Question

Rita, Geeta and Ashish were partners in a firm sharing profits/losses in the ratio of 3:2:1. On March 31, 2017 their balance sheet was as follows:

Liabilities	Amt (Rs.)	Amt (Rs.)	Assets	Amt (Rs.)
Capitals:		160,000	Cash	22,500
Rita	80,000		Debtors	52,300
Geeta	50,000		Stock	36,000
Ashish	30,000		Investments	69,000
Creditors		65,000	Plant	91,200
Bills payable		26,000
General reserve		20,000
		271,000		271,000

On the date of above-mentioned date the firm was dissolved:
1. Rita was appointed to realise the assets. Rita was to receive 5% commission on the rate of assets (except cash) and was to bear all expenses of Realisation,

2. Assets were realised as follows:

	Rs
Debtors	30,000
Stock	26,000
Plant	42,750

3. Investments were realised at 85% of the book value,

4. Expenses of Realisation amounted to Rs 4,100,

5. Firm had to pay Rs 7,200 for outstanding salary not provided for earlier,

6. Contingent liability in respect of bills discounted with the bank was also materialised and paid off Rs 9,800,           

Prepare Realisation Account, Capital Accounts of Partners’ and Cash Account.

Answer 1

Dr.	In the books of Rita, Geeta and Ashish Realisation Account				Cr.
Particulars	Amt (Rs.)	Amt (Rs.)	Particulars	Amt (Rs.)	Amt (Rs.)
To Debtors		52,300	By Creditors		65,000
To Stock		36,000	By Bills Payable		26,000
To Investment		69,000	By Cash:		157,400
To Plant		91,200	Debtors	30,000
To Cash:		108,000	Stock	26,000
Outstanding Salaries	7,200		Plant	42,750
Discounted Bill	9,800		Investment	58,650
Creditors	65,000
Bills Payable	26,000		By Loss transferred to :		115,970
To Rita’s Capital A/c `("Commission" = 1,57,400 xx 5/100)`		7,870	Rita’s Capital A/c	57,985
			Geeta’s Capital A/c	38,657
			Ashish’s Capital A/c	19,328
		364,370			364,370

 

Dr.	Partners’ Capital Account						Cr.
Particulars	Rita	Geeta	Ashish	Particulars	Rita	Geeta	Ashish
To Realisation  (Loss)	57,985	38,657	19,328	By Balance b/d	80,000	50,000	30,000
To Bank	39,885	18,010	14,005	By General Reserve	10,000	6,667	3,333
				Realisation	7,870	-	-
	97,870	56,667	33,333		97,870	56,667	33,333

     

Dr.	Cash Account		Cr.
Particulars	Amt (Rs.)	Particulars	Amt (Rs.)
To Balance b/d	22,500	By Realisation A/c	108,000
To Realisation	157,400	By Rita’s Capital	39,885
		By Geeta’s Capital A/c	18,010
		By Ashish’s Capital A/c	14,005
	179,900		179,900