Anup and Sumit are equal partners in a firm. They decided to dissolve the partnership on December 31, 2017. When the balance sheet is as under: Balance Sheet of Anup and Sumit as on December 31, 2017 Liabilities Amount Rs Assets Amount Rs Sundry Creditors 27,000 Cash at bank 11,000 Reserve fund 10,000 Sundry Debtors 12,000 Loan 40,000 Plants 47,000 Capital Stock 42,000 Anup 60,000 Lease hold land 60,000 Sumit 60,000 1,20,000 Furniture 25,000 1,97,000 1,97,000 The Assets were realised as follows: Rs Lease hold land 72,000 Furniture 22,500 Stock 40,500 Plant 48,000 Sundry Debtors 10,500 The Creditors were paid Rs 25,500 in full settlement. Expenses of Realisation amount to Rs 2,500. Prepare Realisation Account, Bank Account, Partners Capital Accounts to close the books of the firm.
Answers
Given : Anup and Sumit are equal partners in a firm. They decided to dissolve the partnership on December 31, 2017. When the balance sheet is as under: Balance Sheet of Anup and Sumit as on December 31, 2017 Liabilities Amount Rs Assets ……….
Concept :
REALISATION ACCOUNT :
- It records realisation of Assets and settlement liabilities.
- Its purpose is to ascertain profit /loss on realisation of assets and settlement of liabilities.
- It is prepared on dissolution of a firm.
- it contains all relevant asset and liabilities and their disposal and settlement.
BANK ACCOUNT :
In the balance sheet of partnership, there may appear 'Cash Account' or 'Bank account' or both. It is preferable to prepare one account instead of both cash and bank accounts. The most desirable and advisable is to prepare Bank account and the balance of the cash account be deposited into the bank account.
The opening balance of the bank account records the opening balance of cash at bank and cash in hand on the debit side.
PARTNERS CAPITAL ACCOUNT:
It will be prepared on dissolution of firm in order to find out the outstanding amount due to / from the partners. Normally capital accounts have credit balances.
Realisation Account, Bank Account, Partners Capital Accounts to close the books of the firm are in the attachment below :
Hope this answer will help you..
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