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APPEARS IN

Micheal Vaz Accounts - Book Keeping and Accountancy HSC 12th Standard Maharashtra State Board
Chapter 6 Dissolution of Partnership Firm
Practical Problems | Q 5 | Page 184
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