Liabilities | Rs | Assets | Rs |
Trade Creditors B/P Loan from A Loan from Mrs. A E.P.F Workmen Compensation Reserve Joint Life Policy Reserve Investment Fluctuation Reserve General Reserve Profit and Loss a/c A’ s Capital B’s Capital | 80,000 20,000 5,000 15,000 5,000 2,000 5,000 3,000 24,000 11,000 84,000 26,000 | Cash Bank Stock Book Debts 60,000 Less: Provision 6,000 Plant & Machinery Land & Building Joint Life Policy(at Surrender Value) Investments (face value Rs 2,000) Goodwill Prepaid Insurance Deferred Revenue Advt. Expenditure | 6,000 30,000 80,000 60,000 30,000 33,000 5,000 10,000 15,000 1,000 10,000 |
| 2,80,000 | | 2,80,000 |
1. Bill discounted amounting Rs 1,000 will not be recorded in the Realisation A/c.
2. Book value of Book Debts amounts Rs 60,000. Since, Rs 12,000 of the book debts proved bad it means that now remaining Book Debts will be realized in full i.e. Rs, 48,000 will be recovered from Book Debts. Provision will be transferred to the Credit side of Realization A/c.
3. Half the Creditors = 80,000 x ½ = 40,000
Creditors amounting Rs 40,000 accepted Plant and Machinery and Rs 5,000 in cash.
No calculation or entry is required for transferring Plant and Machinery to Creditors.
Only Rs 5,000 will be paid to the Creditors and the entry posted will be: Realization A/c – Dr. 5,000
To Cash A/c 5,000
4. B/P Rs 20,000 was due on 30th April, 2001 but since the firm underwent dissolution on 31st March, 2001, the B/P would be discounted @18% p.a.
Discount = 20,000 x 18% x 1/12
= 300
Hence, amount paid against B/P = 20,000 – 300 = 19,700
5. Since the bill from Z amounting Rs 1,000 was under discount, it means that the amount for same was already received from the party/ bank to whom it was discounted. Now, when Z became insolvent and 25% was received from him. It means only 25% of Rs 1,000 was recoverable i.e. Rs 250 were recovered from Z.
Sine, the party to whom the bill was discounted paid only Rs 250. The remaining Rs 750 [1,000 – 250] would be paid by us to the party from whom the bill was discounted i.e. an unrecorded liability would be paid off. Entry :- Realization A/c - Dr. 750
To Cash A/c 750
6. Other items to pay off or sold which aren’t stated in the adjustments are:
a) Book Debts realized = Rs. 48,000
b) Loan from A paid = Rs. 5,000
c) EPF paid = Rs. 5,000
The Balance Sheet posted in the question is wrong as the balance of Debtors in the Balance Sheet would be Rs 54000 [60,000 – 6,000 (Provision)]
Therefore, the total of Credit Side of the Balance Sheet exceeds the Debit side by Rs 6,000.
Hence, the Cash A/c will not tally.
However, the total of Realization A/c = Rs. 4,21,500
The total of Partner’s Capital A/c : A’s Capital A/c = Rs 1,65,300
B’s Capital A/c = Rs 95,200