[6] Dissolution of Partnership Firm - Practical problem - (Balbharati Book Keeping and Accountancy 12th Board Exam)
Practical problem | Q 5 | Page 246
Seeta and Geeta are partners in the firm sharing Profits and Losses in the ratio of 4:1. They decided to dissolve the partnership on 31st March 2020 on which date their Balance Sheet stood as follows.
Balance Sheets as on 31st March 2020
Liabilities | Amount ₹ | Assets | Amount ₹ | |
Capital | Furniture | 14,000 | ||
Seeta | 90,000 | Plant | 65,000 | |
Geeta | 40,000 | Trademark | 8,000 | |
Sundry Creditors | 35,000 | Sundry Debtors | 48,000 | |
Bank Loan | 15,000 | Less - R. D. D | 3,000 | 45,000 |
Stock | 30,000 | |||
Cash in hand | 10,000 | |||
Advertisement Suspense | 8,000 | |||
1,80,000 | 1,80,000 |
Additional Information :
1. Plant and Stock taken over by Seeta ₹ 78,000, and ₹ 22,000 respectively
2. Debtors Realised 90% of the Book Value and Trademark at ₹ 5,000. and Goodwill was realised for ₹ 27,000.
3. Unrecorded assets estimated ₹4,500 was sold for ₹1,500.
4. ₹ 1,000 Discount were allowed by creditors while paying their claim.
5. The Realisation Expenses amounted to ₹ 3,500
You are required to prepare Realisation A/c, Cash A/c, and Partners Capital A/c
SOLUTION: In the books of Seeta and Geeta
Realisation Account
Particulars | Amount (₹) | Amount (₹) | Particulars | Amount (₹) | Amount (₹) |
To Sundry Assets A/c | By Sundry Liabilities A/c | ||||
Furniture | 14,000 | Bank Loan | 15,000 | ||
Plant | 65,000 | Sundry Creditors | 35,000 | 50,000 | |
Trademark | 8,000 | By R.D.D. A/c (Transfer) | 3000 | ||
Sundry Debtors | 48,000 | By Seeta’s Capital A/c | |||
Stock | 30,000 | 1,65,000 | Plant | 78,000 | |
To Cash A/c | Stock | 22,000 | 1,00,000 | ||
Bank Loan | 15,000 | By Cash A/c | |||
Sundry Creditors | 34,000 | Debtors | 43,200 | ||
Expenses | 3,500 | 52,500 | Trademark | 5,000 | |
To Partners’ Capital A/c (Profit) | Goodwill | 27,000 | |||
Seeta | 9,760 | Unrecorded Assets | 1,500 | 76,700 | |
Geeta | 2,440 | 12,200 | |||
2,29,700 | 2,29,700 |
Partners’ Capital Accounts
Particulars | Seeta (₹) | Geeta (₹) | Particulars | Seeta (₹) | Geeta (₹) |
To Advertisement Suspense A/c | 6,400 | 1,600 | By Balance b/d | 90,000 | 40,000 |
To Realisation A/c (Assets taken over) | 1,00,000 | By realisation A/c (Profit) | 9,760 | 2,440 | |
To Cash A/c | 40,840 | By Cash A/c (Amount contributed) | 6,640 | ||
1,06,400 | 42,440 | 1,06,400 | 42,440 |
Cash Account
Particulars | Amount (₹) | Particulars | Amount (₹) |
To Balance b/d | 10,000 | By realisation A/c | 52,500 |
To realisation A/c | 76,700 | By Geeta’s Capital A/c | 40,840 |
To Seeta’s Capital A/c | 6,640 | ||
93,340 | 93,340 |
Working Notes :
(1) Bank Loan is an external liability of the firm and therefore it is transferred to Realisation A/c.
(2) Amount recovered from Debtors = 90 % of Gross Debtors = (90/100) × 48000 = ₹ 43200.
(3) Amount paid to creditors = Value of Creditors – Discount given = 35,000 – 1,000 = ₹ 34,000.
(4) Sale of unrecorded assets for ₹ 1,500 is recorded on the credit side of realisation A/c and debit side of Cash A/c.
(5) It is presumed that Furniture realised nothing.
