Ganesh and Chandan were partners sharing profits and losses in the proportion of 3:2. They dissolve partnership firm on 31st March, 2011 when their position was as follows:

Balance Sheet as on 31^st March, 2011

Liabilities	Amount	Amount	Assets	Amount	Amount
Sundry Creditors		25000	Debtors	112500
Bank Overdraft		20000	Less: R.D.D.	-12500	100000
Reserve Fund		30000	Stock		225000
Capital A/c			Furniture		50000
Ganesh		230000	Motor Car		75000
Chandan		150000	Cash in Hand		5000
		455000			455000

 The Assets realised as follows: Debtors Rs. 90,000, Stock Rs. 2,00,000, and Goodwill Rs. 25000,, Motor Car was taken over by Ganesh for Rs. 70,000 and Furniture by Chandan for Rs. 60,000.

The Creditors were paid Rs. 22500 in full settlement. The expenses of realisation amounted to Rs. 10,000.

Pass necessary journal entries in the books of the firm.

Solution:

In the Journal of Partnership Firm

Date	Particulars	LF	Debit	Credit
31.3.2011	Realisation A/c ....Dr.		462500
	To Debtors A/c			112500
	To Stock A/c			225000
	To Furniture A/c			50000
	To Motor Car A/c			75000
	[Being assets transferred at their book values to Realisation A/c ]
31.3.2011	Sundry Creditors A/c ....Dr.		25000
	Bank Overdraft A/c ....Dr.		20000
	To Realisation A/c			45000
	[Being external liabilities transferred at their book valued to realisation A/c ]
31.3.2011	R.D.D. A/c ....Dr.		12500
	To Realisation A/c			12500
	[Being R.D.D. transferred to Realisation A/c ]
31.3.2011	Reserve Fund A/c ....Dr.		30000
	To Ganesh's Capital A/c			18000
	To Chandan's Capital A/c			12000
	[Being Balance in reserve transferred to Capital A/c in their profit sharing ratio]
31.3.2011	Cash A/c ....Dr.		315000
	To Realisation A/c			315000
	[Being assets realised into cash]
31.3.2011	Ganesh's Capital A/c ....Dr.		70000
	Chandan's Capital A/c ....Dr.		60000
	To Realisation A/c			130000
	[Being Motor car and furniture taken over by the partners respectively]
31.3.2011	Realisation A/c ....Dr.		42500
	To Cash A/ c			42500
	[Being creditors and Bank overdraft paid in cash ]
31.3.2011	Realisation A/c ....Dr.		10000
	To Cash A/c			10000
	[Being expenses of realisation paid in cash]
31.3.2011	Ganesh's Capital A/c ....Dr.		7500
	Chandan's Capital A/c ....Dr.		5000
	To Realisation A/c			12500
	[Being loss incurred on realisation adjusted to Partners' Capital A/c in the ratio of 3:2]
31.3.2011	Ganesh's Capital A/c ....Dr.		170500
	Chandan's Capital A/c		97000
	To Cash A/c			267500
	[Being balance in capital A/c paid]