Question

X, Y and Z entered into partnership on 1st October, 2021 sharing profits and losses in the proportions of 4 : 3 : 2, respectively, and with capitals of ₹ 30,000, ₹ 20,000 and ₹ 10,000.

Their assets and liabilities on 1st October, 2022, the date on which they decided to wind up their affairs, were as follows:

Office Fixtures ₹ 1,000; Debtors ₹ 28,000; Bills Receivable ₹ 5,000; and Stock-in-trade ₹ 45,000. Sundry creditors were ₹ 30,000; Bills Payable ₹ 4,000.

X agreed to take over the Stock-in-trade at a discount of 10% and pay off the Bills Payable.

Y agreed to take over the Book Debts at a discount of 20% and pay off the Creditors.

Z took over the Bills Receivable at ₹ 4,877 and Office Fixtures at a depreciation of 10%

5% p.a. interest is to be credited to each partner on his capital.

Prepare Realisation a/c and Capital a/cs of the partners and an account showing adjustment of profits or losses in the business.

Hint: Interest on Capital will not be allowed, because there is loss in the business.

Answer 1

Dr.	Realisation A/c			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets:		By Sundry creditors A/c		30,000
Office Fixtures	1,000	By Bills Payable		4,000
Debtors	28,000	By X’s Capital A/c (stock-in-trade taken over)		40,500
Bills Receivable	5,000	By Y’s Capital A/c (Book debts taken over)		22,400
Stock-in-trade	45,000	By Z’s Capital A/c (Bills Receivable taken over)		4,877
To X’s Capital A/c (Bills Payable taken over)	4,000	By Z’s Capital A/c (Office Fixtures taken over)		900
To Y’s Capital A/c (Creditors taken over)	30,000	By Loss on Realisation t/f to Capital A/c:
		X	4,588
		Y	3,441
		Z	2,294	10,323
	1,13,000			1,13,000

 

Dr.	Partner’s Capital A/c						Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
To Realisation A/c (Loss)	4,588	3,441	2,294	By Balance b/d	30,000	20,000	10,000
To Realisation A/c (Stock taken over)	40,500	-	-	By Realisation A/c (Bills Payable taken over)	4,000	-	-
To Realisation A/c (Debtors taken over)	-	22,400	-	By Realisation A/c (Creditors taken over)	-	30,000	-
To Realisation A/c (Bills Receivable taken over)	-	-	4,877	By Bank A/c	17,755	-	1,404
To Realisation A/c (Office Fixtures taken over)	-	-	900
To Profit & loss A/c	6,667	5,000	3,333
To Bank A/c	-	19,159	-
	51,755	50,000	11,404		51,755	50,000	11,404

 

Dr.	Cash A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To X’s Capital A/c	17,755	By Y’s Capital A/c	19,159
To Z’s Capital A/c	1,404
	19,159		19,159

Working note:

Balance sheet
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)
X Capital	30,000	60,000	Office Fixtures	1,000
Y Capital	20,000		Debtors	28,000
Z Capital	10,000		Bills Receivable	5,000
Sundry creditors		30,000	Stock-in-trade	45,000
Bills Payable		4,000	Profit & loss (Balancing figure)	15,000
		94,000		94,000