P, Q and R were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. They agreed to dissolve their partnership firm on 31st March, 2018. P was deputed to realise the assets and pay the liabilities. He as paid ₹ 1,000 as commission for his services. The financial position of the firm was:
P took over Investments for ₹ 12,500. Stock and Debtors realised ₹ 11,500. Plant and Machinery were sold to Q for ₹ 22,500 for cash. Unrecorded assets realised ₹ 1,500. Realisation expenses paid amounted to ₹ 900.
Prepare necessary Ledger Accounts to close the books of the firm.
Answers
The necessary Ledger Accounts to close the books of the firm i.e., Realisation Account, Partner’s Capital Accounts and Cash Account are calculated and prepared below:
Explanation:
REALISATION ACCOUNT:
Particulars (Dr.)
To Plant and Machinery A/c - Rs. 30000
To Stock A/c - Rs. 5,500
To Investments A/c - Rs. 15000
To Debtors A/c - Rs. 7,100
To Cash A/c
- Creditors - Rs. 10000
- Bills Payable - Rs. 3700
- Expenses - Rs. 900
Total = Rs. 14,600
To P's Capital A/c - Rs. 1000
Adding all, we get
= 30000+ 5500 + 15000 + 7100 + 14600 + 1000
= Rs. 73,200
Particulars (Cr.)
By Creditors A/c - Rs. 10000
By Bills Payable A/c - Rs. 3700
By Investments Fluctuation Reserve A/c - Rs. 4500
By Provision for Doubtful Debts A/c - Rs. 450
By P's Capital A/c (Investments) - Rs. 12,500
By Cash A/c :
- Stock and Debtors - Rs. 11,500
- Plant and Machinery - Rs. 22,500
- Unrecorded Assets - Rs. 1500
Total = Rs. 35,500
By Loss transferred to:
- P's Capital A/c - Rs. 3275
- Q's Capital A/c - Rs. 1965
- R's Capital A/c - Rs. 1310
Total = Rs. 6550
Adding all, we get,
= 10000 + 3700 + 4500 + 450 + 12500 + 35500 + 6550
= Rs. 73,200
As per the Parner's Capital Accounts,
The Dr. and the Cr. of P, Q and R will be Rs. 38,550, Rs. 15,000 and Rs. 9,310 respectively.
The cash account are calculated and prepared below:
