A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. On 31st March, 2018 their Balance Sheet was:
On that date, the partners decide to dissolve the firm. A took over Investments at an agreed valuation of ₹ 35,000. Other assets were realised as follows:
Sundry Debtors: Full amount. The firm could realise Stock at 15% less and Furniture at 20% less than the book value. Building was sold at ₹ 1,00,000.
Compensation to employees paid by the firm amounted to ₹ 10,000. This liability was not provided for in the above Balance Sheet.
You are required to close the books of the firm by preparing Realisation Account, Partners Capital Accounts and Bank Account.
Answers
The Realisation Account, Partner’s Capital Accounts and Bank Account are calculated and prepared below:
Explanation:
REALISATION ACCOUNT:
Particulars (Dr.)
To Sundry Debtors A/c - Rs. 26000
To Investments A/c - Rs. 40000
To Stock Alc - Rs. 10000
To Furniture A/c - Rs. 10000
To Building Alc - Rs. 60000
To Bank A/c:
- Compensation of Employees - Rs. 10000
- Bank Overdraft - Rs. 30000
Total = Rs. 40000
To Profit transferred to:
- A's Capital A/c - Rs. 29000
- B's Capital A/c - Rs. 14500
Total = Rs. 43500
Adding all, we get
= 26000 + 40000 + 10000 + 10000 + 60000 + 40000 + 43500
= Rs. 2,29,500
Particulars (Cr.)
By Provision for Doubtful Debts A/c - Rs. 2000
By Bank Overdraft A/c - Rs. 30000
By Investment Fluctuation Reserve A/c - Rs. 20000
By A's Capital A/c (Investment) - Rs. 35000
By Bank A/c:
- Sundry Debtors - Rs. 26000
- Stock - Rs. 8500
- Furniture - Rs. 8000
- Building - Rs. 100000
Total = Rs. 1,42,500
Adding all, we get,
= 2000 + 30000 + 20000 + 35000 + 142500
= Rs. 2,29,500
As per the Parner's Capital Accounts,
The Dr. and the Cr. of A and B will be Rs. 1,16,333 and Rs. 33,167 respectively.
The loan and the bank account are calculated and prepared below:
