Question

Yogesh and Naresh were partners sharing profits equally. They dissolved the firm on 1st April, 2026. Naresh was assigned the responsibility to realise the assets and pay the liabilities at a remuneration of ₹ 10,000 including expenses. Balance Sheet of the firm as on that date was as follows:

Liabilities	₹	₹	Assets	₹	₹
Sundry Creditors		80,000	Cash/Bank		6,000
Loan by Naresh		44,000	Investments		30,000
Loan by Mrs. Yogesh		42,000	Sundry Debtors	73,400	69,400
Investment Fluctuation Reserve		8,000	Less: Provision for Doubtful Debts	4,000
Capital A/cs:		42,000	Advertisement Suspense A/c		1,10,600
Yogesh	21,000
Naresh	21,000
		2,16,000			2,16,000

The firm was dissolved on the following terms:

1. Yogesh was to pay his wife’s loan.
2. Debtors realised ₹ 60,060.
3. Naresh was to take investments at an agreed value of ₹ 26,000.
4. Sundry Creditors were payable after two months but were paid immediately at a discount of 15% p.a.
5. A Debtor previously written off as Bad Debt paid ₹ 16,670.
6. An unrecorded asset realised ₹ 10,000.

Prepare Realisation Account, Partners’ Capital Accounts, Partner’s Loan Account and Cash/Bank Account.

Answer 1

Dr.	Realisation Account				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets A/c (Transfer):		1,03,400	By Sundry Liabilities & Provisions:		1,34,000
Investments	30,000		Sundry Creditors	80,000
Sundry Debtors (Gross)	73,400		Loan by Mrs. Yogesh	42,000
To Naresh’s Capital A/c (Remuneration)		10,000	Provision for Doubtful Debts	4,000
To Yogesh’s Capital A/c (Wife’s loan taken)		42,000	Investment Fluctuation Reserve	8,000
To Bank A/c (Creditors paid)		78,000	By Naresh’s Capital A/c (Investments taken)		26,000
To Gain (Profit) on Realisation transferred to:		13,330	By Bank A/c (Assets Realised):		86,730
Yogesh’s Capital A/c	6,665		Sundry Debtors	60,060
Naresh’s Capital A/c	6,665		Bad Debts Recovered	16,670
			Unrecorded Asset	10,000
		2,46,730			2,46,730

 

Dr.	Partners’ Capital Accounts				Cr.
Particulars	Yogesh (₹)	Naresh (₹)	Particulars	Yogesh (₹)	Naresh (₹)
To Advertisement Suspense A/c	55,300	55,300	By Balance b/d	21,000	21,000
To Realisation A/c (Investments)		26,000	By Realisation A/c (Remuneration)		10,000
To Bank A/c (Final Payment)	14,365		By Realisation A/c (Wife’s loan)	42,000
			By Realisation A/c (Gain)	6,665	6,665
			By Naresh’s Loan A/c		43,635
	69,665	81,300		69,665	81,300

 

Dr.	Loan by Naresh Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Naresh’s Capital A/c (Debit balance set-off)	43,635	By Balance b/d	44,000
To Bank A/c (Balance paid in cash)	365
	44,000		44,000

 

Dr.	Cash/Bank Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	6,000	By Realisation A/c (Creditors paid)	78,000
To Realisation A/c (Assets Realised)	86,730	By Yogesh’s Capital A/c (Final payment)	14,365
		By Naresh’s Loan A/c (Repayment)	365
	92,730		92,730

Working Notes:

Payment to Sundry Creditors:

Creditors were due after 2 months but paid immediately at a 15 p.a. discount.

Discount = `80,000 xx 15/100 xx 2/12`

= 2,000

Amount Paid = 80,000 − 2,000

= 78,000