Question

A and B dissolve their partnership. Their position as at 31st March, 2018 was:
The balance of A’s Loan Account to the firm stood at ₹ 10,000. The realisation expenses amounted to ₹ 350. Stock realised ₹ 20,000 and Debtors ₹ 25,000. B took a machine at the agreed valuation of ₹ 7,500.
You are required to close the books of the firm.

Answer 1

The Realisation Account, Partner’s Capital Accounts and Cash Account are calculated and prepared below:  

Explanation:  

Calculating Realisation Account :

• It is obtained by moving all assets to the debit side of the account except Cash or Bank account.
• Transferring all the liabilities to the credit side of the account except Partner's Loan Account and Partners' Capital Accounts.
• Crediting the receipt on the account's sale of assets.

Calculating Partner's Capital Account:

The opening capital account balance of a partner usually exceeds the amount of its contribution to the partnership. (i.e. cash + the total value of any qualified property).

Here,

As per the Partner's Capital Account,

The Dr. and the Cr. of A and B are Rs. 26,450 and Rs. 16,450 respectively.

As per the A's Loan Account,

An amount of Rs.10000 has been debited from the Balance b/d account and it has been credited an amount of Rs. 10000 to the Bank account.

The Realisation account, Bank A/c and the Memorandum balance sheet as on 31st may 2018 are prepared and calculated below: