dissolution of partnership firm - target publications publications pvt. ltd. chapter 06: dissolution...

Target Publications Pvt. Ltd. Chapter 06: Dissolution of Partnership Firm

1

06 Dissolution of partnership firm Solution to Practice Q.1.: In the Books of Firm

Realisation Account Dr. Cr.

Particulars Amount `

Amount `


Amount `

To Sundry Assets A/c By Sundry Liability A/c Stock 20,000 Sundry Creditors 42,000Motor Van 10,000 Bills Payable 25,000 67,000Machinery 18,000 By Cash A/c Sundry Debtor 24,000 Stock 18,000Furniture 12,000 Motor Van 70,000Land & Building 60,000 1,44,000 Machinery 16,000

To Cash A/c Furniture 10,000Sundry Creditors 42,000 Debtor 22,000Bills Payable 25,000 Land & Building 72,000 2,08,000Dissolution Expenses 2,000 69,000

To Partners Capital A/c (Profit on Realisation)

Soni 31,000 Moni 31,000 62,000

2,75,000 2,75,000 Partner’s Capital Account

Dr. Cr.

Particulars Soni `

Moni `

Particulars Soni `

Moni `

To Cash A/c 76,000 71,000 By Balance b/d 30,000 25,000 By General Reserve A/c 15,000 15,000 By Realisation A/c (Profit) 31,000 31,000 76,000 71,000 76,000 71,000

Cash Account Dr. Cr.



To Balance b/d 8,000 By Realisation A/c 69,000 To Realisation A/c 2,08,000 By Soni’s Capital A/c 76,000 By Moni’s Capital A/c 71,000

2,16,000 2,16,000 Solution to Practice Q.2.: In the Books of Firm



Amount `


Amount `

To Sundry Assets A/c By Sundry Liability A/c Sundry Debtors 45,000 Bank Loan 15,000Land & Building 70,000 Creditors 32,000Furniture 50,000 Bills Payable 8,000Machinery 25,000 Outstanding Expenses 1,000 56,000Stock 24,000 2,14,000

Target Publications Pvt. Ltd. Std. XII (Commerce): Book-Keeping & Accountancy

2

To Bank A/c By Bank A/c Bank Loan 15,000 Building 65,000Creditors 26,000 Furniture 35,000Bills Payable 8,000 Stock 20,000Outstanding Expenses 1,000 Debtors 40,000 1,60,000Realisation Expenses 1,000 51,000 By Piyush’s Capital A/c Machinery 25,000

By Partners Capital A/c (Loss on Realisation)

Piyush 16,000 Nathalal 8,000 24,000

2,65,000 2,65,000

Partner’s Capital Account

Dr. Cr.

Particulars Piyush `

Nathalal `

Particulars Piyush `

Nathalal `

To Realisation A/c (Loss) 16,000 8,000 By Balance b/d 75,000 75,000To Realisation A/c 25,000 − By Profit & Loss A/c 12,000 6,000 To Bank A/c 46,000 73,000 87,000 81,000 87,000 81,000

Bank Account

Dr. Cr.



To Balance b/d 10,000 By Realisation A/c 50,000To Realisation A/c 1,60,000 By Realisation A/c 1,000 By Piyush’s Capital A/c 46,000 By Nathalal’s Capital A/c 73,000

1,70,000 1,70,000

Journal Entries Date Particulars L.F. Debit

` Credit

`2012 Apr 1 Realisation A/c

To Sundry Assets A/c (Being assets transferred to realisation A/c)

Dr. 2,14,000 2,14,000

Apr 1 Sundry Liabilities A/c To Realisation A/c

(Being liabilities transferred to realisation A/c)

Dr. 56,000 56,000

Apr 1 Profit and Loss A/c To Piyush’s Capital A/c To Nathalal’s Capital A/c (Being balance of profit and loss A/c distributed)

Dr. 18,000 12,000 6,000

Apr 1 Bank A/c To Realisation A/c

(Being building, furniture, debtors and stock realised)

Dr. 1,60,000 1,60,000

Apr 1 Realisation A/c To Bank A/c

(Being liabilities paid)

Dr. 50,000 50,000


3


(Being realisation expenses paid)

Dr. 1,000 1,000

Apr 1 Piyush’s Capital A/c To Realisation A/c

(Being machinery taken over)

Dr. 25,000 25,000

Apr 1 Piyush’s Capital A/c Nathalal’s Capital A/c

To Realisation A/c (Being loss on realisation transferred to capital A/c)

Dr. Dr.

16,000 8,000

24,000

Apr 1 Piyush’s Capital A/c Nathalal’s Capital A/c

To Bank A/c (Being cash paid on final settlement)

Dr. Dr.

46,000 73,000

1,19,000

Total: 6,67,000 6,67,000 Solution to Practice Q.3.: In the Books of Firm


` Credit

`2012

Mar 31 Realisation A/c To Debtors A/c To Stock A/c To Building A/c To Furniture A/c To Bills Receivable A/c

(Being Assets transferred to Realisation)

Dr. 40,000 8,000 6,000

22,000 3,000 1,000

Mar 31 Creditors A/c Bills Payable A/c

To Realisation A/c (Being Liabilities transferred to Realisation)

Dr. Dr.

4,600 1,400

6,000

Mar 31 Reserve Fund A/c To Anandrao’s Capital A/c To Baburao’s Capital A/c

(Being Reserve Fund distributed)

Dr. 5,000 2,500 2,500

Mar 31 Cash A/c To Realisation A/c

(Being Assets Realised)

Dr. 31,800 31,800

Mar 31 Anandrao’s Capital A/c To Realisation A/c

(Being Furniture Takenover by Anandrao)

Dr. 2,500 2,500

Mar 31 Realisation A/c To Cash A/c

(Being Liabilities and Expense paid)

Dr. 6,500 6,500

Mar 31 Anandrao’s Capital A/c Baburao’s Capital A/c


Dr. Dr.

3,100 3,100

6,200

Mar 31 Anandrao’s Capital A/c Baburao’s Capital A/c

To Cash A/c (Being Amount Paid to Partner’s on final Settelement of Accounts)

Dr. Dr.

6,900 19,400

26,300

Total: 1,24,300 1,24,300


4

Solution to Practice Q.4.: In the Books of Firm Journal Entries

Date Particulars L.F. Debit

` Credit

`

2013 Realisation A/c

To Debtors A/c To Stock A/c To Furniture A/c To Motor Car A/c

(Being Assets transferred to Realisation A/c)

Dr.

2,31,250

56,250 1,12,500

25,000 37,500

Mar 31

Mar 31 Reserve Fund A/c To Devendra’s Capital A/c To Ganesh’s Capital A/c

(Being Reserve Fund distributed among Partners)

Dr. 15,000 9,000 6,000

Mar 31 R.D.D. A/c To Realisation A/c

(Being R.D.D. transferred to Realisation)

Dr.

6,250 6,250

Mar 31 Creditors A/c Bank Overdraft A/c

To Realisation A/c (Being Liabilities transferred to Realisation)

Dr. Dr.

12,500 10,000

22,500

Mar 31 Bank A/c To Realisation A/c

(Being Assets Realised)

Dr. 1,45,000 1,45,000

Mar 31 Devendra’s Capital A/c Ganesh’s Capital A/c

To Realisation A/c (Being Motor Car and Furniture taken over by Devendra and Ganesh respectively)

Dr. Dr.

35,000 30,000

65,000

Mar 31 Realisation A/c To Bank A/c

(Being Realisation Expenses paid off)

Dr. 5,000 5,000


(Being Goodwill Realised)

Dr.

12,500 12,500


(Being Liabilites Paid off)

Dr. 21,250 21,250

Mar 31 Devendra’s Capital A/c Ganesh’s Captial A/c

To Realisation A/c (Being Loss on Realisation transferred to capital A/c)

Dr. Dr.

3,750 2,500

6,250

Mar 31 Devendra’s Capital A/c Ganesh’s Captial A/c

To Bank A/c (Being Amount Paid to Partner’s for final Settelement of Accounts)

Dr. Dr.

85,250 48,500

1,33,750

Total: 6,63,750 6,63,750


5

Solution to Practice Q.5.: In the Books of Firm Realisation Account

Dr. Cr.


Amount `


Amount`

To Sundry Assets A/c By Sundry Liabilities A/c Bills Receivable 4,000 Sundry Creditors 14,000Computer 18,000 Bills Payable 20,000 34,000Vehicles 20,000 By Bank A/c Machines & Plant 18,000 Bills Receivable 3,800Furniture & Fixture 2,000 Computer 16,000Land & Building 40,000 1,02,000 Vehicle 18,000

To Bank A/c Land & Building 50,000Sundry Creditors 11,200 Plant & Machinery 18,000Bills Payable 18,000 Furniture 2,000 1,07,800Dissolution Expenses 3,000 32,200

By Partner’s Capital A/c (Profit on Realisation)

Ajay 3,040 Vijay 3,040 Sunny 1,520 7,600

1,41,800 1,41,800 Partners Capital Account

Dr. Cr.

Particulars Ajay `

Vijay `

Sunny `

Particulars Ajay `

Vijay `

Sunny `

To Bank A/c 30,240 30,240 15,120 By Balance b/d 20,000 20,000 10,000 By Reserve Fund 7,200 7,200 3,600 By Realisation A/c 3,040 3,040 1,520 (Profit) 30,240 30,240 15,120 30,240 30,240 15,120

Sunny’s Loan Account

Dr. Cr.


Particulars Amount`

To Bank A/c 6,000 By Balance b/d 6,000 6,000 6,000

Bank Account

Dr. Cr.


Particulars Amount`

To Balance b/d 6,000 By Realisation A/c 32,200To Realisation A/c 1,07,800 By Sunny’s Loan A/c 6,000 By Ajay’s Capital A/c 30,240 By Vijay’s Capital A/c 30,240 By Sunny’s Capital A/c 15,120

1,13,800 1,13,800


6


Dr. Cr.


Amount `


Amount `

To Sundry Assets A/c By Sundry Liabilities Goodwill 4,000 Creditors 6,000Land & Building 12,000 Bills Payable 2,000 8,000Furniture 2,400 By Bank A/c Stock 10,000 Land & Building 14,000Debtors 7,200 35,600 Stock 8,000

To Bank A/c Debtors 7,200 29,200Creditors 5,400 By Pravin’s Capital A/c Bills Payable 2,000 Furniture 4,000Realisation Expenses 1,000 8,400 By Partner’s Capital A/c (Loss on Realisation) Pravin 1,400 Angel 1,400 2,800

44,000 44,000


Dr. Cr.

Particulars Pravin `

Angel `

Particulars Pravin `

Angel `

To Realisation A/c 4,000 – By Balance b/d 12,000 10,000To Realisation A/c (Loss) 1,400 1,400 By Reserves A/c 2,000 2,000 To Bank A/c 8,600 10,600

14,000 12,000 14,000 12,000

Pravin’s Loan Account Dr. Cr.



To Bank A/c 4,000 By Balance b/d 4,000

4,000 4,000

Bank Account Dr. Cr.



To Balance b/d 2,400 By Pravin’s Loan A/c 4,000To Realisation A/c 29,200 By Realisation A/c 7,400 By Realisation A/c 1,000 By Pravin’s Capital A/c 8,600 By Angel’s Capital A/c 10,600

31,600 31,600


7


` Credit

`2012 Apr 1 Realisation A/c


Dr. 35,600 35,600

Apr 1 Sundry Liabilities A/c To Realisation A/c


Dr. 8,000 8,000

Apr 1 Reserves A/c To Pravin’s Capital A/c To Angel’s Capital A/c (Being balance of reserves A/c distributed)

Dr. 4,000 2,000 2,000

Apr 1 Bank A/c To Realisation A/c

(Being land & building, debtors and stock realised)

Dr. 29,200 29,200



Dr. 7,400 7,400



Dr. 1,000 1,000

Apr 1 Pravin’s Capital A/c To Realisation A/c

(Being furniture taken over)

Dr. 4,000 4,000

Apr 1 Pravin’s Capital A/c Angel’s Capital A/c


Dr. Dr.

1,400 1,400

2,800

Apr 1 Pravin’s Loan A/c To Bank A/c (Being settlement of loan)

Dr. 4,000 4,000

Apr 1 Pravin’s Capital A/c Angel’s Capital A/c


Dr. Dr.

8,600 10,600

19,200




Amount `


Amount `

To Sundry Assets A/c By R.D.D. A/c 1,000Plant & Machinery 20,000 By Sundry Liabilities Investments 8,000 Creditors 21,000Stock 30,000 By Bank A/c Debtors 18,000 76,000 Investments 5,000

To Bank A/c Stock 24,000Creditors paid 21,000 Debtors 15,000 44,000Realisation Expense 1,000 22,000 By Eknath’s Capital A/c Plant & Machinery 20,000


8

By Partner’s Capital A/c (Loss on Realisation)

Eknath 6,000 Namdeo 3,600 Tukaram 2,400 12,000

98,000 98,000


Dr. Cr.

Particulars Eknath `

Namdeo`

Tukaram`

Particulars Eknath `

Namdeo `

Tukaram`

To Realisation A/c 20,000 – – By Balance b/d 20,000 10,000 4,000To Realisation A/c (Loss) 6,000 3,600 2,400 By Reserve Fund A/c 10,000 6,000 4,000 To Bank A/c 4,000 12,400 5,600

30,000 16,000 8,000 30,000 16,000 8,000

Namdeo’s Loan Account Dr. Cr.



To Cash A/c 5,000 By Balance b/d 5,000

5,000 5,000




To Balance b/d 3,000 By Namdeo’s Loan A/c 5,000To Cash A/c 2,000 By Realisation A/c 21,000To Realisation A/c 44,000 By Realisation A/c 1,000 By Eknath’s Capital A/c 4,000 By Namdeo’s Capital A/c 12,400 By Tukaram’s Capital A/c 5,600

49,000 49,000 Solution to Practice Q.8.: In the Books of Firm



Amount `


Amount `

To Sundry Assets A/c By Sundry Liabilities A/c Debtors 9,000 Creditors 6,400Furniture 3,000 Bills Payable 3,600 10,000Stock 10,000 By Cash A/c Building 10,000 Debtors 8,300Bills Receivable 1,000 33,000 Stock 9,200

To Cash A/c Bills Receivable 990 18,490Creditors 6,400 By Pramod’s Capital A/c Bills Payable 3,600 Building 9,000Realisation Expenses 300 10,300 By Prakash’s Capital A/c Furniture 2,700


9

By Partner’s Capital A/c (Loss on Realisation) Prakash 1,555 Pramod 1,555 3,110

43,300 43,300

Partner’s Capital Account Dr. Cr.

Particulars Prakash `

Pramod `

Particulars Prakash `

Pramod `

To Realisation A/c 2,700 9,000 By Balance b/d 10,000 12,000To Realisation A/c (Loss) 1,555 1,555 By Reserve Fund A/c 2,000 2,000 To Bank A/c 7,745 3,445 12,000 14,000 12,000 14,000




To Balance b/d 3,000 By Realisation A/c 10,300To Realisation A/c 18,490 By Prakash’s Capital A/c 7,745 By Pramod’s Capital A/c 3,445

21,490 21,490 Journal Entries

Date Particulars L.F. Debit `

Credit `

2012 Mar 31 Realisation A/c

To Debtors To Furniture To Stock To Building To Bills Receivable

(Being Sundry Assets Transferred to Realisation)

Dr. 33,000 9,000 3,000

10,000 10,000 1,000

Mar 31 Creditors A/c Bills Payable A/c

To Realisation A/c (Being Sundry Liabilities Transferred to Realisation)

Dr. Dr.

6,400 3,600

10,000

Mar 31 Reserve Fund A/c To Prakash’s Capital A/c To Pramod’s Capital A/c

(Being Reserve Fund Distributed as per profit sharing ratio)

Dr. 4,000 2,000 2,000


(Being Assets realised for Cash)

Dr. 18,490 18,490

Mar 31 Pramod’s Capital A/c Prakash’s Capital A/c

To Realisation A/c (Being Building taken over by Pramod and Furniture taken over by Prakash)

Dr. Dr.

9,000 2,700

11,700


(Being Creditors, Bills Payable and Realisation Expenses Paid)

Dr. 10,300 10,300


10

Mar 31 Prakash’s Capital A/c Pramod’s Capital A/c

To Realisation A/c (Being Loss On Realisation transferred to partners capital A/c)

Dr. Dr.

1,555 1,555

3,110

Mar 31 Prakash’s Capital A/c Pramod’s Capital A/c

To Cash A/c (Being Cash paid to partners on final settlement)

Dr. Dr.

7,745 3,445

11,190




Amount `


Amount `

To Sundry Assets A/c By R.D.D. A/c 800Building 30,000 By Sundry Liabilities A/c Machinery 10,000 Creditors 15,000Furniture 12,000 By Bank A/c Debtors 8,800 Stock 19,000Stock 20,000 Debtors 7,500Investments 4,000 Machinery 11,000Commission Receivable 1,000 85,800 Building 14,000 51,500

To Bank A/c By Shital’s Capital A/c Creditors 15,000 Investments 5,000Dissolution Expenses 2,000 17,000 Furniture 12,000 17,000 By Abhijit’s Loan A/c Settlement of Loan 500

By Partner’s Capital A/c (Loss on Realisation) Abhijit 9,000 Shital 9,000 18,000

1,02,800 1,02,800

Partners Capital Account

Dr. Cr.

Particulars Abhijit `

Shital `

Particulars Abhijit `

Shital `

To Realisation A/c – 17,000 By Balance b/d 40,000 30,000To Realisation A/c (Loss) 9,000 9,000 By Reserve Fund A/c 4,000 4,000 To Bank A/c 35,000 8,000 44,000 34,000 44,000 34,000

Abhijit’s Loan Account

Dr. Cr.



To Bank A/c 1,500 By Balance b/d 2,000To Realisation A/c 500

2,000 2,000


11




To Balance b/d 10,000 By Realisation A/c 17,000To Realisation A/c 51,500 By Abhijit’s Loan A/c 1,500 By Abhijit’s Capital A/c 35,000 By Shital’s Capital A/c 8,000

61,500 61,500 Solution to Practice Q.10.: In the Books of Firm



Amount `


Amount `

To Sundry Assets A/c By R.D.D. A/c 1,000Stock 46,000 By Sundry Liabilities A/c Debtors 20,000 Sundry Creditors 38,000Furniture 14,000 Mrs. Patil’s Loan 10,000 48,000Plant and Machinery 78,000 By Patil’s Capital A/c Investment 10,000 1,68,000 Investments 8,000

To Patil’s Capital A/c By Bank A/c Mrs. Patil’s Loan 10,000 Stock 45,000

To Bank A/c Debtors 18,500Creditors 37,050 Furniture 14,500Dissolution Expense 1,100 38,150 Plant and Machinery 75,000 1,53,000

By Partner’s Capital A/c (Loss on Realisation)

Patil 3,690 Kumbhar 2,460 6,150

2,16,150 2,16,150


Dr. Cr.

Particulars Patil `

Kumbhar`

Particulars Patil `

Kumbhar`

To Profit & Loss A/c 4,500 3,000 By Balance b/d 70,000 48,000To Realisation A/c 8,000 – By Reserve A/c 3,000 2,000To Realisation A/c (Loss) 3,690 2,460 By Realisation A/c 10,000 – To Bank A/c 66,810 44,540 83,000 50,000 83,000 50,000

Kumbhar’s Loan Account

Dr. Cr.




15,000 15,000


12




To Balance b/d 11,500 By Realisation A/c 38,150To Realisation A/c 1,53,000 By Kumbhar’s Loan A/c 15,000 By Patil’s Capital A/c 66,810 By Kumbhar’s Capital A/c 44,540




Amount `


Amount `

To Sundry Assets A/c By Sundry Liabilities A/c Fixed Assets 34,000 Sundry Creditors 12,000Debtors 46,000 Loans 3,000 15,000Stock 15,600 By Manda’s Capital A/c Fixture 2,000 97,600 Fixtures 1,600

To Manda’s Capital A/c Debtors 34,400 36,000Creditors 12,000 By Nanda’s Capital A/c

To Kunda’s Capital A/c Stock 14,000Loan 3,000 Fixed Assets 14,400 28,400Interest 90 3,090 By Kunda’s Capital A/c

To Cash A/c Fixed Assets 16,200Dissolution Expenses 500 By Cash A/c

Debtors 3,000

By Partner’s Capital A/c (Loss on Realisation) Manda 8,754 Nanda 2,918 Kunda 2,918 14,590

1,13,190 1,13,190


Particulars Manda `

Nanda `

Kunda`

Particulars Manda `

Nanda `

Kunda`

To Realisation A/c 36,000 28,400 16,200 By Balance b/d 55,000 20,000 14,000To Realisation A/c (Loss) 8,754 2,918 2,918 By Realisation A/c 12,000 – 3,090 To Cash A/c 22,246 – – By Cash A/c – 11,318 2,028

67,000 31,318 19,118 67,000 31,318 19,118 Cash Account

Dr. Cr.



To Balance b/d 6,400 By Realisation A/c 500To Realisation A/c 3,000 By Manda’s Capital A/c 22,246To Nanda’s Capital A/c 11,318 To Kunda’s Capital A/c 2,028

22,746 22,746


13

Working Note: Calculation of amount of Fixed Assets taken over by Kunda: Book Value of Assets taken over by Nanda Assets taken over by Nanda = ` 14,400 (90% of Book Value) Book Value of Assets taken over by Nanda = ` 14,400 × = ` 16,000 Book Value of Assets taken over by Kunda = 34000 – 16000 = 18000 Assets taken over by Kunda at 90% of the book value = 18000 × 90/100 = 16,200 Solution to Practice Q.12.: In the Books of Firm



Amount `


Amount `

To Sundry Assets A/c By R.D.D. A/c 2,000Building 32,000 By Sundry Liabilities A/c Sundry Debtors 18,000 Bank Loan 10,000Plant & Machinery 12,000 Sundry Creditor 10,000Stock 4,200 Bills Payable 5,000 25,000Furniture 1,800 By Sunita’s Capital A/c Goodwill 10,000 78,000 Building 20,000

To Sunita’s Capital A/c Stock 4,000 24,000Bank Loan 10,000 By Amita’s Capital A/c Interest on Loan 200 10,200 Sundry Debtors 2,000

To Amita’s Capital A/c Plant & Machinery 8,000 10,000Sundry Creditors 10,000 By Madhu’s Capital A/c Bills Payable 5,000 15,000 Furniture 1,500

To Madhu’s Capital A/c Realisation Expenses 1,000 By Partner’s Capital A/c (Loss on Realisation) Sunita 20,850

Amita 12,510 Madhu 8,340 41,700 1,04,200 1,04,200

Partners Capital Account Dr. Cr.

Particulars Sunita `

Amita `

Madhu `

Particulars Sunita `

Amita `

Madhu `

To Realisation A/c 24,000 10,000 1,500 By Balance b/d 20,000 15,000 10,000To Realisation A/c (Loss) 20,850 12,510 8,340 By Reserve Fund A/c 3,000 1,800 1,200 By Realisation A/c 10,200 15,000 − By Realisation A/c − − 1,000To Bank A/c − 9,290 2,360 By Bank A/c 11,650 − − 44,850 31,800 12,200 44,850 31,800 12,200

Sunita’s Loan Account Dr. Cr.

Particulars Amount`

Particulars Amount`


4,000 4,000


14




To Balance b/d 4,000 By Sunita’s Loan A/c 4,000To Sunita’s Capital A/c 11,650 By Amita’s Capital A/c 9,290 By Madhu’s Capital A/c 2,360 15,650 15,650

Solution to Practice Q.13.: In the Books of Firm



Amount `


Amount `

To Sundry Assets A/c By R.D.D. A/c 800Building 40,000 By Sundry Liabilities A/c Machinery 22,000 Creditors 17,000Furniture 15,000 By Cash/Bank A/c Debtors 9,800 Stock 15,000Stock 13,000 Machinery 17,200Investment 25,000 1,24,800 Debtors 8,800

To Commission Receivable A/c 1,000 Building 46,000 87,000To Bank A/c By B’s Capital A/c

Creditors 17,000 Investments 24,000Dissolution Expenses 3,500 20,500 By C’s Capital A/c Furniture 12,000

By Partner’s Capital A/c (Loss on Realisation) A 1,833 B 1,833 C 1,834 5,500

1,46,300 1,46,300


Dr. Cr.

Particulars A `

B `

C `

Particulars A `

B `

C `

To Realisation A/c − 24,000 – By Balance b/d 40,000 30,000 30,000To Realisation A/c − − 12,000 By Reserve Fund A/c 8,000 8,000 8,000To Realisation A/c (Loss) 1,833 1,833 1,834 To Bank A/c 46,167 12,167 24,166

48,000 38,000 38,000 48,000 38,000 38,000

A’s Loan Account Dr. Cr.



To Commission Receivable A/c 10,000 By Balance b/d 10,000

10,000 10,000


15




To Balance b/d 16,000 By Realisation A/c 17,000To Realisation A/c 87,000 By Realisation A/c 3,500 By A’s Capital A/c 46,167 By B’s Capital A/c 12,167 By C’s Capital A/c 24,166

1,03,000 1,03,000


` Credit

`2012

Mar 31 Realisation A/c To Sundry Assets A/c

(Being assets transferred to realisation A/c)

Dr. 1,24,800 1,24,800

Mar 31 R.D.D. A/c To Realisation A/c


Dr. 800 800

Mar 31 Sundry Liabilities A/c To Realisation A/c


Dr. 17,000 17,000

Mar 31 Reserve Fund A/c To A’s Capital A/c To B’s Capital A/c To C’s Capital A/c (Being balance of reserve fund distributed)

Dr. 24,000 8,000 8,000 8,000


(Being building, machinery, debtors and stock realised)

Dr. 87,000 87,000



Dr. 17,000 17,000



Dr. 3,500 3,500

Mar 31 B’s Capital A/c To Realisation A/c

(Being investments taken over)

Dr. 24,000 24,000

Mar 31 C’s Capital A/c To Realisation A/c

(Being furniture taken over)

Dr. 12,000 12,000

Mar 31 A’s Loan A/c Realisation A/c To Commission Receivable A/c (Being settlement of A’s loan by take over of Commission receivable)

Dr. Dr.

10,000 1,000

11,000

Mar 31 A’s Capital A/c B’s Capital A/c C’s Capital A/c


Dr. Dr. Dr.

1,833 1,833 1,834

5,500


16

Mar 31 A’s Capital A/c B’s Capital A/c C’s Capital A/c


Dr. Dr. Dr.

46,167 12,167 24,166

82,500




Amount `


Amount `

To Sundry Assets A/c By Sundry Liability A/c Building 30,000 Bills Payable 4,000Stock 5,000 By Cash A/c Debtors 12,000 Stock 6,000Joint Life Policy 4,000 51,000 Debtors 11,000

To Bank A/c Building 40,000 57,000Bills Payable 4,000 By Mr. R’s Capital A/c Joint Life Policy 4,000

To Partners Capital A/c (Profit on Realisation)

Mr. R 6,667 Mrs. R 3,333 10,000

65,000 65,000


Particulars Mr. R `

Mrs. R `

Particulars Mr. R `

Mrs. R `

To Realisation A/c 4,000 − By Balance b/d 20,000 10,000 By Partners Current A/c 5,000 3,000 By Reserve Fund A/c 8,000 4,000To Cash A/c 35,667 20,333 By Realisation A/c (Profit) 6,667 3,333 39,667 20,333 39,667 20,333




To Balance b/d 3,000 By Realisation A/c 4,000 By Mr. R’s Capital A/c 35,667To Realisation A/c 57,000 By Mrs. R’s Capital A/c 20,333

60,000 60,000 Journal Entries

Date Particulars L.F. Debit `

Credit `

2012 Mar 31 Realisation A/c


Dr. 51,000 51,000



Dr. 4,000 4,000


17

Mar 31 Reserve Fund A/c To Mr. R’s Capital A/c To Mrs. R’s Capital A/c (Being balance of reserve fund distributed)

Dr. 12,000 8,000 4,000

Mar 31 Mr.R’s Current A/c To Mr. R’s Capital A/c

(Being balance of current A/c transferred to capital A/c)

Dr. 5,000 5,000

Mar 31 Mrs.R’s Current A/c To Mrs. R’s Capital A/c

(Being balance of current A/c transferred to capital A/c)

Dr. 3,000 3,000


(Being building, debtors and stock realised)

Dr. 57,000 57,000



Dr. 4,000 4,000

Mar 31 Creditors A/c To Plant & Machinery A/c (Being plant & machinery transferred to creditors in full settlement of their claim)

Dr. 15,000 15,000

Mar 31 Mr. R’s Capital A/c To Realisation A/c

(Being Joint Life Policy taken over)

Dr. 4,000 4,000

Mar 31 Realisation A/c To Mr. R’s Capital A/c To Mrs. R’s Capital A/c (Being profit on realisation transferred to capital A/c)

Dr. 10,000 6,667 3,333

Mar 31 Mr. R’s Capital A/c Mrs. R’s Capital A/c

To Cash A/c (Being cash paid on final settlement)

Dr. Dr.

