Question

A, B and C were in partnership sharing profits in the ratio of 7 : 2 : 1 and the Balance Sheet of the firm as at 31st Marc h, 2018 was:
It was agreed to dissolve the partnership as on 31st March, 2018 and the terms of dissolution were-
(a) A to take over the Building at an agreed amount of ₹ 31,500;
(b) B who was to carry on the business to take over the Goodwill, Stock and Debtors at book value, the Patents at ₹ 30,000 and Plant at ₹ 30,000 and Plant at ₹ 5,000. He was also to pay the Creditors;
(c) C to take over shares in X Ltd. at ₹ 15 each and
(d) The shares in Y Ltd.to be divided in the profit-sharing ratio.
Show Ledger Accounts recording the dissolution in the books of the firm.

Answer 1

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

Explanation:  

Calculating Realisation Account :

It is prepared 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,

Distribution of Shares in Y Ltd.

A's Shares

$=10,000 \times \frac{7}{10}=7,000$

B's Shares

$=10,000 \times \frac{2}{10}=2,000$

C's shares

$=10,000 \times \frac{1}{10}=1,000$