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Question
Shailesh and Shashank were partners sharing Profits and Losses in the ratio of 3:2. Their Balance Sheet as on 31st March 2019 was as follows.
| Balance Sheets as on 31st December 2019. | |||
| Liabilities | Amount ₹ | Assets | Amount ₹ |
| Capital Account : | Building | 7000 | |
| Shailesh | 10,000 | Plant | 9,000 |
| Shashank | 6,000 | Debtors | 14,000 |
| Current Account : | Stock | 5,000 | |
| Shailesh | 3,000 | Bank | 6,000 |
| Shashank | 2,000 | ||
| Creditors | 17,400 | ||
| Bills payable | 2,600 | ||
| 41,000 | 41,000 | ||
The firm was dissolved on the above date and the assets realised as under.
1. Plant ₹ 8,000, Building ₹ 6,000, Stock ₹ 4,000 and Debtors ₹ 12,000.
2. Shailesh agreed to pay of the Bills Payable.
3. Creditors were paid in full.
4. Dissolution expenses were ₹ 1,400
Prepare Realisation A/c, Partners Current A/c, Partners Capital A/c, and Bank A/c
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Solution
| Dr |
In the books of Shailesh and Shashank Realisation Account |
Cr | |||||
| Particulars | Amount (₹) | Amount (₹) | Particulars | Amount (₹) | Amount (₹) | ||
| To Sundry Assets A/c | By Sundry Liabilities A/c | ||||||
| Building | 7,000 | Creditors | 17,400 | ||||
| Plant | 9,000 | Bills Payable | 2,600 | 20,000 | |||
| Debtors | 14,000 | By Bank A/c | |||||
| Stock | 5,000 | 35000 | Plant | 8,000 | |||
| To Shailesh’s Current A/c | Building | 6,000 | |||||
| Bills Payable | 2,600 | Stock | 4,000 | ||||
| To Bank A/c | Debtors | 12,000 | 30,000 | ||||
| Dissolution Expense | 1,400 |
By Partners’ Current A/c (Loss on realisation transferred |
|||||
| Creditors | 17,400 | 18,800 | Shailesh | 3,840 | |||
| Shashank | 2,560 | 6,400 | |||||
| 56,400 | 56,400 | ||||||
| Dr | Partners’ Current Account | Cr | |||||
| Particulars | Shailesh (₹) | Shashank (₹) | Particulars | Shailesh (₹) | Shashank (₹) | ||
| To realisation A/c – Loss | 3,840 | 2,560 | By Balance b/d | 3,000 | 2000 | ||
| To Partners’ Capital A/c | 1,760 | By Bills Payable A/c | 2,600 | ||||
| By Partners’ Capital A/c | 560 | ||||||
| 5,600 | 2,560 | 5,600 |
2,560 |
||||
| Dr | Partners’ Capital Account | Cr | |||||
| Particulars | Shailesh (₹) | Shashank (₹) | Particulars | Shailesh (₹) | Shashank (₹) | ||
| To Partner's current A/c | 560 | By Balance b/d | 10,000 | 6000 | |||
| To Bank A/c | 11,760 | 5,440 | By Partner’s Current A/c | 1,760 | |||
| 11,760 | 6,000 | 11,760 | 6000 | ||||
| Dr | Bank Account | Cr | |||
| Particulars | Amount (₹) | Particulars | Amount (₹) | ||
| To Balance b/d | 6,000 |
By realisation A/c (Exp. and Liabilities) |
18,800 | ||
| To realisation A/c (Assets) | 30,000 | By Shailesh’s Capital A/c | 11,760 | ||
| By Shashank’s Capital A/c | 5,440 | ||||
| 36,000 | 36,000 | ||||
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RELATED QUESTIONS
Dissolution expenses are credited to ______.
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(d) P we appointed to do the work of dissolution for which he was allowed Rs.2,000. Actual expenses of dissolution Rs.2,400 were paid by P.
