Question

On 1st April, 2017, A, B and C commenced business in partnership sharing profits and losses in proportion of 1/2, 1/3 and 1/6 respectively. They paid into their Bank A/c as their capitals ₹ 22,000; ₹ 10,000 by A, ₹ 7,000 by B, ₹ 5,000 by C. During the year , they drew ₹ 5,000; being ₹ 1,900 by A, ₹ 1,700 by B, ₹ 1,400 by C.
On 31st March, 2018, they dissolved their partnership, A taking up Stock at an agreed valuation of ₹ 5,000, B taking up Furniture at ₹ 2,000 and C taking up Debtors at ₹ 3,000. After paying up their Creditors, there remained a balance of ₹ 1,000 at Bank. Prepare necessary accounts showing the distribution of the cash at the Bank and of the further cash brought in by any partner or partners as the case required.

Answer 1

The Realisation Account, Partner’s Capital Accounts and Bank 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. 8,100, Rs. 5,300 and Rs. 4000 respectively.

As per the Bank Account,

An amount of Rs. 100 and Rs. 1300 has been debited from the A and B's capital A/c respectively and it has been credited an amount of Rs. 1000 and Rs. 400 to the Realisation account and the C's capital account respectively.

The Realisation account and the Memorandum balance sheet as on 31st March 2018 are prepared and calculated below: