Question

The following is the Balance Sheet of Gupta and Sharma as on December 31,2017:
Balance Sheet of Gupta and Sharma as on December 31, 2017

Liabilities	Amt (Rs.)	Amt (Rs.)	Assets	Amt (Rs.)
Sundry Creditors		38,000	Cash at Bank	12,500
Mrs.Gupta’s loan		20,000	Sundry Debtors	55,000
Mrs.Sharma’s loan		30,000	Stock	44,000
Reserve fund		6,000	Bills Receivable	19,000
Provision of doubtful debts		4,000	Machinery	52,000
			Investment	38,500
Capital :		150,000	Fixtures	27,000
Gupta	90,000
Sharma	60,000
		248,000		248,000

The firm was dissolved on December 31, 2017 and asset realised and settlements of liabilities as follows:
(a) The Realisation of the assets were as follows:

	Rs.
Sundry Debtors	52,000
Stock	42,000
Bills receivable	16,000
Machinery	49,000

(b) Investment was taken over by Gupta at agreed value of Rs 36,000 and agreed to pay of Mrs. Gupta’s loan.
(c) The Sundry Creditors were paid off less 3% discount.
(d) The Realisation expenses incurred amounted to Rs 1,200.
Journalise the entries to be made on the dissolution and prepare Realisation Account, Bank Account and Partners Capital Accounts.

Answer 1

Books of Gupta and Sharma
Journal Entries

Date	Particulars	L.F.	Amt (Rs.)	Amt (Rs.)
2012
Dec. 31	Realisation A/c                    Dr.   To Sundry Debtors A/c   To Stock A/c   To Bills Receivable A/c   To Machinery A/c   To Investment A/c   To Fixtures A/c  (Assets transferred to Realisation Account)		235,500	55,000 44,000 19,000 52,000 38,500 27,000
Dec. 31	Sundry Creditors A/c             Dr. Mrs. Gupta’s Loan A/c            Dr. Mrs. Sharma’s Loan A/c         Dr. Provision for Doubtful Debts Dr.    To Realisation A/c (Liabilities transferred to Realisation Account)		38,000 20,000 30,000 4,000	92,000
Dec. 31	Bank A/c                                Dr.    To Realisation A/c (Assets realised: Sundry Debtors Rs 52,000, Stock Rs 42,000, Bills Receivable Rs 16,000, Machinery Rs 49,000)		159,000	159,000
Dec. 31	Realisation A/c                 Dr.    To Gupta’s Capital A/c (Gupta took over Mrs. Gupta's Loan)		20,000	20,000
Dec. 31	Gupta’s Capital A/c          Dr   To Realisation A/c (Investment taken over by Gupta)		36,000	36,000
Dec. 31	Realisation A/c                    Dr.     To Bank A/c (Liabilities paid: Mrs. Sharma's Loan Rs 30,000 and Creditors Rs 38,000 paid off less 3% discount)		66,860	66,860
Dec. 31	Realisation A/c                    Dr.     To Bank A/c (Realisation expenses paid)		1,200	1,200
Dec. 31	Gupta’s Capital A/c             Dr Sharma’s Capital A/c           Dr     To Realisation A/c (Loss on Realisation transferred to Partners’ capital Account)		18,280 18,280	36,560
Dec. 31	Reserve Fund A/c           Dr.     To Gupta’s Capital A/c     To Sharma’s Capital A/c    (Reserve fund distributed among partners ratio)		6,000	3,000 3,000
Dec. 31	Gupta’s Capital A/c              Dr Sharma’s Capital A/c            Dr.         To Bank A/c (Final payment made to partners)		58,720 44,720	103,440

                                          Realisation Account
Dr.                                                                                                 Cr.

Particulars				Amount (Rs.)	Particulars		Amount (Rs.)
Sundry Debtors				55,000	Sundry Creditors		38,000
Stock				44,000	Mrs. Gupta’s Loan		20,000
Bills Receivable				19,000	Mrs. Sharma’s Loan		30,000
Machinery				52,000	Provision for Doubtful Debts		4,000
Investment				38,500	Bank :		1,59,000
Fixtures				27,000	Sundry Debtors	52,000
Gupta’s Capital A/c (Mrs. Gupta Loan)				20,000	Stock	42,000
Bank A/c:				68,060	Bills Receivable	16,000
Creditors			36,860		Machinery	49,000
Mrs. Sharma’s Loan			30,000		Gupta’s Capital A/c (Investment)		36,000
Expense			1,200		Loss transferred to :
					Gupta’s Capital A/c	18,280
					Sharma’s Capital A/c	18,280	36,560
				3,23,560			3,23,560

                                        Partners’ Capital Account
Dr.                                                                                            Cr.

Particulars		Gupta	Sharma	Particulars	Gupta	Sharma
Realisation  (Investment)		36,000		Balance b/d	90,000	60,000
Realisation  (Loss)		18,280	18,280	Realisation  (Mrs. Gupta Loan)	20,000
Bank		58,720	44,720	Reserve Fund	3,000	3,000
		1,13,000	63,000		1,13,000	63,000

                                            Bank Account
Dr.                                                                                             Cr.

Particulars		Amt (Rs.)	Particulars	Amt (Rs.)
Balance b/d		12,500	Realisation  (Payment of expenses and liabilities)	68,060
Realisation  (Assets realised)		1,59,000	Gupta’s Capital A/c	58,720
			Sharma’s Capital A/c	44,720
		1,71,500		1,71,500

NOTE: As per the solution, the total of Bank Account is Rs 1,71,500. However, the answers for the same has not been mentioned in the book.