omtexclasses.com: Uday and Prabhakar are partners sharing profit and losses in the proportion of 3/5 and 2/5 respectively. They dissolved their partnership firm on 31st March, 2012 when their financial position was as under.

Balance Sheet as on 31^st March, 2012

The assets were realised as under:

Goodwill Rs. 15,000, Stock Rs. 1,20000 and Debtors Rs. 54,000.

Machinery was taken over by Prabhakar at Rs. 40000 and furniture by Uday at book value.

Uday agreed to discharge his wife’s loan.

The creditors were paid at a rebate of Rs. 3,000

The expenses of dissolution amounted to Rs. 6000

Pass necessary Journal Entries in the books of the firm.

Solution:

Journal Entries In the Books of the Firm.

Date	Particulars	LF.	Debit	Credit
31 Match 2012	Realisation A/c ………Dr.		277500
	To Debtors A/c			67500
	To Stock A/c			135000
	To Machinery A/c			45000
	To Furniture A/c			30000
	[Being assets transferred at their book value]
31^st March, 2012	Sundry creditors A/c ………Dr.		15000
	Uday’s wife’s Loan A/c ………Dr.		30000
	To Realisation A/c			45000
	[Being outsiders liabilities transferred]
31^st March, 2012	R.D.D. A/c ………Dr.		7500
	To Realisation A/c			7500
	[Being R.D.D. transferred to Realisation A/c ]
31^st March, 2011	Bank A/c ………Dr.		189000
	To Realisation A/c			189000
	[Being R.D.D. transferred to Realisation A/c ]
31^st March, 2011	Bank A/c ………Dr.		189000
	To Realisation A/c			189000
	[Being the assets realised]
31^st March, 2012	Prabhakar’s Capital A/c ………Dr.		40000
	Uday’s Capital A/c ………Dr.		30000
	To Realisation A/c			70000
	[Being the assets are taken over by Partners]
31^st March, 2012	Realisation A/c ………Dr.		30000
	To Uday’s Capital A/c			30000
	[Being the loand from Uday’s wife discharged by Uday]
31^st March, 2012	Realisation A/c ………Dr.		18000
	To bank A/c			18000
	[Being liabilities and expenses are paid in cash]
31^st March, 2012	Uday’s Capital A/c ………Dr.		8400
	Prabhakar’s Capital A/c ………Dr.		5600
	To Realisation A/c			14000
	[Being loss on realisation transferred to Partners Capital A/c]
31^st March, 2012	Uday’s Capital A/c ………Dr.		129600
	Prabhakar’s Capital A/c		44400
	To Bank A/c			174000
	[Being the Final settlement is made between the partners]

Working Notes

Realisation A/c

Debit	Credit
277500	52500
30000	189000
18000	40000
	30000
	14000 [Loss on Realisation A/c Transferred to Partners Capital A/c ]
325500	325500

Working Note: Division of loss on Realisation A/c in the Ratio of 3: 2.

Uday = (3/5) × 14000 = 8400

Prabhakar = (2/5) × 14000 = 5600

Working Note: Partners Capital A/c

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