Question

Krishna and Arjun are partners in a firm. They share profits in the ratio of 4 : 1. They decided to dissolve the firm on 31st March, 2018 at which date their Balance Sheet stood as:
The realisation shows the following results:
(a) Goodwill was sold for ₹ 1,000.
(b) Debtors were realised at book value less 10%.
(c) Trademarks were realised for ₹ 800.
(d) Machinery and Stock-in-Trade were taken over by Krishna for ₹ 14,400 and ₹ 3,600 respectively.
(e) An unrecorded asset estimated at ₹ 500 was sold for ₹ 200.
(f) Creditors for goods were settled at a discount of ₹ 80. The expenses on realisation were ₹ 800.
Prepare Realisation Account, Partner’s Capital Accounts and Bank Account.

Answer 1

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 Krishna and Arjun are Rs. 19,456 and Rs. 6,000 respectively.

The Realisation account and the bank account are prepared and calculated below: