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P, Q And R Were Partners in a Firm Sharing Profits and Losses in the Ratio of 5 : 3 : 2. They Agreed to Dissolve Their Partnership Firm on 31st March, - Accountancy

Numerical

P, Q and R were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. They agreed to dissolve their partnership firm on 31st March, 2019. P was deputed to realise the assets and pay the liabilities. He was paid ₹ 1,000 as commission for his services. The financial position of the firm was:

Balance Sheet as at 31st March, 2019

Liabilities Amount
(₹)
Assets Amount
(₹)
Creditors                    10,000 Stock 5,500
Bills Payable 3,700 Investments                                 15,000
Investments Fluctuation Reserve          4,500 Debtors 7,100  
Capital A/cs:    Less: Provision for Doubtful Debtors 450 6,650
P 37,550   Cash   5,600
Q 15,000 52,550 R's Capital A/c   8,000
    Plant and Machinery   30,000
  70,750   70,750


P took over Investments for ₹ 12,500. Stock and Debtors realised ₹ 11,500. Plant and Machinery were sold to Q for ₹ 22,500 for cash. Unrecorded assets realised ₹ 1,500. Realisation expenses paid amounted to ₹ 900.
Prepare necessary Ledger Accounts to close the books of the firm.

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Solution

Realisation Account

Dr.

 

                   Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Plant and Machinery                 

30,000

Creditors

10,000

Stock

5,500

Bills Payable

3,700

Investments

15,000

Investments Fluctuation Reserve

4,500

Debtors

7,100

Provision for Doubtful Debts

450

Cash A/c:

 

P’s Capital A/c (Investments)

12,500

Creditors

10,000

 

Cash A/c:

 

Bills Payable

3,700

 

Stock and Debtors

11,500

 

Expenses

900

14,600

Plant and Machinery

22,500

 

P’s Capital A/c

1,000

Unrecorded Assets

1,500

35,500

 

 

Loss transferred to:

 

 

 

P’s Capital A/c  

3,275

 

 

 

Q’s Capital A/c  

1,965

 

 

 

R’s Capital A/c  

1,310

6,550

 

73,200

 

73,200

 

Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

P

Q

R

Particulars

P

Q

R

Balance b/d

8,000

Balance b/d

37,550

15,000

Realisation (Loss)

3,275

1,965

1,310

Realisation A/c

1,000

Realisation A/c (Investments)

12,500

 

 

 

 

 

 

Cash A/c

22,775

13,035

Cash A/c

9,310

 

38,500

15,000

9,310

 

38,550

15,000

9,310

 

Cash Account 

Dr.

 

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Balance b/d

5,600

Realisation A/c

14,600

Realisation A/c

35,500

P’s Capital A/c

22,775

R’s Capital A/c

9,310

Q’s Capital A/c

13,035

 

50,410

 

50,410

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 27 | Page 59
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