Question

X, Y and Z entered into a partnership and contributed ₹ 9,000; ₹ 6,000 and ₹ 3,000 respectively. They agreed to share profits and losses equally. The business lost heavily during the very first year and they decided to dissolve the firm. After realising all assets and paying off liabilities , there remained a cash balance of ₹ 6,000.
Prepare Realisation Account and Partner’s Capital Accounts.

Answer 1

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, Y and Z are Rs. 9000, Rs. 6000 and Rs. 4000 respectively.

As per the Cash Account,

An amount of Rs. 5000 and Rs. 2000 has been debited from the X and Y's capital A/c respectively and it has been credited an amount of Rs. 6000 and Rs. 1000 to the Realisation account and the Z's capital A/c respectively.

The Realisation account and the Memorandum balance sheet are prepared and calculated below: