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Achal and Vichal Were Partners in a Firm Sharing Profits in the Ratio of 3 : 5. on 31st March, 2019, Their Balance Sheet Was as Follows: - Accountancy

Numerical

Achal and Vichal were partners in a firm sharing profits in the ratio of 3 : 5. On 31st March, 2019, their Balance Sheet was as follows:

Liabilities Amount (₹) Assets Amount (₹)
Capital A/cs:                          Land and Building 4,00,000
Achal  3,00,000   Machinery   3,00,000
Vichal 5,00,000 8,00,000 Debtors   2,22,000
Creditors 1,79,000 Cash at Bank   78,000
Employees' Provident Fund 21,000      
  10,00,000   10,00,000

The firm was dissolved on 1st April, 2019 and the Assets and Liabilities were settled as follows:
(a) Land and Building realised ₹ 4,30,000.
(b) Debtors realised ₹ 2,25,000 (with interest) and ₹ 1,000 were recovered for Bad Debts written off last year.
(c) There was an Unrecorded Investment which was sold for ₹ 25,000.
(d) Vichal took over Machinery at ₹ 2,80,000 for cash.
(e) 50% of the Creditors were paid ₹ 4,000 less in full settlement and the remaining Creditors were paid full amount.
Pass necessary Journal entries for dissolution of the firm.

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Solution

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit Amount

(₹)

2019
Apr.1

 

Realisation A/c


Dr.

 


9,22,000

 

 

To Land & Building A/c

 

 

 

4,00,000

 

To Machinery A/c

 

 

 

3,00,000

 

To Debtors A/c

 

 

 

2,22,000

 

(Being assets transferred)

 

 

 

Apr.1

Creditors A/c

Dr.

 

1,79,000

 

 

Employees’ Provident Fund A/c

Dr.

 

21,000

 

 

To Realisation A/c

 

 

 

2,00,000

 

(Being liabilities transferred)

 

 

 

 

Apr.1

Bank A/c

Dr.

 

4,30,000

 

 

To Realisation A/c

 

 

 

4,30,000

 

(Being Land & Building realised)

 

 

 

 

Apr.1

Bank A/c (2,25,000 + 1,000)

Dr.

 

2,26,000

 

 

To Realisation A/c

 

 

 

2,26,000

 

(Being Debtors realised along-with Bad-debts recovered)

 

 

 

 

Apr.1

Bank A/c

Dr.

 

25,000

 

 

To Realisation A/c

 

 

 

25,000

 

(Being Unrecorded Investments sold)

 

 

 

 

Apr.1

Bank A/c

Dr.

 

2,80,000

 

 

To Realisation A/c

 

 

 

2,80,000

 

(Being Machinery took over by Vichal for Cash)

 

 

 

 

Apr.1

Realisation A/c

Dr.

 

1,96,000

 

 

To Bank A/c (85,500 + 89,500 + 21,000)

 

 

 

1,96,000

 

(Being 50% Creditors of Rs 89,500 were paid at a discount of Rs 4,000 and remaining 50% were settled in full and EPF)

 

 

 

 

Apr.1

Realisation A/c

Dr.

 

43,000

 

 

To Achal’s Capital A/c

 

 

 

16,125

 

To Vichal’s Capital A/c

 

 

 

26,875

 

(Being profits on realisation transferred)

 

 

 

 

Apr.1

Achal’s Capital A/c

Dr.

 

3,16,125

 

 

Vichal’s Capital A/c

Dr.

 

5,26,875

 

 

To Bank A/c

 

 

 

8,43,000

 

(Being Partners paid off)

 

 

 

 

Concept: Accounting Treatment of Bill - Journal Entries and Ledger
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APPEARS IN

TS Grewal Class 12 Accountancy - Double Entry Book Keeping Volume 1
Chapter 7 Dissolution of a Partnership Firm
Exercise | Q 21 | Page 56
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