A, B and C were partners sharing profits int he ratio of 5 : 3 : 2. On 31st March, 2018, A’s Capital and B’s Capital were ₹ 30,000 and ₹ 20,000 respectively but C owed ₹ 5,000 to the firm. the liabilities were ₹ 20,000. The assets of the firm realised ₹ 50,000.
Prepare Realisation Account, Partner’s Capital Accounts and Bank Account.
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respectively but C owed ₹ 5,000 to the firm. the liabilities were ₹ 20,000. The assets of the firm realised ₹ 50,000.
Prepare Realisation Account, Partner’s
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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, B and C are Rs. 30,000, Rs. 20,000 and Rs. 8,000 respectively.
As per the Cash Account,
An amount of Rs. 20000, Rs. 22500 and Rs. 15500 has been debited from the Realisation account (creditors), A and B's capital account respectively and it has been credited an amount of Rs. 50,000 and Rs. 8000 to the Realisation account (assets) and C's capital account respectively.
The Realisation account and the Memorandum balance sheet are prepared and calculated below: