Book Keeping Accountancy Solutions 2014 Solutions for Class 12 Commerce Accountancy Chapter 6 Dissolution Of Partnership Firm are provided here with simple step-by-step explanations. These solutions for Dissolution Of Partnership Firm are extremely popular among class 12 Commerce students for Accountancy Dissolution Of Partnership Firm Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the Book Keeping Accountancy Solutions 2014 Book of class 12 Commerce Accountancy Chapter 6 are provided here for you for free. You will also love the ad-free experience on Meritnation’s Book Keeping Accountancy Solutions 2014 Solutions. All Book Keeping Accountancy Solutions 2014 Solutions for class 12 Commerce Accountancy are prepared by experts and are 100% accurate.
Page No 181:
Question 1.A1:
Objective type Questions.
Answer in one Sentence only.
What is dissolution of partnership firm?
Answer:
Dissolution means termination of the existing relationship between the partners of a firm. It means that the business will come to an end and the firm will wind up its business. Accordingly, all the assets will be realised and liabilities will be paid off. It can be dissolved either voluntarily by the partners or compulsorily by the order of the court.
Page No 181:
Question 1.A2:
Objective type Questions.
Answer in one Sentence only.
When is Realisation Account opened?
Answer:
Realisation Account is opened at the time of dissolution of a partnership firm. In this account, the assets and liabilities are transferred at their book values. Also, the firm’s assets are realised and liabilities are paid off.
Page No 181:
Question 1.A3:
Objective type Questions.
Answer in one Sentence only.
Which accounts are not transferred to Realisation Account?
Answer:
The following accounts are not transferred to Realisation Account:
1. Cash/Bank A/c,
2. Bank overdraft,
3. Reserve fund,
4. Credit/Debit balance of Profit & Loss Account,
5. Partners’ Capital Accounts and
6. Partner’s Loan Account.
Page No 181:
Question 1.A4:
Objective type Questions.
Answer in one Sentence only.
Who is called Insolvent person?
Answer:
When a person is unable to contribute fully or partially to discharge his/her liabilities out of his/her private assets, then that person is regarded as an insolvent. Thus, in the following two situations, a partner is declared as insolvent:
a. When his/her personal assets are insufficient
b. When his/her debit capital balance cannot be covered
Page No 181:
Question 1.A5:
Objective type Questions.
Answer in one Sentence only.
What is Capital Deficiency?
Answer:
The debit balance of an insolvent partner’s capital account that cannot be satisfied due to lack of surplus balance is called capital deficiency. This deficiency is to be borne by all the solvent partners in their profit sharing ratio.
Page No 181:
Question 1.A6:
Objective type Questions.
Answer in one Sentence only.
In what proportion is the balance on Realisation Account transferred to Partner’s Capital Account?
Answer:
The balance of the Realisation Account is to be transferred to Partners’ Capital Accounts in their profit-sharing ratio. If the partnership deed is silent, then profits or losses arising from Realisation Account are to be distributed in equal proportion amongst all the partners of the firm.
Page No 181:
Question 1.A7:
Objective type Questions.
Answer in one Sentence only.
Who should bear the capital deficiency of an insolvent partner?
Answer:
The capital deficiency of an insolvent partner is borne by all other solvent partners in their profit-sharing ratio.
Page No 181:
Question 1.A8:
Objective type Questions.
Answer in one Sentence only.
Which account is debited on repayment of Partner’s Loan?
Answer:
Partner’s loan appearing in the Balance Sheet is not transferred to Realisation Account. In fact, a separate account named as Partner’s Loan Account is maintained. At the time of repayment of partner’s loan, Partner’s Loan A/c is debited and Cash A/c is credited.
Page No 181:
Question 1.A9:
Objective type Questions.
Answer in one Sentence only.
Why is Realisation Account opened?
Answer:
Realisation Account is opened to determine the amount of profit or loss from the realisation of assets and payment of liabilities at the time of dissolution of a partnership firm.
Page No 181:
Question 1.A10:
Objective type Questions.
Answer in one Sentence only.
Which account is debited on payment of dissolution expenses?
Answer:
On payment of dissolution expenses, Realisation Account is to be debited. These are a firm’s expenses and should be paid by the firm. However, when such expenses are paid by the firm on behalf of a partner, then the Concerned Partner’s Capital Account is debited.
Page No 181:
Question 1.B1:
Write the word / term / phrase, which can substitute each of the following statements.
Debit balance in realisation account.
Answer:
Realisation Loss
Explanation: Debit balance in Realisation Account is regarded as ‘Loss on Realisation’. It arises when the debit side of Realisation A/c is more than its credit side. This loss is borne by all the partners’ in their profit-sharing ratio.
Page No 181:
Question 1.B2:
Write the word / term / phrase, which can substitute each of the following statements.
Winding up of partnership business.
Answer:
Dissolution of Partnership
Explanation: Winding-up of partnership business is known as dissolution of partnership, which means there is a change in the business relationship among the partners but the firm may continue its business.
Page No 181:
Question 1.B3:
Write the word / term / phrase, which can substitute each of the following statements.
An account opened to find out the Profit or Loss on Sale of Assets and Settlement of Liabilities.
Answer:
Realisation Account
Explanation: Realisation Account is opened to find out the profit or loss on sale of assets and settlement of liabilities at the time of dissolution of the firm.
Page No 181:
Question 1.B4:
Write the word / term / phrase, which can substitute each of the following statements.
Debit balance of an insolvent Partner’s Capital Account.
Answer:
Capital Deficiency
Explanation: The debit balance of an insolvent partner’s capital account is known as capital deficiency. This deficiency is to be borne by all the solvent partners in their profit-sharing ratio.
Page No 181:
Question 1.B5:
Write the word / term / phrase, which can substitute each of the following statements.
Credit balance in Realisation Account.
Answer:
Realisation Profit
Explanation: Credit balance in Realisation Account is regarded as ‘Profit on Realisation’. It arises when the credit side of Realisation A/c is more than the debit side. This profit is distributed among all the partners in their profit-sharing ratio.
Page No 181:
Question 1.B6:
Write the word / term / phrase, which can substitute each of the following statements.
Conversion of assets into cash on dissolution of firm.
Answer:
Realisation
Explanation: The procedure of converting assets into cash at the time of dissolution of a firm is termed as realisation. In this procedure, Realisation Account is opened in order to determine the correct amount of profits or losses.
Page No 181:
Question 1.B7:
Write the word / term / phrase, which can substitute each of the following statements.
Liability likely to arise in future on happening of certain events.
Answer:
Contingent Liabilities
Explanation: Liability likely to arise in future on happening of certain events is known as contingent liabilities. These are termed as contingent, as their occurrence is dependent upon the happening of a future event, which may or may not happen (i.e. it is uncertain). Therefore, these are not shown in a company’s Balance Sheet.
Page No 181:
Question 1.B8:
Write the word / term / phrase, which can substitute each of the following statements.
Assets which are not recorded in the books of accounts.
Answer:
Unrecorded Assets
Explanation: Those assets that go unrecorded or are skipped in the books of accounts are termed as unrecorded assets. Thus, as these are unrecorded in the books, they are not transferred to the Realisation Account. However, if any unrecorded asset is taken over by any partner, then it is recorded by crediting the Realisation Account and debiting the Concerned Partner’s Capital Account.
Page No 181:
Question 1.B9:
Write the word / term / phrase, which can substitute each of the following statements.
The account which shows realisation of assets and discharge of liabilities.
Answer:
Realisation Account
Explanation: The account that shows realisation of assets and discharge of liabilities is Realisation Account. It is opened to ascertain the profit or the loss on sale of assets and settlement of liabilities.
Page No 181:
Question 1.B10:
Write the word / term / phrase, which can substitute each of the following statements.
Expenses incurred on dissolution of a firm.
Answer:
Dissolution/Realisation Expenses
Explanation: Dissolution/Realisation Expenses are the expenses incurred on dissolution of a firm. These expenses belong to the firm and hence, they should be paid by the firm. However, sometimes these expenses are paid by the firm on behalf of a partner. In such cases, the Concerned Partner’s Capital Account is debited.
Page No 181:
Question 1.C1:
State whether the following statements are True or False.
The firm is dissolved automatically on the retirement of a partner.
Answer:
False
Explanation: Change in profit sharing ratio among the existing partners, admission of a new partner, retirement or death of a partner, result in dissolution of partnership. In such instances, the existing partnership deed gets dissolved and it is replaced by a new partnership deed. However, the partnership firm continues to operate. On the other hand, in case of dissolution of a partnership firm, the whole firm is put to an end (along with the partnership deed).
Therefore, it is incorrect to say that a firm dissolves on the retirement of a partner.
Page No 181:
Question 1.C2:
State whether the following statements are True or False.
On dissolution Cash or Bank Account is closed automatically.
Answer:
True
Explanation: On dissolution, the Cash or Bank Account is closed automatically because if the capital accounts show any balance, then such balance is transferred to the Cash or Bank Account. This is done so that both the sides of the Cash or the Bank Account show the same balance. This is because of the double-entry system of book-keeping.
Page No 181:
Question 1.C3:
State whether the following statements are True or False.
On dissolution Bank Overdraft is transferred to Realisation Account.
Answer:
False
Explanation: The amount of bank overdraft is not transferred to Realisation Account; instead, it is shown on the credit side of Bank Account.
Page No 181:
Question 1.C4:
State whether the following statements are True or False.
A Solvent partner having debit balance to his Capital Account does not share the deficiency of Insolvent Partner’s Capital Account.
Answer:
True
Explanation: A solvent partner who has a debit balance does not share deficiency of an insolvent partner, even though he or she may be more financially sound compared to the other solvent partners. This is because it violates the principle of natural justice and equity.
Page No 181:
Question 1.C5:
State whether the following statements are True or False.
At the time of dissolution of Partnership Firm all assets should be transferred to Realisation A/c.
Answer:
False
Explanation: All assets except the cash or bank balances are transferred to the Realisation Account. Therefore, the given statement is incorrect.
Page No 181:
Question 1.C6:
State whether the following statements are True or False.
Debit balance of insolvent Partner’s Capital A/c is known as Capital Deficiency.
Answer:
True
Explanation: Debit balance of an insolvent partner’s capital account is known as capital deficiency. This deficiency is to be borne by all the solvent partners in their profit sharing ratio.
Page No 181:
Question 1.C7:
State whether the following statements are True or False.
At the time of dissolution loan from partner will be transferred to Realisation Account.
Answer:
False
Explanation: Partner’s loan is transferred to a separate account known as Partner’s Loan Account. This is because partner’s loan is not an external (outside) liability. Its payment can be made only after the settlement of external liabilities.
Page No 181:
Question 1.C8:
State whether the following statements are True or False.
Dissolution takes place when the relation among the partner’s comes to an end.
Answer:
True
Explanation: Dissolution takes place when the business relation among the existing partners comes to an end. This can be done either voluntarily or compulsorily, as per the order of the court of justice.
Page No 181:
Question 1.C9:
State whether the following statements are True or False.
The insolvency loss at the time of dissolution of the firm is shared by the Solvent Partner’s in their Profit-sharing ratio.
Answer:
True
Explanation: Insolvency loss, i.e. capital deficiency (debit balance in the capital account of an insolvent partner) is shared among the solvent partners in their profit sharing ratio.
Page No 181:
Question 1.C10:
State whether the following statements are True or False.
Realisation loss is not transferred to insolvent partner’s Capital Account.
Answer:
False
Explanation: Realisation loss is transferred to All Partners’ Capital Accounts (including the insolvent partner). After this, the total amount of capital deficiency is ascertained and is shared by the other solvent partners in their profit-sharing ratio.
Page No 182:
Question 1.D1:
Select the most appropriate alternative from those given below :
In case of dissolution assets and liabilities are transferred to _____________A/c.
a) Bank A/c
b) Partner’s capital A/c
c) Realisation A/c
d) Partner’s current A/c
Answer:
In case of dissolution, assets and liabilities are transferred to Realisation A/c.
Explanation: All the assets (except cash or bank balances) are transferred to the debit side, whereas all the liabilities (except bank overdraft) are transferred to the credit side of Realisation Account. Thereafter, at the time of realisation, the assets so realised are shown on the credit side and the settlement of liabilities is shown on the debit side.
Page No 182:
Question 1.D2:
Select the most appropriate alternative from those given below :
Dissolution expenses are credited to _____________A/c.
a) Realisation A/c
b) Cash/Bank A/c
c) Partner’s Capital A/c
d) Partner’s Loan A/c
Answer:
Dissolution expenses are credited to Cash/Bank A/c.
Explanation: Payment of realisation expenses results in outflow of cash. Therefore, they are credited to Cash/Bank A/c (as these lead to decrease in cash balance).
Page No 182:
Question 1.D3:
Select the most appropriate alternative from those given below :
Deficiency of Insolvent partner will be suffered by solvent partners in their ___________ ratio.
a) capital ratio
b) profit-sharing ratio
c) sale ratio
d) liquidity ratio
Answer:
Deficiency of Insolvent partner will be suffered by solvent partners in their profit-sharing ratio.
Explanation: If deficiency of insolvent partner (i.e. the debit balance in the insolvent partner’s capital account) is treated as an ordinary loss, then this loss is to be borne by the other solvent partners in their profit-sharing ratio.
Page No 182:
Question 1.D4:
Select the most appropriate alternative from those given below :
If any asset is taken over by partner from firm his Capital A/c will be____________.
a) credited
b) debited
c) added
d) none of these
Answer:
If any asset is taken over by a partner from the firm, then his Capital A/c will be debited.
Explanation: When an asset is taken over by a partner, then the Realisation A/c is credited and the Concerned Partner’s Capital A/c is debited with the agreed price at which the asset is taken over by him.
Page No 182:
Question 1.D5:
Select the most appropriate alternative from those given below :
If any unrecorded liability is paid on dissolution of the firm____________ account is debited.
a) Cash/Bank A/c
b) Realisation A/c
c) Partner’s Capital A/c
d) Loan A/c
Answer:
If any unrecorded liability is paid on dissolution of the firm, then Realisation account is debited.
Explanation: All the liabilities are paid-off by debiting the Realisation A/c. This is because all the payments are made through the Realisation Account, so that the true profits or losses can be ascertained.
Page No 182:
Question 1.D6:
Select the most appropriate alternative from those given below :
Partnership is compulsorily dissolved when the partners of the firm become ____________
a) Solvent
b) Insolvent
c) Creditor
d) None of these
Answer:
Partnership is compulsorily dissolved when the partners of the firm become insolvent.
Explanation: When the partners of a firm become insolvent, it implies that the assets of the firm have decreased in comparison to the liabilities. Moreover, the partners do not have enough funds to make payment to the creditors; hence, the partnership is compulsorily dissolved as per the order of a court of justice.
Page No 182:
Question 1.D7:
Select the most appropriate alternative from those given below :
Assets and liabilities are transferred to Realisation Account at their ____________values.
a) market
b) purchase
c) sale
d) book
Answer:
Assets and liabilities are transferred to the Realisation Account at their book values.
Explanation: In order to determine the correct amount of profit or loss on the eve of dissolution of a partnership firm, all assets and liabilities are transferred to the Realisation Account at their book values.
Page No 182:
Question 1.D8:
Select the most appropriate alternative from those given below :
If the number of partners in a firm falls below two, the firm stands____________
a) dissolved
b) established
c) realisation
d) None of these
Answer:
If the number of partners in a firm falls below two, the firm stands dissolved.
Explanation: As per the Indian Partnership Act of 1932, at least two people are required to form a partnership firm. Thus, if the minimum number of members falls below two, then the partnership firm gets automatically dissolved.
Page No 182:
Question 1.D9:
Select the most appropriate alternative from those given below :
Realisation Account is __________on realisation of assets.
a) debited
b) credited
c) deducted
d) None of these
Answer:
Realisation Account is credited on realisation of assets.
Explanation: If the assets are realised in cash, then the Realisation A/c is credited and Cash/Bank A/c is debited with the amount actually realised.
Page No 182:
Question 1.D10:
Select the most appropriate alternative from those given below :
All activities of the partnership firm cease (stop) on ____________ of firm.
a) dissolution
b) admission
c) retirement
d) None of these
Answer:
All activities of the partnership firm cease (stop) on dissolution of firm.
Explanation: Dissolution of a partnership firm involves discontinuance of the firm’s business, besides the termination of the existing partnership deed. Thus, at the time of dissolution of a partnership firm, all the activities of the firm tend to cease.
Page No 182:
Question 1:
PRACTICAL PROBLEMS
Sushil and Sumit were in partnership sharing profits and losses in the proportion of 3/5 and 2/5 respectively. On 31st March, 2005 they decide to dissolve the firm when their Balance Sheet was as under:
Balance Sheet as on 31st March, 2005
|
|||
Liabilities
|
Amount
Rs
|
Assets
|
Amount
Rs
|
Sushil’s Capital
|
20,000
|
Plant and Machinery
|
15,000
|
Sumit’s Capital
|
18,000
|
Stock
|
15,000
|
General Reserve
|
5,000
|
Sundry Debtors
|
22,000
|
Sumit’s Loan A/c
|
2,000
|
Bank
|
3,000
|
Sundry Creditors
|
10,000
|
|
|
|
55,000
|
|
55,000
|
|
|
|
|
The Assets realised as follows: Stock Rs 14,000, Plant and Machinery Rs 12,000 and Debtors Rs 20,000. The Sundry Creditors were paid Rs 9,000 in full settlement.
Prepare: Realisation Account, Partners Capital Accounts and Bank Account.
Answer:
Realisation Account
|
||||||
Dr.
|
Cr.
|
|||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
|||
|
|
|
|
|||
Sundry Assets:
|
|
Sundry Liabilities- Sundry Creditors
|
10,000
|
|||
Plant and Machinery
|
15,000
|
|
|
|
||
Stock
|
15,000
|
|
Bank A/c:
|
|
||
Sundry Debtors
|
22,000
|
52,000
|
Stock
|
14,000
|
|
|
|
|
Plant and Machinery
|
12,000
|
|
||
Bank A/c (Sundry Creditors)
|
9,000
|
Bank
|
20,000
|
46,000
|
||
|
|
|
|
|||
|
|
Loss transferred to:
|
|
|||
|
|
Sunil’s Capital A/c
|
3,000
|
|
||
|
|
Sumit’s Capital A/c
|
2,000
|
5,000
|
||
|
61,000
|
|
61,000
|
|||
|
|
|
|
Partners’ Capital Accounts
|
||||||
Dr.
|
Cr.
|
|||||
Particulars
|
Sushil
|
Sumit
|
Particulars
|
Sushil
|
Sumit
|
|
|
|
|
|
|
|
|
Realisation A/c (Loss)
|
3,000
|
2,000
|
Balance b/d
|
20,000
|
18,000
|
|
Bank A/c
|
20,000
|
18,000
|
General Reserve
|
3,000
|
2,000
|
|
|
23,000
|
20,000
|
|
23,000
|
20,000
|
|
|
|
|
|
|
|
Sumit’s Loan Account
|
||||
Dr.
|
Cr.
|
|||
Particulars
|
Amount
(Rs)
|
Particulars
|
Amount
(Rs)
|
|
|
|
|
|
|
Bank A/c
|
2,000
|
Balance b/d
|
2,000
|
|
|
2,000
|
|
2,000
|
|
|
|
|
|
Cash/Bank Account
|
|||||
Dr.
|
Cr.
|
||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
||
|
|
|
|
||
Balance b/d
|
3,000
|
Realisation A/c (Liabilities)
|
9,000
|
||
Realisation A/c (Assets)
|
46,000
|
Loan A/c
|
2,000
|
||
|
|
Capital A/cs:
|
|
||
|
|
Sushil
|
20,000
|
|
|
|
|
Sumit
|
18,000
|
38,000
|
|
|
49,000
|
|
49,000
|
||
|
|
|
|
Page No 183:
Question 2:
PRACTICAL PROBLEMS
Ganesh and Chandan were partners sharing profits and losses in the proportion of 3:2. They dissolve the partnership firm on 31st March, 2011 when their position was as follows:
Balance Sheet as on 31st March, 2011
|
||||
Liabilities
|
Amount
Rs
|
Assets
|
Amount
Rs
|
|
Sundry Creditors
|
25,000
|
Debtors
|
1,12,500
|
|
Bank overdraft
|
20,000
|
Less: R.D.D.
|
12,500
|
1,00,000
|
Reserve Fund
|
30,000
|
Stock
|
2,25,000
|
|
Capital Accounts:
|
|
Furniture
|
50,000
|
|
Ganesh
|
2,30,000
|
Motor Car
|
75,000
|
|
Chandan
|
1,50,000
|
Cash in hand
|
5,000
|
|
|
4,55,000
|
|
4,55,000
|
|
|
|
|
|
The Assets realised as follows: Debtors Rs 90,000, Stock Rs 2,00,000, and Goodwill Rs 25,000, Motor Car was taken over by Ganesh for Rs 70,000 and Furniture by Chandan for Rs 60,000.
The Creditors were paid Rs 22,500 in full settlement. The expenses of realisation amounted to Rs 10,000.
Pass necessary journal entries in the books of the firm.
Answer:
|
Journal Entry
|
|||||
Date
|
Particulars
|
L.F.
|
Debit Amount
Rs
|
Credit Amount
Rs
|
||
|
|
|
|
|
|
|
|
Realisation A/c
|
Dr.
|
|
4,62,500
|
|
|
|
To Debtors A/c
|
|
|
|
1,12,500
|
|
|
To Stock A/c
|
|
|
|
2,25,000
|
|
|
To Furniture A/c
|
|
|
|
50,000
|
|
|
To Motor Car A/c
|
|
|
|
75,000
|
|
|
(Assets transferred to Realisation A/c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sundry Creditors A/c
|
Dr.
|
|
25,000
|
|
|
|
Reserve for Doubtful Debts A/c
|
Dr.
|
|
12,500
|
|
|
|
To Realisation A/c
|
|
|
|
37,500
|
|
|
(Liabilities transferred to Realisation A/c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash A/c
|
Dr.
|
|
3,15,000
|
|
|
|
To Realisation A/c
|
|
|
|
3,15,000
|
|
|
(Assets realised)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ganesh’s Capital A/c
|
Dr.
|
|
70,000
|
|
|
|
To Realisation A/c
|
|
|
|
70,000
|
|
|
(Motor Van taken over by Ganesh)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chandan’s Capital A/c
|
Dr.
|
|
60,000
|
|
|
|
To Realisation A/c
|
|
|
|
60,000
|
|
|
(Furniture taken over by Chandan)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realisation A/c
|
Dr.
|
|
32,500
|
|
|
|
To Cash A/c
|
|
|
|
32,500
|
|
|
(Realisation expenses and creditors are paid off)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ganesh’s Capital A/c
|
Dr.
|
|
7,500
|
|
|
|
Chandan’s Capital A/c
|
Dr.
|
|
5,000
|
|
|
|
To Realisation A/c
|
|
|
|
12,500
|
|
|
(Loss transferred to Partner’s Capital A/c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve Fund A/c
|
|
|
30,000
|
|
|
|
To Ganesh’s Capital A/c
|
|
|
|
18,000
|
|
|
To Chandan’s Capital A/c
|
|
|
|
12,000
|
|
|
(Reserve Fund transferred to Partner’s Capital A/c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank Overdraft A/c
|
Dr.
|
|
20,000
|
|
|
|
To Cash A/c
|
|
|
|
20,000
|
|
|
(Bank overdraft transferred to Cash A/c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ganesh’s Capital A/c
|
Dr.
|
|
1,70,500
|
|
|
|
Chandan’s Capital A/c
|
Dr.
|
|
97,000
|
|
|
|
To Cash A/c
|
|
|
|
2,67,500
|
|
|
(Amount paid off on account of final settlement)
|
|
|
|
|
|
|
|
|
|
|
|
Note: As per the book the amounts paid to Ganesh and Chandan are Rs 1,72,500 and Rs 95,000, respectively, however, as per the solution above these balances should be Rs 1,70,500 and Rs 97,000, respectively.
Page No 183:
Question 3:
PRACTICAL PROBLEMS
Anil and Sunil were partners sharing profits and losses in the ratio of 3:2. Their Balance Sheet as on 31st March, 2009.
Balance Sheet as on 31st March, 2009
|
|||
Liabilities
|
Amount
Rs
|
Assets
|
Amount
Rs
|
Capital Account
|
|
Bank
|
30,000
|
Anil
|
50,000
|
Stock
|
25,000
|
Sunil
|
30,000
|
Debtors
|
70,000
|
Current Account
|
|
Plant
|
45,000
|
Anil
|
15,000
|
Building
|
35,000
|
Sunil
|
10,000
|
|
|
Creditors
|
87,000
|
|
|
Bills payable
|
13,000
|
|
|
|
2,05,000
|
|
2,05,000
|
|
|
|
|
The firm was dissolved on the above date and the assets realised as under:
1) Stock Rs 20,000, Debtors Rs 60,000, Plant Rs 40,000 and Building Rs 30,000.
2) Anil agreed to pay off the bills payable.
3) Creditors were paid in full.
4) Dissolution expenses were Rs 7,000.
Prepare:
(i) Realisation Account
(ii) Bank Account
(iii) Current Account and Capital Account of the partners.
Answer:
Realisation Account
|
||||||
Dr.
|
Cr.
|
|||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
|||
|
|
|
|
|||
Sundry Assets:
|
|
Sundry Liabilities:
|
|
|||
Stock
|
25,000
|
|
Sundry Creditors
|
87,000
|
|
|
Debtors
|
70,000
|
|
Bills Payable
|
13,000
|
1,00,000
|
|
Plant
|
45,000
|
|
|
|
||
Building
|
35,000
|
1,75,000
|
Bank A/c:
|
|
||
|
|
Stock
|
20,000
|
|
||
Bank A/c-
|
|
Debtors
|
60,000
|
|
||
Creditors
|
87,000
|
|
Plant
|
40,000
|
|
|
Dissolution Expenses
|
7,000
|
94,000
|
Building
|
30,000
|
1,50,000
|
|
Anil’s Current A/c
|
13,000
|
Loss transferred to:
|
|
|||
|
|
Anil’s Current A/c
|
19,200
|
|
||
|
|
Sunil’s Current A/c
|
12,800
|
32,000
|
||
|
2,82,000
|
|
2,82,000
|
|||
|
|
|
|
Partners’ Current Accounts
|
||||||
Dr.
|
Cr.
|
|||||
Particulars
|
Anil
|
Sunil
|
Particulars
|
Anil
|
Sunil
|
|
|
|
|
|
|
|
|
Realisation A/c (Loss)
|
19,200
|
12,800
|
Balance b/d
|
15,000
|
10,000
|
|
Capital A/c
|
8,800
|
|
Realisation A/c (Bills Payable paid off)
|
13,000
|
|
|
|
|
|
Capital A/c
|
|
2,800
|
|
|
28,000
|
12,800
|
|
28,000
|
12,800
|
|
|
|
|
|
|
|
Partners’ Capital Accounts
|
||||||
Dr.
|
Cr.
|
|||||
Particulars
|
Anil
|
Sunil
|
Particulars
|
Anil
|
Sunil
|
|
|
|
|
|
|
|
|
Current A/c
|
|
2,800
|
Balance b/d
|
50,000
|
30,000
|
|
Bank A/c
|
58,800
|
27,200
|
Current A/c
|
8,800
|
|
|
|
58,800
|
30,000
|
|
58,800
|
30,000
|
|
|
|
|
|
|
|
Bank Account
|
|||||
Dr.
|
Cr.
|
||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
||
Balance b/d
|
30,000
|
Realisation A/c (Liabilities)
|
94,000
|
||
Realisation A/c (Assets)
|
1,50,000
|
Capital A/cs:
|
|
||
|
|
Anil
|
58,800
|
|
|
|
|
Sunil
|
27,200
|
86,000
|
|
|
1,80,000
|
|
1,80,000
|
||
|
|
|
|
Page No 184:
Question 4:
PRACTICAL PROBLEMS
X, Y and Z were carrying on business. They share profits and losses in the ratio of 5:3:2 respectively. Their Balance Sheet as on 31st March, 2010 was as under:
Balance Sheet as on 31st March, 2010
|
||||
Liabilities
|
Amount
Rs
|
Assets
|
Amount
Rs
|
|
Sundry Creditors
|
21,000
|
Plant and Machinery
|
20,000
|
|
Y’s loan
|
5,000
|
Investment
|
8,000
|
|
Reserve fund
|
20,000
|
Stock
|
30,000
|
|
Capital Account:
|
|
Debtors
|
18,000
|
|
X
|
20,000
|
Less: R.D.D.
|
1,000
|
17,000
|
Y
|
10,000
|
Cash in hand
|
2,000
|
|
Z
|
4,000
|
Cash at Bank
|
3,000
|
|
|
80,000
|
|
80,000
|
|
|
|
|
|
On the above date the firm was dissolved and the assets realised as under:
1) Investment Rs 5,000, Stock Rs 24,000 and Debtors Rs 15,000.
2) The Plant and Machinery was taken over by Mr. ‘X’ at book value.
3) Sundry Creditors and Mr. ‘Y’ loan were paid in full.
4) Realisation expenses incurred Rs 1,000.
Prepare Realisation Account, Partner’s Capital Account and Bank Account
Answer:
Realisation Account
|
||||||
Dr.
|
Cr.
|
|||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
|||
|
|
|
|
|||
Sundry Assets:
|
|
Sundry Liabilities:
|
|
|||
Plant and Machinery
|
20,000
|
|
Reserve for Doubtful Debts
|
1,000
|
|
|
Investments
|
8,000
|
|
Sundry Creditors
|
21,000
|
22,000
|
|
Stock
|
30,000
|
|
|
|
||
Debtors
|
18,000
|
76,000
|
Bank A/c:
|
|
||
|
|
Investments
|
5,000
|
|
||
Bank A/c
|
|
Stock
|
24,000
|
|
||
Creditors
|
21,000
|
|
Debtors
|
15,000
|
44,000
|
|
Realisation Expenses
|
1,000
|
22,000
|
X’s Capital A/c (Plant and Machinery)
|
20,000
|
||
|
|
Loss transferred to:
|
|
|
||
|
|
X’s Capital A/c
|
6,000
|
|
||
|
|
Y’s Capital A/c
|
3,600
|
|
||
|
|
Z’s Capital A/c
|
2,400
|
12,000
|
||
|
98,000
|
|
98,000
|
|||
|
|
|
|
Partners’ Capital Accounts
|
||||||||
Dr.
|
Cr.
|
|||||||
Particulars
|
X
|
Y
|
Z
|
Particulars
|
X
|
Y
|
Z
|
|
|
|
|
|
|
|
|
|
|
Realisation A/c (Loss)
|
6,000
|
3,600
|
2,400
|
Balance b/d
|
20,000
|
10,000
|
4,000
|
|
Realisation A/c (Plant and Machinery)
|
20,000
|
|
|
Reserve Fund
|
10,000
|
6,000
|
4,000
|
|
Bank A/c
|
4,000
|
12,400
|
5,600
|
|
|
|
|
|
|
30,000
|
16,000
|
8,000
|
|
30,000
|
16,000
|
8,000
|
|
|
|
|
|
|
|
|
|
Bank Account
|
|||||
Dr.
|
Cr.
|
||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
||
|
|
|
|
||
Balance b/d
|
3,000
|
Realisation A/c (Liabilities)
|
22,000
|
||
Cash A/c
|
2,000
|
Capital A/cs:
|
|
||
Realisation A/c (Assets)
|
44,000
|
X
|
4,000
|
|
|
|
|
Y
|
12,400
|
|
|
|
|
Z
|
5,600
|
22,000
|
|
|
|
Y’s Loan A/c
|
5,000
|
||
|
49,000
|
|
49,000
|
||
|
|
|
|
Y’s Loan Account
|
||||
Dr.
|
Cr.
|
|||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
|
|
|
|
|
|
Bank A/c
|
5,000
|
Balance b/d
|
5,000
|
|
|
5,000
|
|
5,000
|
|
|
|
|
|
Page No 184:
Question 5:
PRACTICAL PROBLEMS
A, B and C were partners sharing profits and losses in the ratio of 3:2:1. On 31st March, 2010. Their Balance Sheet was as follows:
Balance Sheet as on 31st March, 2010
|
||||
Liabilities
|
Amount
Rs
|
Assets
|
Amount
Rs
|
|
Sundry Creditors
|
15,400
|
Cash at Bank
|
3,500
|
|
Bills payable
|
3,600
|
Stock
|
19,800
|
|
A’s loan A/c
|
10,000
|
Debtors
|
15,000
|
|
Capital Account:
|
|
Less: Provision
|
1,000
|
14,000
|
A
|
20,000
|
Join Life Policy
|
4,000
|
|
B
|
16,000
|
Plant and Machinery
|
43,700
|
|
C
|
8,000
|
|
|
|
Reserve Fund
|
12,000
|
|
|
|
|
85,000
|
|
85,000
|
|
|
|
|
|
The firm was dissolved on 31st March, 2010 and the assets realised as follows:
1) Join Life Policy was taken over by Mr. A at Rs 5,000.
2) Stock realised Rs 18,000, Debtors realised Rs 14,500, Plant and Machinery was sold for Rs 36,000.
3) Liabilities were paid in full. In addition one bill for Rs 700 under discount was dishonoured and had to be taken up by the firm.
4) There were no realisation expenses.
Give the Journal entries and necessary Ledger Accounts to close the books of the firm.
Answer:
|
Journal Entry
|
|||||
Date
|
Particulars
|
L.F.
|
Debit Amount
Rs
|
Credit Amount
Rs
|
||
|
|
|
|
|
|
|
|
Realisation A/c
|
Dr.
|
|
82,500
|
|
|
|
To Stock A/c
|
|
|
|
19,000
|
|
|
To Debtors A/c
|
|
|
|
15,000
|
|
|
To Joint Life Policy A/c
|
|
|
|
4,000
|
|
|
To Plant and Machinery A/c
|
|
|
|
43,700
|
|
|
(Sundry Assets transferred to Realisation A/c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sundry Creditors A/c
|
Dr.
|
|
15,400
|
|
|
|
Bills Payable A/c
|
|
|
3,600
|
|
|
|
Provision on Debtors A/c
|
|
|
1,000
|
|
|
|
To Realisation A/c
|
|
|
|
20,000
|
|
|
(Sundry Liabilities transferred to Realisation A/c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c
|
Dr.
|
|
68,500
|
|
|
|
To Realisation A/c
|
|
|
|
68,500
|
|
|
(Assets realised)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realisation A/c
|
Dr.
|
|
19,700
|
|
|
|
To Bank A/c
|
|
|
|
19,700
|
|
|
(Liabilities paid off)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A’s Capital A/c
|
Dr.
|
|
5,000
|
|
|
|
To Realisation A/c
|
|
|
|
5,000
|
|
|
(Joint Life Policy taken over by Mr. A for Rs 5,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A’s Capital A/c
|
|
|
4,350
|
|
|
|
B’s Capital A/c
|
|
|
2,900
|
|
|
|
C’s Capital A/c
|
|
|
1,450
|
|
|
|
To Realisation A/c
|
|
|
|
8,700
|
|
|
(Loss on realization transferred to Partner’s Capital A/c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve Fund
|
Dr.
|
|
12,000
|
|
|
|
To A’s Capital A/c
|
|
|
|
6,000
|
|
|
To B’s Capital A/c
|
|
|
|
4,000
|
|
|
To C’s Capital A/c
|
|
|
|
2,000
|
|
|
(Reserve Fund transferred to Partner’s Capital A/c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A’s Loan A/c
|
Dr.
|
|
10,000
|
|
|
|
To Bank A/c
|
|
|
|
10,000
|
|
|
(A’s Loan has been paid off)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A’s Capital A/c
|
Dr.
|
|
16,650
|
|
|
|
B’s Capital A/c
|
Dr.
|
|
17,100
|
|
|
|
C’s Capital A/c
|
Dr.
|
|
8,550
|
|
|
|
To Bank A/c
|
|
|
|
42,300
|
|
|
(Amount paid off to Partner on account of final settlement)
|
|
|
|
|
|
|
|
|
|
|
|
Realisation Account
|
||||||
Dr.
|
Cr.
|
|||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
|||
|
|
|
|
|||
Sundry Assets:
|
|
Sundry Liabilities:
|
|
|||
Stock
|
19,800
|
|
Provision on Debtors
|
1,000
|
|
|
Debtors
|
15,000
|
|
Bills Payable
|
3,600
|
|
|
Joint Life Policy
|
4,000
|
|
Sundry Creditors
|
15,400
|
20,000
|
|
Plant and Machinery
|
43,700
|
82,500
|
|
|
||
|
|
Mr. A’s Capital A/c (Joint Life Policy)
|
5,000
|
|||
Bank A/c:
|
|
Bank A/c:
|
|
|||
Creditors
|
15,400
|
|
Stock
|
18,000
|
|
|
Bills Payable
|
3,600
|
|
Debtors
|
14,500
|
|
|
Bill Dishonoured
|
700
|
19,700
|
Plant and Machinery
|
36,000
|
68,500
|
|
|
|
|
|
|||
|
|
Loss transferred to:
|
|
|||
|
|
A’s Capital A/c
|
4,350
|
|
||
|
|
B’s Capital A/c
|
2,900
|
|
||
|
|
C’s Capital A/c
|
1,450
|
8,700
|
||
|
93,500
|
|
93,500
|
|||
|
|
|
|
Partners’ Capital Accounts
|
||||||||
Dr.
|
Cr.
|
|||||||
Particulars
|
A
|
B
|
C
|
Particulars
|
A
|
B
|
C
|
|
|
|
|
|
|
|
|
|
|
Realisation A/c (Loss)
|
4,350
|
2,900
|
1,450
|
Balance b/d
|
20,000
|
16,000
|
8,000
|
|
Realisation A/c (Joint Life Policy)
|
5,000
|
|
|
Reserve fund
|
6,000
|
4,000
|
2,000
|
|
Balance c/d
|
16,650
|
17,100
|
8,550
|
|
|
|
|
|
|
26,000
|
20,000
|
10,000
|
|
26,000
|
20,000
|
10,000
|
|
|
|
|
|
|
|
|
|
Bank Account
|
|||||
Dr.
|
Cr.
|
||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
||
|
|
|
|
||
Balance b/d
|
3,500
|
Realisation A/c (Liabilities)
|
19,700
|
||
Realisation A/c (Assets)
|
68,500
|
Capital A/cs:
|
|
||
|
|
A
|
16,650
|
|
|
|
|
B
|
17,100
|
|
|
|
|
C
|
8,550
|
42,300
|
|
|
|
A’s Loan A/c
|
10,000
|
||
|
72,000
|
|
72,000
|
||
|
|
|
|
A’s Loan Account
|
||||
Dr.
|
Cr.
|
|||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
|
|
|
|
|
|
Bank A/c
|
10,000
|
Balance b/d
|
10,000
|
|
|
10,000
|
|
10,000
|
|
|
|
|
|
Note: As per the book amounts paid to A, B and C is Rs 16,650, Rs 16,700 and Rs 8,950 respectively but as per our solution it should be Rs 16,650, Rs 17,100 and Rs 8,550 respectively.
Page No 185:
Question 6:
PRACTICAL PROBLEMS
Pannalal, Babulal and Hiralal were partners sharing profits and losses in the proportion of 2:2:1, following is their Balance Sheet as on 31st March, 2008.
Balance Sheet as on 31st March, 2008
|
||||
Liabilities
|
Amount
Rs
|
Assets
|
Amount
Rs
|
|
Capital Accounts:
|
|
Machinery
|
25,000
|
|
Pannalal
|
30,000
|
Stock
|
10,000
|
|
Babulal
|
10,000
|
Debtors
|
27,500
|
|
Hiralal
|
10,000
|
Loss: R.D.D.
|
1,500
|
26,000
|
General Reserve
|
3,000
|
Investment
|
12,000
|
|
Creditors
|
20,000
|
Profit and Loss A/c
|
9,000
|
|
Pannalal’s Loan A/c
|
4,000
|
Bank
|
2,000
|
|
Bills payable
|
7,000
|
|
|
|
|
84,000
|
|
84,000
|
|
|
|
|
|
On the above date the partners decided to dissolve the firm:
1) Assets were realised: Machinery Rs 22,500, Stock Rs 9,000, Investment Rs 10,500, Debtors Rs 22,500.
2) Dissolution expenses were Rs 1,500.
3) Goodwill of the firm realised Rs 12,000
Pass the necessary Journal entries in the books of the firm.
Answer:
|
Journal Entry |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
||
|
|
|
|
|
|
|
|
Realisation A/c |
Dr. |
|
74,500 |
|
|
|
To Machinery A/c |
|
|
|
25,000 |
|
|
To Stock A/c |
|
|
|
10,000 |
|
|
To Debtors A/c |
|
|
|
27,500 |
|
|
To Investments A/c |
|
|
|
12,000 |
|
|
(Sundry Assets transferred to Realisation A/c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Creditors A/c |
Dr. |
|
20,000 |
|
|
|
Bills Payable A/c |
Dr. |
|
7,000 |
|
|
|
Reserve for Doubtful Debts A/c |
Dr. |
|
1,500 |
|
|
|
To Realisation A/c |
|
|
|
28,500 |
|
|
(Sundry Liabilities transferred to Realisation A/c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c |
Dr. |
|
76,500 |
|
|
|
To Realisation A/c |
|
|
|
76,500 |
|
|
(Sundry Assets realised) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Realisation A/c |
Dr. |
|
28,500 |
|
|
|
To Bank A/c |
|
|
|
28,500 |
|
|
(Sundry Liabilities paid off) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Realisation A/c |
Dr. |
|
2,000 |
|
|
|
To Pannalal’s Capital A/c |
|
|
|
800 |
|
|
To Babulal’s Capital A/c |
|
|
|
800 |
|
|
To Hiralal’s Capital A/c |
|
|
|
400 |
|
|
(Profit on Realisation transferred to Partner’s Capital Account) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pannalal’s Capital A/c |
Dr. |
|
3,600 |
|
|
|
Babulal’s Capital A/c |
Dr. |
|
3,600 |
|
|
|
Hiralal’s Capital A/c |
Dr. |
|
1,800 |
|
|
|
To Profit and Loss A/c |
|
|
|
9,000 |
|
|
(Profit and Loss A/c (Dr.) transferred to Partner’s Capital A/c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
General Reserve A/c |
Dr. |
|
3,000 |
|
|
|
To Pannalal’s Capital A/c |
|
|
|
1,200 |
|
|
To Babulal’s Capital A/c |
|
|
|
1,200 |
|
|
To Hiralal’s Capital A/c |
|
|
|
600 |
|
|
(General Reserve transferred to Partner’s Capital A/c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pannalal’s Loan A/c |
Dr. |
|
4,000 |
|
|
|
To Bank A/c |
|
|
|
4,000 |
|
|
(Pannalal’s Loan has been paid) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pannalal’s Capital A/c |
Dr. |
|
28,400 |
|
|
|
Babulal’s Capital A/c |
Dr. |
|
8,400 |
|
|
|
Hiralal’s Capital A/c |
Dr. |
|
9,200 |
|
|
|
To Bank A/c |
|
|
|
46,000 |
|
|
(Amount paid to partners on account of final settlement) |
|
|
|
|
Page No 185:
Question 7:
PRACTICAL PROBLEMS
Mahesh, Suresh and Jayesh were partners of the firm. They decided to dissolve the firm on 31st March, 2012. Their Balance Sheet as on that date was as under:
Balance Sheet as on 31st March, 2012
|
||||
Liabilities
|
Amount
Rs
|
Assets
|
Amount
Rs
|
|
Creditors
|
18,000
|
Cash at Bank
|
9,600
|
|
Loan
|
4,500
|
Sundry Assets
|
51,000
|
|
Capitals
|
|
Debtors
|
72,600
|
|
Mahesh
|
82,500
|
Less: R.D.D.
|
3,600
|
69,000
|
Suresh
|
30,000
|
Stock
|
23,400
|
|
Jayesh
|
21,000
|
Furniture
|
3,000
|
|
|
1,56,000
|
|
1,56,000
|
|
|
|
|
|
The firm was dissolved as follows:
1) Mahesh will accept furniture for Rs 2,000 and agreed accept the debtors of book value of Rs 60,000 at on agreed value of Rs 51,000.
2) Suresh will accept stock at an agreed value Rs 20,000, and Sundry Assets of Book value Rs 24,000 at Rs 23,500.
3) Jayesh will accept remaining Sundry Assets for Rs 25,000 He will further accept the liability of loan along with due interest at 12% p.a.
Interest for three months on this loan was outstanding and was not recorded in the books.
4) Expenses of dissolution were Rs 1,000 and outstanding expenses of Rs 1,200 were to be paid from the firm.
5) The remaining debtors were realised Rs 7,000.
Prepare:
1) Realisation A/c
2) Partner’s Capital A/c
3) Bank A/c
Answer:
Realisation Account
|
||||||
Dr.
|
Cr.
|
|||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
|||
|
|
|
|
|||
Sundry Assets:
|
|
Sundry Liabilities:
|
|
|||
Assets
|
51,000
|
|
Creditors
|
18,000
|
|
|
Debtors
|
72,600
|
|
Loan
|
4,500
|
|
|
Stock
|
23,400
|
|
Reserve for Doubtful debts
|
3,600
|
26,100
|
|
Furniture
|
3,000
|
1,50,000
|
Mahesh’s Capital A/c:
|
|
||
Bank A/c:
|
|
|
Furniture
|
2,000
|
|
|
Creditors
|
18,000
|
|
Debtors
|
51,000
|
53,000
|
|
Dissolution Expenses
|
1,000
|
|
Suresh’s Capital A/c:
|
|
||
Outstanding Expenses
|
1,200
|
20,200
|
Stock
|
20,000
|
|
|
|
|
Sundry Assets
|
23,500
|
43,500
|
||
Jayesh’s Capital A/c (Loan with its 3 months outstanding Interest)
|
4,635
|
Jayesh’s Capital A/c (Sundry Assets)
|
25,000
|
|||
|
|
Bank A/c (Debtors)
|
7,000
|
|||
|
|
|
|
|||
|
|
Loss transferred to:
|
|
|||
|
|
Mahesh’s Capital A/c
|
6,745
|
|
||
|
|
Suresh’s Capital A/c
|
6,745
|
|
||
|
|
Jayesh’s Capital A/c
|
6,745
|
20,235
|
||
|
1,74,835
|
|
1,74,835
|
|||
|
|
|
|
Partners’ Capital Accounts
|
||||||||
Dr.
|
Cr.
|
|||||||
Particulars
|
Mahesh
|
Suresh
|
Jayesh
|
Particulars
|
Mahesh
|
Suresh
|
Jayesh
|
|
|
|
|
|
|
|
|
|
|
Realisation A/c
|
53,000
|
43,500
|
25,000
|
Balance b/d
|
82,500
|
30,000
|
21,000
|
|
Realisation A/c (Loss)
|
6,745
|
6,745
|
6,745
|
Realisation A/c (Loan paid)
|
|
|
4,635
|
|
Bank A/c
|
22,755
|
|
|
Bank A/c
|
|
20,245
|
6,110
|
|
|
82,500
|
50,245
|
31,745
|
|
82,500
|
50,245
|
31,745
|
|
|
|
|
|
|
|
|
|
Bank Account
|
|||||
Dr.
|
Cr.
|
||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
||
|
|
|
|
||
Balance b/d
|
9,600
|
Realisation A/c (Liabilities)
|
20,200
|
||
Realisation A/c (Assets)
|
7,000
|
Mahesh’s Capital A/c
|
22,755
|
||
Capital A/cs:
|
|
|
|
||
Suresh
|
20,245
|
|
|
|
|
Jayesh
|
6,110
|
26,355
|
|
|
|
|
42,955
|
|
42,955
|
||
|
|
|
|
Page No 186:
Question 8:
PRACTICAL PROBLEMS
Gautam, Viral and Ashwin were Partners sharing profits and losses equally. Their Balance sheet as on 31st December, 2011 was as follows:
Balance Sheet as on 31st December, 2011
|
|||
Liabilities
|
Amount
Rs
|
Assets
|
Amount
Rs
|
Capital Accounts:
|
|
Building
|
73,900
|
Gautam
|
75,000
|
Furniture
|
44,100
|
Virat
|
45,000
|
Stock
|
25,400
|
Reserve Fund
|
27,000
|
Debtors
|
33,600
|
Creditors
|
48,500
|
Cash
|
15,000
|
Bank Loan
|
11,500
|
Ashwin’s Capital
|
15,000
|
|
2,07,000
|
|
2,07,000
|
|
|
|
|
The firm was dissolved due to insolvency of Ashwin and the following was the result.
(i) The realisation of Assets were as follows:
a) The stock was completely damaged and could realise worth Rs 16,500 only.
b) Building was sold for Rs 49,800.
c) Furniture was realised by the firm at Rs 23,100 less than the book value.
d) A Customer who owes Rs 14,400 became insolvent and nothing could be recovered from his private estate.
(ii) Creditors were paid for Rs 36,900 in full settlement and Bank Loan was discharged fully.
(iii) The expenses of realisation Rs 4,100
(iv) Ashwin became insolvent and the firm could recover only Rs 4,000 from his private estate.
Prepare Realisation A/c, Partner’s Capital A/c and cash A/c to close the books of the firm.
Answer:
Realisation Account
|
||||||
Dr.
|
Cr.
|
|||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
|||
|
|
|
|
|||
Sundry Assets:
|
|
Sundry Liabilities:
|
|
|||
Building
|
73,900
|
|
Creditors
|
48,500
|
|
|
Furniture
|
44,100
|
|
Bank Loan
|
11,500
|
60,000
|
|
Stock
|
25,400
|
|
|
|
||
Debtors
|
33,600
|
1,77,000
|
Bank A/c:
|
|
||
|
|
Stock
|
16,500
|
|
||
Bank A/c:
|
|
Building
|
49,800
|
|
||
Creditors
|
36,900
|
|
Furniture
|
21,000
|
|
|
Bank Loan
|
11,500
|
|
Debtors
|
19,200
|
1,06,500
|
|
Realisation Expenses
|
4,100
|
52,500
|
|
|
|
|
|
|
Loss transferred to:
|
|
|
||
|
|
Gautam’s Capital A/c
|
21,000
|
|
||
|
|
Virat’s Capital A/c
|
21,000
|
|
||
|
|
Ashwin’s Capital A/c
|
21,000
|
63,000
|
||
|
2,29,500
|
|
2,29,500
|
|||
|
|
|
|
Partners’ Capital Accounts
|
||||||||
Dr.
|
Cr.
|
|||||||
Particulars
|
Gautam
|
Virat
|
Ashwin
|
Particulars
|
Gautam
|
Virat
|
Ashwin
|
|
|
|
|
|
|
|
|
|
|
Balance b/d
|
|
|
15,000
|
Balanace b/d
|
75,000
|
45,000
|
|
|
Realisation A/c (Loss)
|
21,000
|
21,000
|
21,000
|
Reserve fund
|
9,000
|
9,000
|
9,000
|
|
Ashwin’s Capital A/c
|
11,500
|
11,500
|
|
Cash
|
|
|
4,000
|
|
Bank A/c
|
51,500
|
21,500
|
|
Gautam’s Capital A/c
|
|
|
11,500
|
|
|
|
|
|
Virat’s Capital A/c
|
|
|
11,500
|
|
|
84,000
|
54,000
|
36,000
|
|
84,000
|
54,000
|
36,000
|
|
|
|
|
|
|
|
|
|
Cash/Bank Account
|
|||||
Dr.
|
Cr.
|
||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
||
|
|
|
|
||
Balance b/d
|
15,000
|
Realisation A/c (Liabilities)
|
52,500
|
||
Realisation A/c (Assets)
|
1,06,500
|
Capital A/cs:
|
|
||
Ashwin’s Capital A/c
|
4,000
|
Gautam
|
51,500
|
|
|
|
|
Virat
|
21,500
|
73,000
|
|
|
1,25,500
|
|
1,25,500
|
||
|
|
|
|
Working Notes:
Calculation of Capital Deficiency
Page No 186:
Question 9:
PRACTICAL PROBLEMS
(When one partner becomes insolvent)
Rahul, Rohit and Ramesh were partners in a firm sharing profit and losses in the ratio of 2:2:1 respectively.
The Balance Sheet as on 31st March, 2012 was as follows:
Balance Sheet as on 31st December, 2011
|
||||
Liabilities
|
Amount
Rs
|
Assets
|
Amount
Rs
|
|
Sundry Creditors
|
20,000
|
Cash at Bank
|
8,000
|
|
Bills payable
|
5,000
|
Stock
|
20,000
|
|
General Reserve
|
6,000
|
Debtors
|
16,000
|
|
Rahul’s Loan A/c
|
16,000
|
Less: R.D.D.
|
1,000
|
15,000
|
Capital Account
|
|
Plant and Machinery
|
30,000
|
|
Rahul
|
25,000
|
Furniture
|
6,000
|
|
Rohit
|
10,000
|
Ramesh’s Capital A/c
|
3,000
|
|
|
82,000
|
|
82,000
|
|
|
|
|
|
The firm was dissolved on the above date:
1) The Assets realised as follows:
Debtors Rs 9,000, Plant and Machinery Rs 26,000, Stock Rs 14,000 and Furniture Rs 3,000.
2) The Creditors were paid Rs 18,000 in full settlement and the bills payable were paid in full.
3) The realisation expenses amounted to Rs 3,000.
4) Ramesh become insolvent and was able to bring in only Rs 1,800 from his private estate.
Prepare:
1) Realisation A/c
2) Bank A/c and
3) Partner’s Capital A/c
Answer:
Realisation Account
|
||||||
Dr.
|
Cr.
|
|||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
|||
|
|
|
|
|||
Sundry Assets:
|
|
Sundry Liabilities:
|
|
|||
Debtors
|
16,000
|
|
Sundry Creditors
|
20,000
|
|
|
Stock
|
20,000
|
|
Bills Payable
|
5,000
|
|
|
Plant and Machinery
|
30,000
|
|
Reserve for Doubtful Debts
|
1,000
|
26,000
|
|
Furniture
|
6,000
|
72,000
|
|
|
||
|
|
|
Bank A/c:
|
|
||
Bank A/c:
|
|
Debtors
|
9,000
|
|
||
Sundry Creditors
|
18,000
|
|
Plant and Machinery
|
26,000
|
|
|
Bills Payable
|
5,000
|
|
Stock
|
14,000
|
|
|
Realisation Expenses
|
3,000
|
26,000
|
Furniture
|
3,000
|
52,000
|
|
|
|
|
|
|||
|
|
Loss transferred to:
|
|
|||
|
|
Rahul’s Capital A/c
|
8,000
|
|
||
|
|
Rohit’s Capital A/c
|
8,000
|
|
||
|
|
Ramesh’s Capital A/c
|
4,000
|
20,000
|
||
|
98,000
|
|
98,000
|
|||
|
|
|
|
Partners’ Capital Accounts
|
||||||||
Dr.
|
Cr.
|
|||||||
Particulars
|
Rahul
|
Rohit
|
Ramesh
|
Particulars
|
Rahul
|
Rohit
|
Ramesh
|
|
|
|
|
|
|
|
|
|
|
Balance b/d
|
|
|
3,000
|
Balance b/d
|
25,000
|
10,000
|
|
|
Realisation A/c (Loss)
|
8,000
|
8,000
|
4,000
|
General Reserve
|
2,400
|
2,400
|
1,200
|
|
Ramesh’s Capital A/c
|
2,000
|
2,000
|
|
Bank A/c
|
|
|
1,800
|
|
Bank A/c
|
17,400
|
2,400
|
|
Rahul’s Capital A/c
|
|
|
2,000
|
|
|
|
|
|
Rohit’s Capital A/c
|
|
|
2,000
|
|
|
27,400
|
12,400
|
7,000
|
|
27,400
|
12,400
|
7,000
|
|
|
|
|
|
|
|
|
|
Bank Account
|
||||||
Dr.
|
|
Cr.
|
||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
|||
|
|
|
|
|||
Balance b/d
|
8,000
|
Realisation A/c (Liabilities)
|
26,000
|
|||
Realisation A/c (Assets)
|
52,000
|
Capital A/cs:
|
|
|||
Ramesh’s Capital A/c
|
1,800
|
Rahul
|
17,400
|
|
||
|
|
Rohit
|
2,400
|
19,800
|
||
|
|
Rahul’s Loan A/c
|
16,000
|
|||
|
61,800
|
|
61,800
|
|||
|
|
|
|
Rahul’s Loan Account
|
||||
Dr.
|
Cr.
|
|||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
|
|
|
|
|
|
Bank A/c
|
16,000
|
Balance b/d
|
16,000
|
|
|
16,000
|
|
16,000
|
|
|
|
|
|
Capital Deficiency of Ramesh
|
Rs
|
Debit balance of Ramesh
|
7,000
|
Less: General Reserve
|
1,200
|
|
5,800
|
Less: Cash brought in by Ramesh
|
1,800
|
Capital Deficiency
|
4,000
|
Capital Deficiency of Rs 4,000 to be distributed between Rahul and Rohit (Solvent Partners) in the ratio 2:2.
Page No 187:
Question 10:
PRACTICAL PROBLEMS
(When all partners become insolvent)
Shiv, Sadashiv and Sadanand are Partners in a firm sharing Profit and Losses equally whose Balance-sheet as on 31st December, 2011 stood as follows:
Balance Sheet as on 31st December, 2011
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Liabilities
|
Amount
Rs
|
Assets
|
Amount
Rs
|
Capital Accounts
|
|
Sadanand’s Capital A/c
|
2,000
|
Shiv
|
6,000
|
Buildings
|
18,300
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Sadashiv
|
4,000
|
Machinery
|
12,700
|
Parvati’s Loan
|
10,000
|
Debtors
|
9,100
|
Sundry Creditors
|
30,000
|
Bank
|
7,900
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50,000
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50,000
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Shiv, Sadashiv and Sadanand were declared bankrupt and hence the firm was dissolved as on that date:
(i) The sundry Assets realised as follows:
Building Rs 10,900, Machinery Rs 8,200, Debtors Rs 6,800.
(ii) Realisation expenses amounted to Rs 1,300.
(iii) Sadanand was unable to contribute anything-
Whereas Rs 1,100 and Rs 900 were recovered from the realisation of private estate of Shiv and Sadashiv respectively.
You are required to close the books of the firm.
Answer:
Realisation Account
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Dr.
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Cr.
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|||||
Particulars
|
Amount
Rs
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Particulars
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Amount
Rs
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|||
|
|
|
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Sundry Assets:
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Bank A/c:
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Building
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18,300
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Building
|
10,900
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Machinery
|
12,700
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Machine
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8,200
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Debtors
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9,100
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40,100
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Debtors
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6,800
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25,900
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Bank A/c (Realisation Expenses)
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1,300
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Loss transferred to:
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Shiv’s Capital A/c
|
5,167
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Sadashiv’s Capital A/c
|
5,167
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||
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Sadanand’s Capital A/c
|
5,166
|
15,500
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|
41,400
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41,400
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Partners’ Capital Accounts
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Dr.
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Cr.
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|||||||
Particulars
|
Shiv
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Sadashiv
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Sadanand
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Particulars
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Shiv
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Sadashiv
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Sadanand
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|
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|
|
|
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Balance b/d
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|
|
2,000
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Balance b/d
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6,000
|
4,000
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Realisation A/c (Loss)
|
5,167
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5,167
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5,166
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Bank A/c
|
1,100
|
900
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Deficiency A/c
|
1,933
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Deficiency A/c
|
|
267
|
7,166
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7,100
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5,167
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7,166
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|
7,100
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5,167
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7,166
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Bank Account
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|||||
Dr.
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Cr.
|
||||
Particulars
|
Amount
Rs
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Particulars
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Amount
Rs
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||
|
|
|
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||
Balance b/d
|
7,900
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Realisation A/c (Realisation Expenses)
|
1,300
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Realisation A/c (Assets)
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25,900
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Sundry Creditors
|
25,875
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Parvati’s Loan A/c
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8,625
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Capital A/cs
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|
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Shiv
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1,100
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|
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Sadashiv
|
900
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2,000
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|
|
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|
35,800
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|
35,800
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Sundry Creditors Account
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||||
Dr.
|
Cr.
|
|||
Particulars
|
Amount
Rs
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Particulars
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Amount
Rs
|
|
|
|
|
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Bank A/c
|
25,875
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Balance b/d
|
30,000
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Deficiency A/c
|
4,125
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30,000
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30,000
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Parvati’s Loan Account
|
||||
Dr.
|
Cr.
|
|||
Particulars
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Amount
Rs
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Particulars
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Amount
Rs
|
|
|
|
|
|
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Bank A/c
|
8,625
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Balance b/d
|
10,000
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Deficiency A/c
|
1,375
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10,000
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10,000
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Deficiency Account
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||||
Dr.
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Cr.
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|||
Particulars
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Amount
Rs
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Particulars
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Amount
Rs
|
|
|
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|
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Sadashiv’s Capital A/c
|
267
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Shiv’s Capital A/c
|
1,933
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Sadanand’s Capital A/c
|
7,166
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Sundry Creditors A/c
|
4,125
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Parvati’s Loan A/c
|
1,375
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7,433
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7,433
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Working Notes:
Page No 188:
Question 11:
PRACTICAL PROBLEMS
Ganga, Yamuna and Godavari are in Partnership sharing profits and losses equally. Their Balance sheet as on 31st December, 2011 was as follows:
Balance Sheet as on 31st December, 2011 |
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Liabilities |
Amount Rs |
Assets |
Amount Rs |
Capital Accounts |
|
Currnet Accounts |
|
Ganga |
25,000 |
Yamuna |
20,000 |
Yamuna |
10,000 |
Godavari |
4,000 |
Godavari |
5,000 |
Premises |
17,200 |
Ganga’s Currnet A/c |
3,000 |
Machinery |
10,800 |
Sundry Creditors |
4,000 |
Debtors |
9,600 |
Bank loan |
3,000 |
Cash |
6,400 |
|
50,000 |
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50,000 |
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Godavari was declared insolvent and hence the firm was dissolved as on that date. Premises was sold at Rs 14,800, Machinery realised Rs 6,400. Bad debts and discount allowed to Debtors amounted to Rs 1,600. Sundry creditors agreed to receive 80 paise in a rupee (Rs) in full satisfaction of their claim. Bank Loan was settled at 60% of book value. During the course of dissolution a liability under an action for damages was settled for Rs 1,400 against Rs 2,100 provided in the books of the firm. The expenses of realisation amounted to Rs 900. Goodwill contributed Rs 1,900 from her private Property.
Prepare necessary ledger accounts in the books of the firm.Answer:
Realisation Account
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||||||
Dr.
|
Cr.
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|||||
Particulars
|
Amount
Rs
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Particulars
|
Amount
Rs
|
|||
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|
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Sundry Assets:
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Sundry Liabilities:
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Premises
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17,200
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Sundry Creditors
|
4,000
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Machinery
|
10,800
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Bank Loan
|
3,000
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7,000
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Debtors
|
9,600
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37,600
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Bank A/c:
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Bank A/c:
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Premises
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14,800
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Sundry Creditors
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3,200
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Machinery
|
6,400
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Bank Loan
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1,800
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Debtors
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8,000
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29,200
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Realiation Expenses
|
900
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Damages
|
1,400
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7,300
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Loss transferred to:
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Ganga’s Capital A/c
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2,900
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Yamuna’s Capital A/c
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2,900
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Godavari’s Capital A/c
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2,900
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8,700
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|
44,900
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|
44,900
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Partners’ Current Accounts
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||||||||
Dr.
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Cr.
|
|||||||
Particulars
|
Ganga
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Yamuna
|
Godavari
|
Particulars
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Ganga
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Yamuna
|
Godavari
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|
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Balance b/d
|
|
2,000
|
4,000
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Balance b/d
|
3,000
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|
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Realisation A/c (Loss)
|
2,900
|
2,900
|
2,900
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Cash A/c
|
|
|
1,900
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Capital A/c
|
100
|
|
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Capital A/c
|
|
4,900
|
5,000
|
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|
3,000
|
4,900
|
5,000
|
|
3,000
|
4,900
|
5,000
|
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|
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Partners’ Capital Accounts
|
||||||||
Dr.
|
Cr.
|
|||||||
Particulars
|
Ganga
|
Yamuna
|
Godavari
|
Particulars
|
Ganga
|
Yamuna
|
Godavari
|
|
|
|
|
|
|
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|
|
|
Current A/c
|
|
4,900
|
5,000
|
Balance b/d
|
25,000
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10,000
|
5,000
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|
Cash A/c
|
25,100
|
5,100
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|
Current A/c
|
100
|
|
|
|
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25,100
|
10,000
|
5,000
|
|
25,100
|
10,000
|
5,000
|
|
|
|
|
|
|
|
|
|
Cash/Bank Account
|
|||||
Dr.
|
Cr.
|
||||
Particulars
|
Amount
Rs
|
Particulars
|
Amount
Rs
|
||
|
|
|
|
||
Balance b/d
|
6,400
|
Realisation A/c (Liabilities)
|
7,300
|
||
Realiation A/c (Assets)
|
29,200
|
Capital A/cs:
|
|
||
Godavari’s Capital A/c
|
1,900
|
Ganga
|
25,100
|
|
|
|
|
Yamuna
|
5,100
|
30,200
|
|
|
37,500
|
|
37,500
|
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|
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Capital deficiency of Godavari
|
Rs
|
Capital A/c Cr. Balance
|
5,000
|
Add: Amount contributed |
1,900
|
|
6,900
|
Less: Debit Balance of current A/c
|
4,000
|
|
2,900
|
Less: Realisation Loss
|
2,900
|
It is needless to transfer solvent partner’s capital A/c
|
NIL
|
View NCERT Solutions for all chapters of Class 15