The following is the balance sheet of A and B as on 31.12.1993:

laibilities amount asset amount

creditors 30,000 cash 500

B/p 8,000 Bank 8,000

mrs.A's loan 5,000 stock 5,000

mrs b's loan 10,000 investment 10,000

general reserve 10,000 debtors 20,000-2,000(provision) 18,000

IFF 1,000 plant 20,000

a's capital 10,000 building 15,000

B's capital 10,000 goodwill 4,000

advertisement suspense 3,500

84,000 84000

The firm was dissolved on 31.12.1993 on the following terms:

  1. A promised to pay Mrs. A's loan and took away stock at Rs.4,000
  2. B took away half of the investments at 10% discount.
  3. debtors realised Rs.19,000
  4. Creditors B/P were due on an average basis of one monthafter 31 december but they were paid immediately on 31december at 6% discount p.a.
  5. plant realised Rs.25,000 , building Rs. 40,000, goodwill Rs.6,000 and remaining investments at Rs 4,500
  6. There was an old typewriter in the firm which had been written off completely from the books, it was estimated to realize Rs.300, it was taken away by B at this estimated price

  • you are required to prepare the realisation A/c, partner's capital A/c and bank A/c to close books of the firm

Dear Student,

The solution to your question is provided below:

 

Realisation Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

Sundry Assets

 

Sundry Liabilities

 

Stock

5,000

 

Creditors

30,000

 

Investment

10,000

 

Bills Payable

8,000

 

Debtors

20,000

 

Mrs. A’s Loan

5,000

 

Plant

20,000

 

Mrs. B’s Loan

10,000

 

Building

15,000

 

Investment Fluctuation Fund (IFF)

1,000

 

Goodwill

4,000

74,000

Provision for bad and doubtful debts

2,000

56,000

 

 

 

 

A’s Capital A/c (Mrs. A’s Loan)

5,000

A’s Capital A/c (Stock)

4,000

 

 

B’s Capital A/c (Half investments and Typewriter)

4,800

Bank A/c-

 

Bank A/c-

 

Creditors

29,850

 

Debtors

19,000

 

Bills Payable

7,960

 

Plant

25,000

 

Mrs. B’s Loan

10,000

47,810

Building

40,000

 

 

 

Goodwill

6,000

 

Profit transferred to-

 

Investments

4,500

94,500

A’s Capital A/c

16,245

 

 

 

B’s Capital A/c

16,245

32,490

 

 

 

 

 

 

 

1,59,300

 

1,59,300

 

 

 

 

 


Partners’ Capital Accounts

Dr.

 

Cr.

Particulars

A

B

Particulars

A

B

 

 

 

 

 

 

 

 

Realisation A/c

4,000

4,800

Balance b/d

10,000

10,000

 

Advertisement suspense A/c

1,750

1,750

Realisation A/c

5,000

 

 

 

 

 

General Reserve

5,000

5,000

 

Bank A/c

30,495

24,695

Realisation A/c (Profit)

16,245

16,245

 

 

 

 

 

 

 

 

 

31,245

26,245

 

36,245

31,245

 

 

 

 

 

 

 

 

                 

 

Cash and Bank Account

Dr.

 

Cr.

Particulars

Amount

Rs

Particulars

Amount

Rs

 

 

 

 

Balance b/d (8,000+500)

8,500

Realisation A/c

47,810

Realisation A/c

94,500

A’s Capital A/c

30,495

 

 

B’s Capital A/c

24,695

 

 

 

 

 

1,03,000

 

1,03,000

 

 

 

 

Hope this answers your query.

Keep posting and keep studying!!

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