[6] Dissolution of Partnership Firm - Practical problem - (Balbharati Book Keeping and Accountancy 12th Board Exam)
Practical problem | Q 11 | Page 249
Following is the Balance Sheet as on 31st March 2019 of a firm having Three equal partners Priti, Priya, and Prachi.
Balance Sheets as on 31st March 2019
Liabilities | Amount ₹ | Assets | Amount ₹ |
Capital | Machinery | 23,000 | |
Priti | 40,000 | Furniture | 16,000 |
Priya | 35,000 | Stock | 47,000 |
Prachi | 25,000 | Cash at Bank | 10,000 |
Trade Creditors | 50,000 | Profit and Loss Account | 84,000 |
Loan (secured by Machinery) | 30,000 | ||
1,80,000 | 1,80,000 |
The firm was dissolved due to insolvency of all the partners. Machinery was sold for ₹ 18,000, while Furniture fetched ₹ 14,000, Stock realised ₹ 35,000. Realisation expenses amounted to ₹ 2,000. Nothing could be recovered from Priya and Prachi, but ₹ 3,400 could be collected from Priti’s private estate.
Close the books of accounts of the firm.
SOLUTION: In the books of Priti, Priya and Prachi
Realisation Account
Particulars | Amount (₹) | Amount (₹) | Particulars | Amount (₹) | Amount (₹) |
To Sundry Assets A/c | By Bank A/c | ||||
Machinery | 23,000 | Machinery | 18,000 | ||
Furniture | 16,000 | Furniture | 14,000 | ||
Stock | 47,000 | 86,000 | Stock | 35,000 | 67,000 |
To Bank A/c (realisation Expense) | 2,000 | By Partners’ Capital A/c (Loss on realisation transferred | |||
Priti | 7,000 | ||||
Priya | 7,000 | ||||
Prachi | 7,000 | 21,000 | |||
88,000 | 88,000 |
Partners’ Capital Accounts
Particulars | Priti (₹) | Priya (₹) | Prachi (₹) | Particulars | Priti (₹) | Priya (₹) | Prachi (₹) |
To Profit and Loss A/c | 28,000 | 28,000 | 28,000 | By Balance b/d | 40,000 | 35,000 | 25,000 |
To realisation A/c – Loss | 7,000 | 7,000 | 7,000 | By Bank A/c (Asset) | 3,400 | ||
To Deficiency A/c | 8,400 | By Deficiency A/c | 10,000 | ||||
43,400 | 35,000 | 35,000 | 43,400 | 35,000 | 35,000 |
Trade Creditors A/c
Particulars | Amount (₹) | Particulars | Amount (₹) |
To Deficiency A/c | 1,290 | By Balance b/d | 50,000 |
To Bank A/c | 48,710 | ||
50,000 | 50,000 |
Loan A/c
Particulars | Amount (₹) | Particulars | Amount (₹) |
To Deficiency A/c | 310 | By Balance b/d | 30,000 |
To Bank A/c | 29,690 | ||
30,000 | 30,000 |
Deficiency Account
Particulars | Amount (₹) | Particulars | Amount (₹) |
To Prachi’s Capital A/c | 10,000 | By Priti’s Capital A/c | 8400 |
By Trade Creditors A/c | 1,290 | ||
By Loan A/c | 310 | ||
10,000 | 10,000 |
Bank Account
Particulars | Amount (₹) | Particulars | Amount (₹) |
To Balance b/d | 10,000 | By Sundry Creditors A/c | 48,710 |
To Priti’s Capital A/c | 3,400 | By realisation Expense A/c | 2,000 |
To realisation A/c (Assets) | 67,000 | By Loan A/c | 29,690 |
80,400 | 80,400 |
Working Notes :
1) Amount paid to loan from sale of machinery = ₹ 18,000
Balance of Loan = 30,000 – 18,000 = ₹ 12,000
(2) ratio of Trade creditors and Loan = 50,000 : 12,000 = 50 : 12 i.e. 25 : 6
(3) Balance of cash available = 10,000 + 67,000 + 3,400 – 18,000 – 2,000
= 80,400 – 20,000 = ₹ 60,400
Amount paid towards loan = (6/31) × 60400 = ₹ 11690.
Amount paid to Trade Creditors = (25/31) × 60400 = ₹ 48710
Amount paid towards loan = 18000 + 11690 = ₹ 29690.
