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Question
Akbar and Birbal were partners in a firm sharing profits and losses in the ratio of 3 : 2 respectively. Their balance sheet as on 31st march , 2013 was as follows :
Balance Sheet as on 31st March, 2013
| Liabilities | Amount | Assets | Amount | |
| Capital A/c’s: | Plant and Machinery | 40,000 | ||
| Akbar | 60,000 | Furniture | 12,000 | |
| Birbal | 40,000 | Sundry debtors | 61,000 | 60,000 |
| General reserve | 20,000 | Less: R.D.D. | 1,000 | |
| Sundry creditors | 39,700 | Stock | 28,300 | |
| Bank | 19,400 | |||
| 1,59,700 | 1,59,700 | |||
On the above date, the firm was dissolved and the assets realised were as follows :
Plant and machinery ₹ 30,000.
Sundry debtors ₹ 58,000.
Furniture was taken over by Akbar for ₹ 10,000 and stock by Birbal for 27,000.
Sundry creditors were paid ₹ 38,000 in full settlement of their claim.
Realisation expenses amounted to ₹ 2,000.
Prepare :
(1) Realisation Account
(2) Partners’ Capital Accounts
(3) Bank Account
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Solution
|
Particulars
|
Amount
|
Amount
|
Particulars
|
Amount
|
Amount
|
|
To Sundry Assets:
|
By Sundry Liabilities
(Sundry Creditors)
|
39700
|
|||
|
Plant and Machinery A/c
|
40000
|
By R.D.D. A/c
|
1000
|
||
|
Furniture A/c
|
12000
|
By Bank A/c
|
|||
|
Sundry Debtors A/c
|
61000
|
Plant and Macinery
|
30000
|
||
|
Stock A/c
|
28300
|
141300
|
Sundry Debtors
|
58000
|
88000
|
|
To Bank A/c
(Sundry Creditors)
|
38000
|
By Akbar’s Capital A/c
(Plant and Machinery)
|
10000
|
||
|
To Bank A/c
(Realisation Expenses)
|
2000
|
By Birbal’s Capital A/c
[Stock ]
|
27000
|
||
|
By Partners’ Capital A/c
|
|||||
|
Akbar
|
9360
|
||||
|
Birbal
|
6240
|
15600
|
|||
|
181300
|
181300
|
Partners’ Capital Accounts
|
Particulars
|
Akbar
|
Birbal
|
Particulars
|
Akbar
|
Birbal
|
|
To Realization A/c
(Assets taken over)
|
10000
|
27000
|
By Balace b/d
|
60000
|
40000
|
|
To Realisation A/c
(Loss)
|
9360
|
6240
|
By General Reserve A/c
[Transfer]
|
12000
|
8000
|
|
To Bank A/c
(Final Settlement)
|
52640
|
14760
|
|||
|
72000
|
48000
|
72000
|
48000
|
Bank Account.
|
Particulars
|
Amount
|
Amount
|
Particulars
|
Amount
|
Amount
|
|
To Balance b/d
|
19400
|
By Realisation A/c
(Sundry Creditors)
|
38000
|
||
|
To Realisation A/c
(Assets Sold)
|
88000
|
By Realization A/c
(Expenses paid)
|
2000
|
||
|
By Akbar’s Capital A/c
[Final settlement]
|
52640
|
||||
|
By Birbal’s Capital A/c
[Final Settlement]
|
14760
|
||||
|
107400
|
107400
|
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RELATED QUESTIONS
Dissolution expenses are credited to ______.
If an asset is taken over by partner from firm his capital account will be ___________.
G and H were partners in a firm sharing profits in the ratio of 9: 7. On 1.4.2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to realisation account you are given the following information :
(a) Mohan, a creditor of Rs 2,30,000 accepted debtors of Rs 2,00,000 at a discount of 10% and the balance was paid to him by cheque.
(b) Sohan, a second creditor for Rs 7,00,000 accepted land of the book value of Rs 10,00,000 at Rs 15,00,000 and paid the balance to the firm by cheque.
(c) Ram, a third creditor for Rs 80,000 took over stock of book value of Rs 40,000 at Rs 30,000 and investments of Rs 48,000 in full settlement of his claim.
(d) Loss on dissolution was Rs 48,000.
Pass necessary journal entries for the above transactions in the books of G and H.
C and D were partners in a firm sharing profits in the ratio of 3:2. On 28-2-2016 the firm was dissolved. After transferring assets (other than cash) and outsiders' liabilities to realization account you are given the following information :
(a) A creditor for Rs 2 00,000 accepted building of Rs 2,80,000 at Rs 2,20,000 and paid the firm Rs 20,000.
(b) A second creditor for Rs 75,000 accepted furniture at Rs 60,000 in full settlement of his claim.
(c) A third creditor amounting to Rs 80,000 accepted Rs 20,000 in cash and investments of the book value of Rs 65,000 in full settlement of his claim.
(d) Loss on dissolution was Rs 7,500. Pass necessary journal entries for the above transactions in the books of the firm assuming that all payments were made by cheque.
E and F were partners in a firm sharing profits in the ratio of 7:3. On 28-2-2016 the firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to realization account you are given the following information:
(a) A creditor for Rs 3, 00,000 accepted building valued Rs 3, 75,000 and paid the firm Rs 75,000.
(b) A second creditor for Rs 93,000 accepted stock valued at Rs 90,000 in full settlement of his claim.
(c) A third creditor amounting to Rs 60,000 accepted Rs 37,000 in cash and investments of the book value of Rs 40,000 in full settlement of his claim.
(d) Loss on dissolution was Rs 7,000.
Pass necessary journal entries for the above transactions in the books of the firm assuming that all payments were made by cheque.
R and L were partners in a firm sharing profits in the ratio of 13:7. On 4-3-2016 their firm was dissolved. After transferring assets (other than cash) and outsiders liabilities to the realization account, you are given the following information :
(a) Subh, a creditor for Rs 4,90,000 accepted building at Rs 6,50,000 and paid the balance to the firm by a cheque.
(b) Sudha, a second creditor for Rs 1, 80,000 accepted machinery of the book value of Rs 1,80,000 at Rs 1,76,000 in full settlement of his claim.
(c) Sudhir, a third creditor for Rs 2,00,000 accepted investments of Rs 1,20,000 and a bank draft of Rs 79,000 in full settlement of his claim.
(d) Loss on dissolution was Rs 30,000. Pass necessary journal entries for the above transactions in the books of the firm
Pass necessary journal entries on the dissolution of a partnership firm in the following cases :
1) Expenses of dissolution Rs 500 were paid by John, a partner.
2) Joney, a partner, agreed to bear the dissolution expenses for a commission of 750. Actual dissolution expenses 650 were paid by Joney
3) Bony, partner agreed to look after the dissolution work for a remuneration of Rs 3,700. He also agreed to bear the dissolution expenses. Actual dissolution expenses Rs 4,200 were paid by Bony from the firm’s cash.
4) Sony, a partner, was appointed to look after the dissolution work for a remuneration of Rs 10,000. Sony agreed to bear the dissolution expenses. Sony took away stock worth Rs 10,000 as his remuneration. The stock had already been transferred to realisation account.
5) Vikky, a partner, agreed to look after the dissolution work for a remuneration of Rs 12,000. Vikky also agreed to bear the dissolution expenses. Actual dissolution expenses Rs 12,500 were paid by another partner, Clive, on behalf of Vikky.
6) Dissolution expenses were Rs 5,000
Answer in one sentence only.
What is dissolution of partnership firm?
Answer in one sentence only.
Which accounts are not transferred to Realisation account?
Answer in one sentence only.
In what proportion is the balance on Realisation Account transferred to Partners’ Capital / Current Accounts?
Answer in one Sentence only.
Why is Realisation Account opened?
Write the word / term / phrase, which can substitute the following statement.
Debit balance of an insolvent Partner’s Capital Account.
