Question

A and B were partners sharing profits and losses as to 7/11th to A and 4/11th to B. They dissolved the partnership on 30th May, 2018. As on that date their capitals were: A ₹ 7,000 and B ₹ 4,000. There were also due on Loan A/c to A ₹ 4,500 and to B ₹ 750. The other liabilities amounted to ₹ 5,000. The assets proved to have been undervalued in the last Balance Sheet and actually realised ₹ 24,000.
Prepare necessary accounts showing the final settlement between partners.

Answer 1

 

Realisation Account   

Dr.					Cr.
Particulars			Amount Rs	Particulars	Amount Rs
Sundry Assets (WN)			21,250	Other liabilities	5,000
Cash A/c (Liabilities)			5,000	Cash A/c (Assets Realised)	24,000
Profit transferred to:
A’s Capital A/c		1,750
B’s Capital A/c		1,000	2,750
			29,000		29,000

Partners’ Capital Accounts

Dr.							Cr.
Particulars		A	B	Particulars	A	B
Cash A/c		8,750	5,000	Balance b/d	7,000	4,000
				Realisation A/c (Profit)	1,750	1,000
		8,750	5,000		8,750	5,000

 

Partners’ Loan Accounts

Dr.							Cr.
Particulars		A	B	Particulars	A	B
Cash A/c		4,500	750	Balance b/d	4,500	750
		4,500	750		4,500	750

 

Cash Account

Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Realisation A/c  (Assets)		24,000	A’s Capital A/c	8,750
			B’s Capital A/c	5,000
			A’s Loan A/c	4,500
			B’s Loan A/c	750
			Realisation A/c	5,000
		24,000		24,000

Working Note: 

Memorandum Balance Sheet

as on May 30, 2018

Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Sundry Assets	21,250
A	7,000		(Balancing Figure)
B	4,000	11,000
A’s Loan		4,500
B’s Loan		750
Other Liabilities		5,000
		21,250		21,250