ARTNER
Liabilities
5.161
Assets
3
Creditors
Bills Payable
Karan's Loan
Capitals
Arun
Varun
6,000
3,200
₹
17,000 Cash
12,000 Debtors
28,000 Bills Receivables
Furniture
Machinery
1,38,000 Karan's Capital
1,95,000
70,000
68,000
8,000
13,000
9,000
27,000
1,25,000
13,000
1,95,000
150
500
20
purchase of the average profits of the last four years. The profits of the last
four years were
31,90,000; 31,70,000; 31,80,000 and 31,60,000
respectively.
(b) His share in the profits of the firm till the date of his death calculated on the
basis of the average profits of the last four years.
(C) Interest @ 8% p.a. on the credit balance, if any, in his Capital Account.
(d) Interest on his loan @12% p.a.
Prepare Karan’s Capital Account to be presented to his executors, assuming that
his loan and interest on loan were transferred to his Capital Account.
RETIREMENT OR DEATH OF A PARTNER
On 30.9.2014, Karan died. The Partnership Deed provided for the following to the
executors of the deceased partner :
(a) His share in the goodwill of the firm calculated on the basis of three years'
Answers
Answer:
Rohit, Kunal and Sarthak are partners in a firm. They decided to dissolve their firm. Pass necessary Journal entries for the following after various assets (other than Cash and Bank) and the third party liability have been transferred to Realisation Account:
(a) Kunal agreed to pay off his wife's loan of Rs. 6,000.
(b) Total Creditors of the firm were Rs. 40,000. Creditors worth Rs. 10,000 were given a price of furniture costing Rs. 8,000 in full and final settlement. Remaining Creditors allowed a discount of 10%.
(c) Rohit had given a loan of Rs. 70,000 to the firm which was duly paid.
(d) A machine which was not recorded in the books was taken over by kunal at Rs. 3,000, whereas its expected value was Rs. 5,000.
(e) the firm had a debit balance of Rs. 15,000 in the profit and Loss Account on the date of dissolution.
(f) Sarthak paid the realisation expenses of Rs. 16,000 out of his private funds, who was to get a remuneration of Rs. 15,000 for completing dissolution process and was responsibel to bear all the realisation ecpenses.
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ANSWER
(a) Realisation A/C.... Dr. 6000
To Kunal's Capital A/C 6000
(Being Kunal's wife's loan discharged off by Kunal)
(b) Realisation A/C.... Dr. 27000
To Bank A/C 27000
(Being creditors [30000 - 10%] paid off)
(c) Rohit's Loan A/C.... Dr. 70000
To Bank A/C 70000
(Being Rohit's loan paid off)
(d) Kunal's Capital A/C.... Dr. 3000
To Realisation A/C 3000
(Being unrecorded asset taken over by Kunal)
(e) Rohit's Capital A/C.... Dr. 5000
Kunal's Capital A/C.... Dr. 5000
Sarthak's Capital A/C.... Dr. 5000
To Profit and Loss A/C 15000
(Being profit and loss transferred to the partner's capital accounts)