Question

Ashu and Harish are partners sharing profit and losses as 3:2. They decided to dissolve the firm on December 31, 2017. Their balance sheet on the above date was:
Balance Sheet of Ashu and Harish as on December 31, 2017

Liabilities	Amt (Rs.)	Amt (Rs.)	Assets	Amt (Rs.)
Capitals:		162,000	Building	80,000
Ashu	108,000		Machinery	70,000
Harish	54,000		Furniture	14,000
Creditors		88,000	Stock	20,000
Bank overdraft		50,000	Investments	60,000
			Debtors	48,000
			Cash in hand	8,000
		300,000		300,000

Ashu is to take over the building at Rs 95,000 and Machinery and Furniture is take over by Harish at value of Rs 80,000. Ashu agreed to pay Creditor and Harish agreed to meet Bank overdraft. Stock and Investments are taken by both partner in profit sharing ratio. Debtors realised for Rs 46,000, expenses of Realisation amounted to Rs 3,000. Prepare necessary ledger Account.

Answer 1

Dr.	Books of Ashu and Harish Realisation Account			Cr.
Particulars	Amt (Rs.)	Amt (Rs.)	Particulars	Amt (Rs.)
To Building		80,000	By Creditors	88,000
To Machinery		70,000	By Bank overdraft	50,000
To Furniture		14,000	By Ashu’s Capital A/c (Assets taken)	143,000
To Stock		20,000	By Harish’s Capital A/c (Assets taken)	1,12,000
To Investments		60,000	By Cash  (Debtors)	46,000
To Debtors		48,000
To Ashu’s Capital A/c (Creditors)		88,000
To Harish’s Capital A/c (Bank Overdraft)		50,000
To Cash (Expenses)		3,000
To Profit transferred to :		6,000
Ashu’s Capital A/c	3,600
Harish’s Capital A/c	2,400
		439,000		439,000

         

Dr.	Partners’ Capital Account				Cr.
Particulars	Ashu	Harish	Particulars	Ashu	Harish
To Realisation  (Assets taken)	143,000	112,000	By Balance b/d	108,000	54,000
To Cash (B.F)	56,600	-	By Realisation  (Liabilities)	88,000	50,000
			By Realisation  (Profit)	3,600	2,400
			By Cash (B.F)		56,600
	199,600	112,000		199,600	112,000

 

Dr.	Cash Account		Cr.
Particulars	Amt (Rs.)	Particulars	Amt (Rs.)
To Balance b/d	8,000	By Realisation  (Expenses)	3,000
To Realisation  (Debtors)	46,000	By Ashu’s Capital A/c	56,600
To Harish’s Capital A/c	5,600
	59,600		59,600

NOTE: As per the solution, the Profit on Realisation is Rs 6,000; however, the answer mentioned in the book is Rs 6,000 as loss on realisation.

Working Notes:

particulars	Ashu	Harish
Building	95,000	-
Machinery and Furniture	-	80,000
Stock (3:2)	12,000	8,000
Investment (3:2)	36,0000	24,000
	Rs. 143,000	Rs. 112,000