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| Balance Sheet as on 31.03.2013 | |||
| Liabilities | Amount Rs | Assets | Amount Rs. |
| Sundry Creditor | 12,500 | Debtors 56,250 | |
| Bank Overdraft | 10,000 | Less: R.D.D. 6,250 | 50000 |
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| 227500 | 227500 | ||
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| Liabilities | Amount (Rs) |
Assets | Amount (Rs) | |
| Sundry Creditors | 25000 | Debtors | 112500 | 100000 |
| Bank overdraft | 20000 | Less : R.D.D | 12500 | |
| Reserve Fund | 30000 | Stock | 225000 | |
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| Ganesh | 230000 | Motor Car | 75000 | |
| Chandan | 150000 | Cash in hand | 5000 | |
| 455000 | 455000 | |||
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Balance Sheet as on 31st March, 2010
| Liabilities | Amount (Rs) | Assets | Amount (Rs) | |
| Sundry Creditors | 15400 | Cash at Bank | 3500 | |
| Bills payable | 3600 | Stock | 19800 | |
| A’s loan A/c | 10000 | Debtors | 15000 | 14000 |
| Capital Account: | Less : Provision | 1000 | ||
| A | 20000 | Join Life Policy | 4000 | |
| B | 16000 | Plant and Machinery | 43700 | |
| C | 8000 | |||
| Reserve Fund | 12000 | |||
| 85000 | 85000 | |||
The firm was dissolved on 31st March, 2010 and the assets realised as follows:
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2) Stock realised Rs 18,000, Debtors realised Rs 14,500, Plant and Machinery was sold for Rs 36,000.
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Balance Sheet as on 31st March, 2016
| Liabilities | Amount (Rs.) |
Assets | Amount (Rs.) |
| Capital A/c : | Machinery | 2,00,000 | |
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| Liabilities | Amount (₹) | Assets | Amount (₹) | |
| Capital A/c | Machinery | 50000 | ||
| Jay | 60000 | Stock | 20000 | |
| Ajay | 20000 | Debtors | 55000 | 52000 |
| Vijay | 20000 | Less : R.D.D. | (3000) | |
| General Reserve | 6000 | Investments | 24000 | |
| Creditors | 40000 | Profit and loss A/c | 18000 | |
| Jay's Loan A/c | 8000 | Bank | 4000 | |
| Bills Payable | 14000 | |||
| 168000 | 168000 | |||
On the above date the partners decided to dissolve the firm.
(1) Assets were realised as :
Machinery ₹45000 ; Stock ₹ 18000;
Investment ₹ 21000 ; Debtors ₹ 45000
(2) Dissolution expenses were ₹ 3000.
(3) Goodwill of the firm realised ₹ 24000.
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A firm consisting of partners Mukund, Sachin and Yuvraj decided to dissolve the partnership They decided to take over certain assets and liabilities and continue the business separately. The Balance Sheet was as under.
| Balance Sheet as on 31st March, 2020 | |||||
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
||
| Capital A/c: | Furniture | 2,000 | |||
| Mukund | 55,000 | 89,000 | Sundry Assets | 34,000 | |
| Sachin | 20,000 | Debtors | 48,400 | 46,000 | |
| Yuvraj | 14,000 | Less: RDD | 2,400 | ||
| Creditors | 12,000 | Stock | 15,600 | ||
| Loan | 3,000 | Cash | 6,400 | ||
| 1,04,000 | 1,04000 | ||||
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- Mukund is to take Furniture at ₹ 1,600 and the Debtors amounting to ₹ 40,000 at ₹ 34,400 only. He accepted the Creditors on ₹ 12,000 at that figure.
- Sachin is to take over all Stock at ₹ 14,000 and Sundry Assets worth ₹ 16,000 at ₹ 14,400 only.
- Yuvraj is to take over the remaining Sundry Assets at ₹ 16,000 and assume the responsibility for the discharge of the loan together will accrued interest on a loan of ₹ 60. which has not been recorded in accounts.
