A, B and C were partners sharing profits in the ratio of 2 : 2 : 1. They decided to dissolve their firm on 31st March, 2018 when the Balance Sheet was:
Following transactions took place:
(a) A took over Stock at ₹ 36,000. He also took over his wife’s loan.
(b) B took over half of Debtors at ₹ 28,000.
(c) C took over Investments at ₹ 54,000 and half of Creditors at their book value.
(d) Remaining Debtors realised 60% of their book value. Furniture sold for ₹ 30,000; Machinery ₹ 82,000 and Land ₹ 1,20,000.
(e) An unrecorded asset was sold for ₹ 22,000.
(f) Realisation expenses amounted to ₹ 4,000.
Prepare necessary Ledger Accounts to close the books of the firm.
Answers
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,
As per the Partner's Capital Account,
The Dr. and the Cr. of A, B and C are Rs. 1,58,000, Rs. 1,00,000 and Rs. 1,20,000 respectively.
As per the C's loan Account,
An amount of Rs. 30000 has been debited from the Balance b/d and it has been credited to Cash A/c.
The Realisation account and the cash account are prepared and calculated below:
