Question

A, B and C were in partnership sharing profits and losses in the ratio of 2 : 1 : 1. They decided to dissolve the partnership. On that date of dissolution, Sundry Assets (including cash ₹ 5,000) amounted to ₹ 88,000, assets realised ₹ 80,000 (including an unrecorded asset which realised ₹ 4,000). A contingent liability on account of bills discounted ₹ 8,000 was paid by the firm. The Capital Accounts of A, B and C showed a balance of ₹ 20,000 each.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account.

Answer 1

Realisation Account

Dr.							Cr.
Particulars			Amount Rs	Particulars		Amount Rs
Sundry Assets			83,000	Sundry Liabilities (WN )		28,000
				Cash A/c (Assets realised)		80,000
Cash A/c:				Loss transferred to:
Sundry  Liabilities		28,000		A’s Capital A/c	5,500
Contingent Liabilities		8,000	36,000	B’s Capital A/c	2,750
				C’s Capital A/c	2,750	11,000
			1,19,000			1,19,000

 

Partners’ Capital Accounts

Dr.									Cr.
Particulars		A	B	C	Particulars	A	B	C
Realisation A/c (Loss)		5,500	2,750	2,750	Balance b/d	20,000	20,000	20,000
Bank A/c		14,500	17,250	17,250
		20,000	20,000	20,000		20,000	20,000	20,000

 

Cash Account

Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Balance b/d		5,000	Realisation A/c	36,000
Realisation A/c		80,000	A’s Capital A/c	14,500
			B’s Capital A/c	17,250
			C’s Capital A/c	17,250
		85,000		85,000

Working Notes:

Memorandum Balance Sheet

Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Cash in Hand	5,000
A	20,000		Sundry Assets	83,000
B	20,000
C	20,000	60,000
Sundry Liabilities		28,000
(Balancing figure)
		88,000		88,000