Q. Prachi, Ritika and Ishita were partners in a firm sharing profits and losses in the ratio of 5: 3 :2. Inspite of repeated reminders by the authorities, they kept dumping hazardous material into a near bv river. The court ordered for the dissolution of their partnership firm on 31st March 2012. Prachi was deputed to realize the assets and pay the liabilities. She was paid Rsl,000 as commission for her services. The financial position of the firm was as follows:
 
Liabilities  Rs. Assets Rs.
Creditors 10,000 Furniture 37,000
Investment's Fluctuation fund  4,500 Stock   5,500
Capitals:
Prachi

40,000
Investment 15,000
Ritika 30,000 Cash  9,000
    Ishita's Capital 18,000
  84,500   84,500


Following was agreed upon:
Prachi took over investments for Rs. 12,500 , stock and furniture relaie Rs. 41,500.  There was old furniture which has been written off  completely from the books. Ritika agreed to take away the same at the price of Rs. 3,000. Compensation paid to the employees amounted to Rs. 8,000. This liability was not provided in the above Balance Sheet. Realization expenses amounted to Rs1,000 Prepare 'Realization Account, Partners' Capital Accounts and Cash A/c to close the books of the firm. Also identify the value being conveyed in the question.

Dear Student
 
Realisation A/c
Date Particulars   Amount (in Rs) Date   Particulars   Amount (in Rs)
               
  Furniture   37,000   Creditors   10,000
  Stock    5,500   Investment Fluctuation Fund   4,500
  Investments   15,000        
               
  Prachi's Capital A/c (Commission)   1,000   Prachi's Capital A/c (Investments)   12,500
  Cash A/c (Compensation)   8,000   Cash A/c (Stock and Furniture)   41,500
  Cash A/c (Realisation Expenses)   1,000   Ritika's Capital A/c   3,000
  Cash A/c (Creditors)   10,000        
               
               
          Capital A/c (6,000  in 5:3:2)    
          Prachi 3,000  
          Ritika 1,800  
          Ishita 1,200 6,000
               
               
               
      77,500       77,500
 
Partner's Capital A/c
Particulars Prachi Ritika Ishita Particulars Prachi Ritika Ishita
Bal B/d     18,000 Balance b/d 40,000 30,000  
               
Realisation A/c 12,500 3,000   Realisation A/c 1,000    
               
Realisation A/c (Loss) 3,000 1,800 1,200 Cash A/c     19,200
               
Cash 25,500 25,200 0        
               
  41,000 30,000 19,200   41,000 30,000 19,200
 
Cash A/c
Date Particulars   Amount (in Rs) Date   Particulars   Amount (in Rs)
  Bal B/d   9,000        
          Realisation A/c (Compensation)   8,000
  Realisation A/c   41,500   Realisation A/c (Expenses)   1,000
          Realisation A/c (Creditors)   10,000
               
  Ishita's Capital A/c   19,200   By Capital A/c's    
          Prachi 25,500  
          Ritika 25,200  
              50,700
               
               
      69,700       69,700



Note:
1. It has been assumed that realization expenses are to be borne by firm only and  prachi  is given Rs 1,000 commission exclusively.
2. Creditors are paid at their book value.

  Values affected here:- Negligence towards the environment. 

Regards

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