Give the word/term/phrase which can substitute the following statement.
The account which shows realisation of assets and discharge of liabilities.
Write the word / term / phrase, which can substitute the following statement.
Expenses incurred on dissolution of a partnership firm.
State whether the following statement is True or False.
On dissolution Cash or Bank Account is closed automatically.
State whether the following statement is True or False.
On dissolution Bank Overdraft is transferred to Realisation Account.
State whether the following statement is True or False.
At the time of dissolution loan from partner will be transferred to Realisation Account.
State whether the following statement is True or False with reason.
Realisation Loss is not transferred to the insolvent partner’s capital account.
Deficiency of Insolvent partner will be suffered by solvent partners in their ___________ ratio.
Select the most appropriate alternative from those given below :
Partnership is compulsorily dissolved when the partners of the firm become ____________
If the number of partners in a firm falls below two, the firm stands_________.
Select the most appropriate alternative from those given below :
Realisation Account is __________on realisation of assets.
Sushil and Sumit were in partnership sharing profits and losses in the proportion of 3/5 and 2/5 respectively. On 31st March, 2005 they decide to dissolve the firm when their Balance Sheet was as under:
Balance Sheet as on 31st March, 2005
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
|
Sushil’s Capital |
20,000 | Plant and Machinery | 15,000 |
| Sumit's Capital | 18,000 | Stock | 15,000 |
| General Reserve | 5,000 |
Sundry Debtors |
22,000 |
| Sumit’s Loan A/c | 2,000 | Bank |
3,000 |
| Sundry Creditors | 10,000 | ||
| 55,000 | 55,000 |
The Assets realised as follows: Stock Rs 14,000, Plant and Machinery Rs 12,000 and Debtors Rs 20,000. The Sundry Creditors were paid Rs 9,000 in full settlement.
Prepare: Realisation Account, Partners Capital Accounts and Bank Account.
Ganesh and Chandan were partners sharing profits and losses in the proportion of 3:2. They dissolve the partnership firm on 31st March, 2011 when their position was as follows:
Balance Sheet as on 31st March, 2011
| Liabilities | Amount (Rs) |
Assets | Amount (Rs) | |
| Sundry Creditors | 25000 | Debtors | 112500 | 100000 |
| Bank overdraft | 20000 | Less : R.D.D | 12500 | |
| Reserve Fund | 30000 | Stock | 225000 | |
| Capital Accounts: | Furniture | 50000 | ||
| Ganesh | 230000 | Motor Car | 75000 | |
| Chandan | 150000 | Cash in hand | 5000 | |
| 455000 | 455000 | |||
The Assets realised as follows: Debtors Rs 90,000, Stock Rs 2,00,000, and Goodwill Rs 25,000, Motor Car was taken over by Ganesh for Rs 70,000 and Furniture by Chandan for Rs 60,000.
The Creditors were paid Rs 22,500 in full settlement. The expenses of realisation amounted to Rs 10,000.
Pass necessary journal entries in the books of the firm.
(When all partners become insolvent)
Shiv, Sadashiv and Sadanand are Partners in a firm sharing Profit and Losses equally whose Balance-sheet as on 31st December, 2011 stood as follows:
Balance Sheet as on 31st December, 2011
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capital Accounts | Sadanand’s Capital A/c | 2000 | |
| Shiv | 6000 | Buildings | 18300 |
| Sadashiv | 4000 |
Machinery |
12700 |
| Parvati’s Loan | 10000 |
Debtors |
9100 |
| Sundry Creditors | 30000 |
Bank |
7900 |
| 50000 | 50000 |
Shiv, Sadashiv and Sadanand were declared bankrupt and hence the firm was dissolved as on that date:
(i) The sundry Assets realised as follows:
Building Rs 10,900, Machinery Rs 8,200, Debtors Rs 6,800.
(ii) Realisation expenses amounted to Rs 1,300.
(iii) Sadanand was unable to contribute anything-
Whereas Rs 1,100 and Rs 900 were recovered from the realisation of private estate of Shiv and Sadashiv respectively.