- The dissolution expenses were ₹ 540.
- The remaining debtors realised only ₹ 4,200.
- The necessary adjustments were made by partners to settle their accounts.
Prepare Realisation Account, Partners Capital Account, and Cash Account, after giving effect to the above adjustments.
Complete the table.
| Creditors | Bills Payable | Third-Party Liabilities |
| ₹ 16,000 | ₹ 12,000 | ? |
Complete the table.
| Debit side total of Realisation A/c |
Credit side total of Realisation A/c |
Loss on Realisation |
| ₹ 20,000 | ? | ₹ 4,000 |
Complete the following table:
| Debit side total of Capital A/c |
Credit side total of Capital A/c |
Cash brought by Partner |
| ₹ 51,000 | ? | ₹ 17,000 |
Total assets of a partnership firm, which was dissolved were ₹ 30,00,000 and its total liabilities were ₹ 6,00,000. Assets were realised at 80% and liabilities were settled at 5% less. If dissolution expenses were ₹ 30,000 the profit or loss on dissolution was ______.
Pass the necessary journal entries for the following transactions on the dissolution of the partnership firm of Tina and Rina after various assets (other than cash) and external liabilities have been transferred to Realisation Account:
- An unrecorded asset of ₹ 18,000 was taken over by Tina at ₹ 16,000.
- Rina agreed to pay her brother's loan of ₹ 23,000.
- Stock of ₹ 30,000 was taken over by a creditor of ₹ 40,000 in full settlement.
- Expenses of dissolution ₹ 40,000 were paid by Rina.
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A, B and C are in partnership business. A used ₹ 2,00,000 belonging to the firm without the information to other partners and made a profit of ₹ 35,000 by using this amount. Which decision should be taken by the firm to rectify this situation?
Insolvent partner Capital A/c debit side total is ₹ 25,000 and credit side total is ₹ 10,000. Calculate deficiency.
Lal, Bal and Pal were partners sharing profits and losses in the ratio of 2 : 2 : 1. The following is the Balance Sheet as on 31st March, 2020.
| Balance sheet as on 31st March 2020 | ||||
| Liabilities | Amount (₹) | Assets | Amount (₹) | |
| Capital A/c | Machinery | 50,000 | ||
| Lal | 60,000 | Investments | 24,000 | |
| Bal | 20,000 | Debtors | 55,000 | 52,000 |
| Pal | 20,000 | Less: R.D.D. | (3,000) | |
| General Reserve | 6,000 | Stock | 20,000 | |
| Creditors | 48,000 | Profit and loss A/c | 18,000 | |
| Bills Payable | 14,000 | Bank | 4,000 | |
| 168000 | 168000 | |||
On the above date the partners decided to dissolve the firm.
(1) Assets were realised as:
| Machinery | ₹ 45000 |
| Stock | ₹ 18000 |
| Investment | ₹ 21000 |
| Debtors | ₹ 45000 |
(2) Dissolution expenses were ₹ 3000.
(3) Goodwill of the firm realised ₹ 24000.
Prepare:
- Realisation Account
- Partner's Capital Account
- Bank Account.
Read the following hypothetical situation and answer question on the basis of the same.
|
Nitya, Shreya and Ishita are partners in a firm. They share profit in the ratio of 5 : 3 : 2. Their fixed capital are ₹1,80,000; ₹1,60,000 and ₹2,00,000 respectively. For the year ending 31st March, 2022, Nitya withdrew ₹7,500 at the end of every quarter. |
The partnership deed provide that interest on capital will be allowed @10% p.a. The amount of interest on Ishita's capital will be:
Choose the correct order in which a partnership firm, at the time of its dissolution, will apply the amount realised from the sale of its assets, including any amount contributed by the partners, towards the payment of:
P: Partners' loan
Q: Firm's debts
R: Balance of partners' capital
S: Surplus divided amongst the partners in their profit-sharing ratio
