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Dissolution of Partnership Firm

1. X and Y are equal partners. The following is their Balance Sheet as on 31st March, 2012.


Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
X’s Capital
Y’s Capital
Reserve Fund
X’s Loan
Creditors

40000
30000
8000
2000
15000
Building
Machinery
Furniture
Debtors
Less: R.D.D.
Stock
Investments
Commission REceivable
Bank




8800
- 800
30000
10000
12000


8000
20000
4000
1000
10000


95000


95000
The firm was dissolved on 31st March, 2012
(i) The Assets realised as follows:
Stock Rs. 19,000, Debtors Rs. 7,500, Machinery Rs. 11,000, Building Rs. 14,000
ii. Y took over the investments Rs. 5000 and Furniture at Book Value.
iii. X agreed to accept Rs. 1500 in full settlement of his Loan Account.
iv. Dissolution expenses amounted to Rs. 2000.
v. Commission Receivable could not be recovered.
Prepare Realisation Account, X’s Loan Account, Capital Accounts and Bank Account.


Solution:
Realisation Account


Particulars
Rs.
Rs.
Particulars
Rs.
Rs
To Sundry Assets


By Sundry Liabilities


Building
30000

Creditors

15000
Machinery
10000

By R.D.D. A/c

800
Furniture
12000

By Bank A/c


Debtors
8800

Stock
19000

Stock
20000

Debtors
7500

Investments
4000

Machinery
11000

Commission Receivable
1000
85800
Building
14000
51500
To Bank A/c

2000
BY Y’s Capital A/c


(Dissolution Expenses)


Investments
5000

To Bank A/c


Furniture
12000
17000
Creditors

15000
By X’s Loan A/c

500



By Loss on Realisation A/C





X
9000




Y
9000
18000


102800


102800


Partners Capital Account
Particulars
X
Y
Particulars
X
Y
To Realisation A/c

17000
By Balance b/d
40000
30000
To Realisation A/c
(loss)
9000
9000
By Reserve Fund (1:1)
4000
4000
To Bank A/c
35000
8000




44000
34000

44000
34000


X’s Loan Account
Particulars
Rs.
Rs.
Particulars
Rs.
Rs
To Bank A/c

1500
By Balance b/d

2000
To Realisation A/c

500





2000


2000









Bank Account

Particulars
Rs.
Rs.
Particulars
Rs.
Rs
To Balance b/d

10000
By Realisation A/c

2000
To Realisation A/c

51500
By Realisation A/c

15000



By X’s Loan A/c

1500



By X’s Capital A/c

35000



By Y’s Capital A/c

8000


61500


61500