Q. X, Y and Z commenced business on 1st April, 2016 with capitals of Rs 5,00,000; Rs 4,00,000 and Rs 3,00,000 respectively. Profits and losses were shared in the ratio of 4:3:3. Interest on Capitals was paid at 5% p.a. During 2016-17 and 2017-18 they earned profit of Rs 2,00,000 and Rs 2,50,000 (before allowing interest on capital). Drawings of each partner were Rs 50,000 per year. On 31st March, 2018 the firm was dissolved. Creditors on that date were Rs 1,20,000. The assets realised Rs 13,00,000 net.
Give necessary accounts to close the books of the firm.
Dear Student
Working Notes :-
Computation of Closing capital balances on 31.03.18.
Total cash received on sell of assets = 13,00,000 + 1,20,000 = 14,20,000/- i.e Net Assets realised means Total Assets realised - Paid to creditors , therefore Total Cash = Net assets + Paid to creditors.
Regards
| Realisation A/c | |||||||
| Date | Particulars | Amount (in Rs) | Date | Particulars | Amount (in Rs) | ||
| Sundry Assets | 1,470,000 | Creditors | 120,000 | ||||
| Cash A/c | 120,000 | Cash A/c (13,00,000 + 1,20,000) | 1,420,000 | ||||
| Capital A/c (50,000 in 4:3:3) | |||||||
| X | 20,000 | ||||||
| Y | 15,000 | ||||||
| Z | 15,000 | 50,000 | |||||
| 1,590,000 | 1,590,000 | ||||||
| Cash A/c | |||||||
| Date | Particulars | Amount (in Rs) | Date | Particulars | Amount (in Rs) | ||
| Bal B/d | 0 | ||||||
| Realisation A/c | 1,420,000 | ||||||
| Realisation A/c (Creditors) | 120,000 | ||||||
| By Capital A/c's | |||||||
| X | 562,550 | ||||||
| Y | 423,850 | ||||||
| Z | 313,600 | 1,300,000 | |||||
| 1,420,000 | 1,420,000 | ||||||
| Partner's Capital A/c | |||||||
| Particulars | X | Y | Z | Particulars | X | Y | Z |
| Bal B/d | Balance b/d | 582,550 | 438,850 | 328,600 | |||
| Realisation A/c (Loss) | 20,000 | 15,000 | 15,000 | ||||
| Cash | 562,550 | 423,850 | 313,600 | ||||
| 582,550 | 438,850 | 328,600 | 582,550 | 438,850 | 328,600 | ||
Working Notes :-
Computation of Closing capital balances on 31.03.18.
| Particulars | X | Y | Z | Total |
| Opening Capital at 01-04-16 | 500,000 | 400,000 | 300,000 | 1,200,000 |
| Add : Interest on Capital for 16-17 @5% | 25,000 | 20,000 | 15,000 | 60,000 |
| Add : Profit 1,40,000 in 4:3:3 | 56,000 | 42,000 | 42,000 | 140,000 |
| Less : Drawings | (50,000) | (50,000) | (50,000) | (150,000) |
| Closing Balance 31-03-17 | 531,000 | 412,000 | 307,000 | 1,250,000 |
| Opening Capital at 01-04-17 | 531,000 | 412,000 | 307,000 | 1,250,000 |
| Add : Interest on Capital for 17-18 @ 5% | 26,550 | 20,600 | 15,350 | 62,500 |
| Add : Profit 1,87,500 in 4:3:3 | 75,000 | 56,250 | 56,250 | 187,500 |
| Less : Drawings | (50,000) | (50,000) | (50,000) | (150,000) |
| Closing Balance 31-03-18 | 582,550 | 438,850 | 328,600 | 1,350,000 |
| Liabilities | Assets | ||
| Capital | |||
| X | 582,550 | Sundry Assets (B.Fig) | 1,470,000 |
| Y | 438,850 | ||
| Z | 328,600 | ||
| Creditors | 120,000 | ||
| 1,470,000 | 1,470,000 | ||
Total cash received on sell of assets = 13,00,000 + 1,20,000 = 14,20,000/- i.e Net Assets realised means Total Assets realised - Paid to creditors , therefore Total Cash = Net assets + Paid to creditors.
Regards