You are required to close the books of the firm.
Ganga, Yamuna and Godavari are in Partnership sharing profits and losses equally. Their Balance sheet as on 31st December, 2011 was as follows:
Balance Sheet as on 31st December, 2011
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Capital Accounts | Currnet Accounts | ||
| Ganga | 25000 | Yamuna | 20000 |
| Yamuna | 10000 | Godavari | 4000 |
| Godavari | 5000 | Premises | 17200 |
| Ganga’s Currnet A/c | 3000 | Machinery | 10800 |
| Sundry Creditors | 4000 | Debtors | 9600 |
| Bank loan | 3000 | Cash | 6400 |
| 50000 | 50000 |
Godavari was declared insolvent and hence the firm was dissolved as on that date. Premises was sold at Rs 14,800, Machinery realised Rs 6,400. Bad debts and discount allowed to Debtors amounted to Rs 1,600. Sundry creditors agreed to receive 80 paise in a rupee (Rs) in full satisfaction of their claim. Bank Loan was settled at 60% of book value. During the course of dissolution a liability under an action for damages was settled for Rs 1,400 against Rs 2,100 provided in the books of the firm. The expenses of realisation amounted to Rs 900. Goodwill contributed Rs 1,900 from her private Property.
Prepare necessary ledger accounts in the books of the firm.
Land and Building (book value) ₹ 1,60,000 sold for ₹ 3,00,000 through a broker who charged 2% commission on the deal. Journalise the transaction, at the time of dissolution of the firm.
Rahul, Rohit and Ramesh were partners in a firm sharing profits and losses in the ratio of 2:2:1 respectively. The Balance Sheet as on 31.03.2013 was as follows :
Balance Sheet as on 31st Mar, 2013
| Liabilities |
Amount
(Rs.)
|
Assets |
Amount
(Rs.)
|
Amount
(Rs.)
|
| Sundry Creditors | 20,000 | Cash at Bank | 8000 | |
| Bills Payable | 5,000 |
Debtors
|
16000 | |
| General Reserve | 6,000 | Less : R.D.D. | (1000) | 15,000 |
| Rahul’s Loan A/c | 16,000 | Stock | 20,000 | |
| Capital Account | Plant and Machinery | 30,000 | ||
| Rahul | 25,000 | Furniture | 6,000 | |
| Rohit | 10,000 | Ramesh’s Capital Account | 3,000 | |
| 82000 | 82000 |
Jay , Ajay and Vijay were partners sharing profits and losses in the proportion of 2 : 2 : 1 . Following is their balance sheet as on 31.03.2013.
Balance sheet as on 31st March 2013
| Liabilities | Amount (₹) | Assets | Amount (₹) | |
| Capital A/c | Machinery | 50000 | ||
| Jay | 60000 | Stock | 20000 | |
| Ajay | 20000 | Debtors | 55000 | 52000 |
| Vijay | 20000 | Less : R.D.D. | (3000) | |
| General Reserve | 6000 | Investments | 24000 | |
| Creditors | 40000 | Profit and loss A/c | 18000 | |
| Jay's Loan A/c | 8000 | Bank | 4000 | |
| Bills Payable | 14000 | |||
| 168000 | 168000 | |||
On the above date the partners decided to dissolve the firm.
(1) Assets were realised as :
Machinery ₹45000 ; Stock ₹ 18000;
Investment ₹ 21000 ; Debtors ₹ 45000
(2) Dissolution expenses were ₹ 3000.
(3) Goodwill of the firm realised ₹ 24000.
Prepare : (1) Realisation Account (2) Partner's Capital Account (3) Bank Account.
Answer the following question:
State any two situations when a partnership firm can be compulsorily dissolved.
State whether the following statement is True or False with reason.
A solvent partner having debit balance to his Capital Account does not share the deficiency of insolvent partner Capital Account.
State whether the following statement is True or False with reason.
At the time of the dissolution of partnership, all assets should be transferred to Realisation Account.
Creditors ₹ 30,000, Bills Payable ₹ 20,000 and Bank Loan ₹ 10,000. Available Bank Balance ₹ 40,000 what will be the amount that creditors will get in case of all partner's insolvency.
Insolvent partners capital A/c Debit side is ₹ 15,000 & insolvent partner brought cash ₹ 6,000. Calculate the amount of Insolvency Loss to be distributed among the solvent partners.
Realisation profit of a firm is ₹ 6,000, partners share Profit & Loss in the ratio of 3: 2: 1. Calculate the amount of Realisation Profit to be credited to Partners Capital A/c.
Sangeeta, Anita, and Smita were in partnership sharing Profits and Losses in the ratio 2: 2: 1. Their Balance Sheet as on 31st March 2019 was as under:
| Balance Sheets as on 31st March, 2019 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capital: | Land | 2,10,000 | |
| Sangeeta | 60,000 | Plant | 20,000 |
| Anita | 40,000 | Goodwill | 15,000 |
| Smita | 30,000 | Debtors | 1,25,000 |
| Sangeeta’s Loan A/c | 1,20,000 | Loans and Advances | 15,000 |
| Sundry Creditors | 1,20,000 | Bank | 5,000 |
| Bills Payable | 20,000 | ||
| 3,90,000 | 3,90,000 | ||
They decided to dissolve the firm as follows:
1. Assets realised as; Land recovered ₹ 1,80,000; Goodwill for ₹ 75,000; Loans and Advances realised ₹ 12,000; 10% of the Debts proved bad;
2. Sangeeta took Plant at book value.
3. Creditors and Bills payable paid at 5% discount.
4. Sangeeta’s Loan was discharged along with ₹ 6,000 as Interest.
5. There was a contingent liability in respect of bills of ₹ 1,00,000 which was under discount. Out of them, a holder of one bill of ₹ 20,000 became insolvent
Show Realisation Account, Partners Capital Account, and Bank Account.
The dissolution of partnership may take place in the following ways?
Name the account opened to find out the Profit or Loss on Sale of Assets and Settlement of Liabilities?
Consider the following statements
Statement 1: "On dissolution Cash or Bank Account is closed automatically".
Statement 2: This is done because of the double- entry system of book-keeping.
On the basis of the following data, how much final payment will be made to a partner on firm's dissolution?
Credit balance of capital account of the partner was ₹ 50,000. Share of loss on realisation amounted to ₹ 10,000. Firm's liability taken over by him was for ₹ 8,000.
At the time of dissolution, all assets are transferred to Realisation Account at their ______.
On dissolution of the firm, ______ will be debited to the Realisation Account.
Asha, Usha and Nisha are partners in the firm sharing profits and losses in the ratio of 3 : 2 : 1 respectively. On 31st March, 2019 they decided to dissolve the firm when their Balance Sheet was as under:
| Balance Sheet as on 31st March, 2019 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Creditors | 28,800 | Building | 1,02,000 |
| Bills Payable | 21,600 | Machinery | 73,000 |
| Capitol Accounts: | Motor Car | 1,67,600 | |
| Asha | 2,27,160 | Goodwill | 45,600 |
| Usha | 1,44,000 | Investment | 62,400 |
| Nisha | 1,08,000 | Debtors | 30,600 |
| Stock | 45,000 | ||
| Bank | 3,360 | ||
| 5,29,560 | 5,29,560 | ||
The firm was dissolved on the above date and the assets realised as under:
- Asha agreed to take over the Building at ₹ 1,23,600
- Usha took over Goodwill Stock and Debtors at book value and agreed to pay Creditors and Bills payable.
- Motor car and Machinery realised at ₹ 1,51,080 and ₹ 31,680 respectively.
- Investment were taken by Nisha at an agreed value of ₹ 55,440.
- Realisation Expenses amounted to ₹ 6,800.
Prepare:
- Realisation Account
- Partners' Capital Account
- Bank Account
Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership Firm' on the basis of Termination of business.
Mandar and Prasad are partners in a firm sharing profit & losses in the ratio of 3 : 2. The following is their balance sheet as on 31st March, 2019.
| Liabilities | Amount (₹) | Assets | Amount (₹) | |
| Capital A/c: | Building | 72,000 | ||
| Mandar | 95,000 | Plant & Machinery | 60,000 | |
| Prasad | 1,00,000 | Furniture | 10,000 | |
| Creditors | 4,000 | Debtors | 42,000 | 40,000 |
| Bills Payable | 3,000 | Less: RDD | 2,000 | |
| Bank | 20000 | |||
| 2,02,000 | 2,02,000 |
On 1st April, 2019 Shubham is admitted for 1/2 share on the following terms:
- He paid ₹ 1,00,000 as Capital ₹ 40,000 as his shares of goodwill by RTGS.
- Plant & Machinery revalued at ₹ 48,000.
- Building is taken over by Mandar at ₹ 100,000.
- Reserve for Doubtful Debts (RDD) to be increased upto ₹ 4,000.
- The old partners decided to retain half of the amount of goodwill in the business.
- The old partners decided to sacrifice equally.
Prepare Partners' Capital Account Only and show your working clearly.
Complete the table.
| Creditors | Bills Payable | Third-Party Liabilities |
| ₹ 16,000 | ₹ 12,000 | ? |
Hema, Manisha and Limsy were in partnership firm sharing profits and losses in the ratio of 5:3:2. They decided to dissolve their partnership firm on 31st March 2019 and their Balance sheet as on that date stood as:
| Balance sheet as on 31st March,2019 | |||
| Liabilities | Amount ₹ | Assets | Amount ₹ |
| Capital Account: | Machinery | 1,00,000 | |
| Hema | 1,50,000 | Debtors | 50,000 |
| Manisha | 80,000 | Stock | 70,000 |
| Reserve Fund | 10,000 | Cash at Bank | 30,000 |
| Sundry Creditors | 20,000 | Limsy Capital A/c | 20,000 |
| Bills payable | 10,000 | ||
| 2,70,000 | 2,70,000 | ||
The firm was dissolved on 31st March, 2019 and assets were realised as under:
- Machinery realised 60% of its book value.
- Out of debtors, Mr. Jagdish, our customer for ₹ 20,000 was declared insolvent and nothing could be recovered from him. Other debtors are good and recovered and realised.
- Hema took stock at an agreed value of ₹ 50,000.
- Creditors and Bills payable were paid at 10% discount.
- Limsy became insolvent and nothing was recovered from her estate.
Prepare:
- Realisation Account
- Partners’ Capital Account
- Bank Account
A, B and C are in partnership business. A used ₹ 2,00,000 belonging to the firm without the information to other partners and made a profit of ₹ 35,000 by using this amount. Which decision should be taken by the firm to rectify this situation?
Amul and Sumul were partners sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as on 31st March, 2023 was as follows:
| Balance Sheet as on 31st March, 2023 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capital Accounts : | Building | 10,500 | |
| Amul | 15,000 | Plant | 13,500 |
| Sumul | 9,000 | Debtors | 21,000 |
| Current Accounts: | Stock | 7,500 | |
| Amul | 4,500 | Bank | 9,000 |
| Sumul | 3,000 | ||
| Creditors | 26,100 | ||
| Bills Payable | 3,900 | ||
| 61,500 | 61,500 | ||
The firm was dissolved on the above date and the assets realised as under:
(1) Plant ₹ 12,000, Building ₹ 9,000, Stock ₹ 6,000, and Debtors ₹ 18,000.
(2) Amul agreed to pay off the Bills Payable.
(3) Creditors were paid in full.
(4) Dissolution expenses were ₹ 2,100.
Prepare: Realisation A/c, Partners' Current A/cs, Partners' Capital A/cs and Bank A/c.
Vinay, Premal and Monil were in partnership sharing profits and losses in the ratio 2 : 2 : 1. They decided to dissolve their partnership firm on 31st March, 2023 and their Balance Sheet on that date stood as:
| Balance Sheet as on 31st March, 2023 | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Capital : | Plant | 2,40,000 | |||
| Vinay | 1,80,000 | 3,60,000 | Debtors | 90,000 | |
| Premal | 1,20,000 | Stock | 1,50,000 | ||
| Monil | 60,000 | ||||
| Loan | 24,000 | ||||
| Sundry Creditors | 18,000 | ||||
| Bank Overdraft | 78,000 | ||||
| 4,80,000 | 4,80,000 | ||||
It was agreed that:
(1) Vinay to discharge Loan and to take Debtors at book value.
(2) Plant realised ₹ 2, 70,000.
(3) Stock realised ₹1,44,000.
( 4) Creditors were paid off at a discount of ₹ 90.
Show Realisation Account, Partner's Capital Accounts and Bank Account.
Mita and Sita, sharing profits in, the ratio 2 : 1, decided to dissolve their partnership firm on 31st March, 2022, on which date their Balance Sheet was as under:
| Balance Sheet of Mita and Sita as on 31st March, 2022 |
|||||
| Liabilities | (₹) | Assets | (₹) | ||
| Sundry Creditors | 40,000 | Land & Building | 29,000 | ||
| Sita's Son's Loan | 2,000 | Plant & Machinery | 20,000 | ||
| Bank Overdraft | 8,000 | Stock | 3,000 | ||
| Capital Accounts: | Debtors | 26,400 | 26,000 | ||
| Mita | 20,000 | 30,000 | Less: Provision for Doubtful Debts |
400 | |
| Sita | 10,000 | Bank | 2,000 | ||
| 80,000 | 80,000 | ||||
The partnership firm was dissolved on the date of the Balance Sheet subject to the following adjustments:
- Trade creditors accepted plant and machinery at an agreed valuation of 10% less than the book value and the balance in cash in full settlement of their claims.
- Debtors of ₹ 1,000 proved bad.
- Sita took over the stock at a discount of 20%.
- Realisation expenses of ₹ 1,100 were paid by the firm.
You are required to prepare the Realisation Account.
Lal, Bal and Pal were partners sharing profits and losses in the ratio of 2 : 2 : 1. The following is the Balance Sheet as on 31st March, 2020.
| Balance sheet as on 31st March 2020 | ||||
| Liabilities | Amount (₹) | Assets | Amount (₹) | |
| Capital A/c | Machinery | 50,000 | ||
| Lal | 60,000 | Investments | 24,000 | |
| Bal | 20,000 | Debtors | 55,000 | 52,000 |
| Pal | 20,000 | Less: R.D.D. | (3,000) | |
| General Reserve | 6,000 | Stock | 20,000 | |
| Creditors | 48,000 | Profit and loss A/c | 18,000 | |
| Bills Payable | 14,000 | Bank | 4,000 | |
| 168000 | 168000 | |||
On the above date the partners decided to dissolve the firm.
(1) Assets were realised as:
| Machinery | ₹ 45000 |
| Stock | ₹ 18000 |
| Investment | ₹ 21000 |
| Debtors | ₹ 45000 |
(2) Dissolution expenses were ₹ 3000.
(3) Goodwill of the firm realised ₹ 24000.
Prepare:
- Realisation Account
- Partner's Capital Account
- Bank Account.
Read the following hypothetical situation and answer question on the basis of the same.
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Nitya, Shreya and Ishita are partners in a firm. They share profit in the ratio of 5 : 3 : 2. Their fixed capital are ₹1,80,000; ₹1,60,000 and ₹2,00,000 respectively. For the year ending 31st March, 2022, Nitya withdrew ₹7,500 at the end of every quarter. |
The average number of months for which interest on drawings will be calculated, will be:
Ira (a partner in a firm) was allowed to retain the whole of the stock as her remuneration for services rendered by her in the course of dissolution of the firm. The value of stock was ₹ 10,000 which had been transferred to the Realisation Account.
Complying with the accounting principle of full disclosure, record the above transaction in the books of the partnership firm at the time of its dissolution.
