Ashok and Kishore were in partnership sharing profits in the ratio of 3 : 1. They agreed to dissolve the firm. The assets (other than cash of ₹ 2,000) of the firm realised ₹ 1,10,000. The liabilities and other particulars on that date were:
You are required to close the books of the firm.
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the firm. The assets (other than cash of ₹ 2,000) of the firm realised ₹ 1,10,000. The liabilities and other particulars on that date were:
You are required to close the books
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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 Ashok and Kishore are Rs. 1,00,000 and Rs. 14,750 respectively.
As per the Cash Account,
An amount of Rs. 41,000 and Rs. 85,750 has been debited from the Realisation account and the Ashok's capital A/c respectively and it has been credited an amount of Rs. 2000, Rs. 1,10,000 and Rs. 14,750 to the Balance b/d, Realisation account and the Kishore's capital A/c respectively.
The Realisation account and the Memorandum balance sheet are prepared and calculated below:
