[6] Dissolution of Partnership Firm - Practical problem - (Balbharati Book Keeping and Accountancy 12th Board Exam)
Practical problem | Q 6 | Page 246
Sangeeta, Anita, and Smita were in partnership sharing Profits and Losses in the ratio 2:2:1. Their Balance Sheet as on 31st March 2019 was as under :
Balance Sheets as on 31st March 2019
Liabilities | Amount ₹ | Assets | Amount ₹ |
Capital : | Land | 2,10,000 | |
Sangeeta | 60,000 | Plant | 20,000 |
Anita | 40,000 | Goodwill | 15,000 |
Smita | 30,000 | Debtors | 1,25,000 |
Sangeeta’s Loan A/c | 1,20,000 | Loans and Advances | 15,000 |
Sundry Creditors | 1,20,000 | Bank | 5,000 |
Bills Payable | 20,000 | ||
3,90,000 | 3,90,000 |
They decided to dissolve the firm as follows :
1. Assets realised as; Land recovered ₹ 1,80,000; Goodwill for ₹ 75,000; Loans and Advances realised ₹ 12,000; 10% of the Debts proved bad;
2. Sangeeta took Plant at book value.
3. Creditors and Bills payable paid at 5% discount.
4. Sandhya’s Loan was discharged along with ₹ 6,000 as Interest.
5. There was a contingent liability in respect of bills of ₹ 1,00,000 which was under discount. Out of them, a holder of one bill of ₹ 20,000 became insolvent
Show Realisation Account, Partners Capital Account, and Bank Account.
SOLUTION: In the books of Sangeeta, Anita and Smita
Realisation Account
Particulars | Amount (₹) | Amount (₹) | Particulars | Amount (₹) | Amount (₹) |
To Sundry Assets A/c | By Sundry Liabilities A/c | ||||
Land | 2,10,000 | Sundry Creditors | 1,20,000 | ||
Plant | 20,000 | Bills Payable | 20,000 | ||
Goodwill | 15,000 | Sandhya’s Loan | 1,20,000 | 2,60,000 | |
Debtors | 1,25,000 | By Sangeeta’s Capital A/c (Plant) | 20,000 | ||
Loans and Advances | 15,000 | 3,85,000 | By Bank A/c | ||
To Bank A/c | Land | 1,80,000 | |||
Creditors | 1,14,000 | Goodwill | 75,000 | ||
Bills Payable | 19,000 | 1,33,000 | Loans and Advances | 12,000 | |
To Bank A/c | Debtors | 1,12,500 | 3,79,500 | ||
Sandhya’s Loan | 1,26,000 | By Partners’ Capital A/c (Loss on realisation transferred) | |||
To Bank A/c (Contingent liability paid) | 20,000 | Sangeeta | 1,800 | ||
Anita | 1,800 | ||||
Smita | 900 | 4,500 | |||
6,64,000 | 6,64,000 |
Partners’ Capital Accounts
Particulars | Sangeeta (₹) | Anita (₹) | Smita (₹) | Particulars | Sangeeta (₹) | Anita (₹) | Smita (₹) |
To Realisation A/c | 20,000 | By Balance b/d | 60,000 | 40,000 | 30,000 | ||
To Realisation A/c – Loss | 1,800 | 1,800 | 900 | ||||
To Bank A/c | 38,200 | 38,200 | 29,100 | ||||
60,000 | 40,000 | 30,000 | 60,000 | 40,000 | 30,000 |
Bank Account
Dr | Cr | ||
Particulars | Amount (₹) | Particulars | Amount (₹) |
To Balance b/d | 5,000 | By Sandhya’s Loan A/c | 1,26,000 |
To realisation A/c – Assets | 3,79,500 | By realisation A/c | 20,000 |
By realisation A/c – Liabilities | 1,33,000 | ||
By Sangeeta’s Capital A/c | 38,200 | ||
By Anita’s Capital A/c | 38,200 | ||
By Smita’s Capital A/c | 29,100 | ||
3,84,500 | 3,84,500 |
Working Notes :
(1) Amount paid towards Sandhya’s Loan = Loan amount + Interest due on loan
= 1,20,000 + 6,000 = ₹ 1,26,000
(2) Amount received from Debtors = Debtors – Bad debts
= 1,25,000 – 10 % of 1,25,000 = 1,25,000 – 12,500
= ₹ 1,12,500
(3) Amount paid to Creditors = Creditor – 5 % discount
= 1,20,000 – 5 % on 1,20,000
= 1,20,000 – 6,000
= ₹ 1,14,000
(4) Amount paid towards Bills payable = Bills payable – 5 % discount
= 20,000 – 5 % on 20,000
= 20,000 – 1,000 =
₹ 19,000
(5) Bill of ₹ 1,00,000 was discounted with the Bank. On the due date bank could not recover ₹ 20,000 from one bill holder as he was declared insolvent. Therefore, we required to settle that contingent liability of ₹ 20,000.
