X and Y were partners sharing profits and losses in the ratio of 3 : 2. They decided to dissolve the firm on 31st March, 2018. On that date their Capitals were X ₹ 40,000 and Y ₹ 30,000. Creditors amounted to ₹ 24,000.
Assets were realised for ₹ 88,500. Creditors of ₹ 16,000 were taken over by X at ₹ 14,000. Remaining Creditors were paid at ₹ 76,500. The cost of realisation came to ₹ 500.
Prepare necessary accounts.
Answers
Answer:
Sheridan.....................................
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 X and Y are Rs. 54,000 and Rs. 30,000 respectively.
As per the Cash Account,
An amount of Rs. 8000, Rs. 51,900 and Rs. 28,600 has been debited from the realisation A/c (Creditors), X and Y's capital A/c respectively and it has been credited an amount of Rs. 88,500 to the Realisation account (assets).
The Realisation account and the Memorandum balance sheet as on 31st March 2018 are prepared and calculated below:
