Question

Ashok and Kishore were in partnership sharing profits in the ratio of 3 : 1. They agreed to dissolve the firm. The assets (other than cash of ₹ 2,000) of the firm realised ₹ 1,10,000. The liabilities and other particulars on that date were:

Creditors	₹ 40,000
Ashok's Capital	₹ 1,00,000
Kishore's Capital	₹ 10,000	(Dr. Balance)
Profit and Loss A/c	₹ 8,000	(Dr. Balance)
Realisation Expenses	₹ 1,000

You are required to close the books of the firm.

Answer 1

Realisation Account

Dr.						Cr.
Particulars			Amount Rs	Particulars			Amount Rs
Sundry Assets (WN)			1,20,000	Creditors			40,000
Cash A/c:				Cash A/c (Assets Realised)			1,10,000
Creditors		40,000		Loss transferred to:
Expenses		1,000	41,000	Ashok’s Capital A/c	8,250
				Kishore’s Capital A/c	2,750		11,000
			1,61,000				1,61,000

 

Partners’ Capital Accounts

Dr.							Cr.
Particulars		Ashok	Kishore	Particulars	Ashok	Kishore
Balance b/d		–	10,000	Balance b/d	1,00,000	–
Realisation A/c (Loss)		8,250	2,750	Cash A/c	–	14,750
Profit and Loss A/c		6,000	2,000
Cash A/c		85,750
		1,00,000	14,750		1,00,000	14,750

 

Cash Account

Dr.					Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Balance b/d		2,000	Realisation A/c	41,000
Realisation A/c		1,10,000	Ashok’s Capital A/c	85,750
Kishore’s Capital A/c		14,750
		1,26,750		1,26,750

Working Note:

Memorandum Balance Sheet

Liabilities	Amount Rs	Assets	Amount Rs
Creditors	40,000	Cash	2,000
Ashok’s Capital	1,00,000	Kishore’s Capital	10,000
		Profit and Loss A/c	8,000
		Sundry Assets (Balancing figure)	1,20,000
	1,40,000		1,40,000