35,667 20,333

56,000




Amount `


Amount `

To Sundry Assets A/c By R.D.D. A/c 1,000Debtors 16,000 By Sundry Liabilities A/c Stock 20,000 Creditors 20,000Plant & Machinery 30,000 Bills Payable 5,000 25,000Furniture 6,000 72,000 By Bank A/c

To Bank A/c Debtors 9,000Creditors 18,000 Plant & Machinery 26,000Bills Payable 5,000 Stock 14,000Realisation Expenses 3,000 26,000 Furniture 3,000 52,000

By Partner’s Capital A/c

(Loss on Realisation) Rajani 8,000 Rohini 8,000 Rani 4,000 20,000 98,000 98,000


18


Particulars Rajani `

Rohini `

Rani `

Particulars Rajani `

Rohini `

Rani `

To Balance b/d – – 3,000 By Balance b/d 25,000 10,000 –To Realisation A/c (Loss) 8,000 8,000 4,000 By General Reserve A/c 2,400 2,400 1,200To Rani’s Capital A/c 2,000 2,000 – By Bank A/c – – 1,800 By Rajani’s Capital A/c – – 2,000To Bank A/c 17,400 2,400 – By Rohini’s Capital A/c – – 2,000

27,400 12,400 7,000 27,400 12,400 7,000

Rajani’s Loan Account Dr. Cr.



To Bank A/c 16,000 By Balance b/d 16,000 16,000 16,000

Bank Account

Dr. Cr.



To Balance b/d 8,000 By Realisation A/c 26,000To Realisation A/c 52,000 By Rajani’s Capital A/c 16,000 By Rohini’s Capital A/c 2,400To Rani’s Capital A/c 1,800 By Rajani’s Capital A/c 17,400 61,800 61,800

Solution to Practice Q.16.: In the Books of Firm



Amount `


Amount `

To Sundry Assets A/c By Sundry Liabilities A/c Sundry Debtors 7,000 Sundry Creditors 12,000Plant & Machinery 14,000 Bills Payable 8,000 20,000Stock 4,000 By Bank A/c Land & Building 10,000 Debtors 4,000Goodwill A/c 6,000 41,000 Machinery 8,000

To Bank A/c Goodwill 4,800Creditors 10,800 Building 8,000Bills Payable 8,000 18,800 Stock 4,000 28,800

By Partner’s Capital A/c

(Loss on Realisation) Sony 5,500

Mony 3,300 Tony 2,200 11,000

59,800 59,800


19

Partners Capital Account Dr. Cr.

Particulars Sony `

Mony `

Tony `

Particulars Sony `

Mony `

Tony `

To Balance b/d − − 2,000 By Balance b/d 18,000 7,000 −To Realisation A/c (Loss) 5,500 3,300 2,200 By Bank A/c − − 1,000To Tony’s Capital A/c 2,000 1,200 − By Sony’s Capital A/c − − 2,000 By Mony’s Capital A/c − − 1,200To Bank A/c 10,500 2,500 − 18,000 7,000 4,200 18,000 7,000 4,200




To Balance b/d 2,000 By Realisation A/c 18,800To Realisation A/c 28,800 By Sony’s Capital A/c 10,500To Tony’s Capital A/c 1,000 By Mony’s Capital A/c 2,500 31,800 31,800


Dr. Cr.


Amount `


Amount `

To Sundry Assets A/c By Sundry Liabilities A/c Building 1,00,000 Creditors 13,000Machinery 70,000 Bills Payable 9,000 22,000Furniture 20,000 By Bank A/c Stock 12,000 Building 1,20,000Debtors 12,000 Machinery 60,000Bills Receivable 6,000 2,20,000 Debtors 10,000

To Rushi’s Capital A/c Goodwill 2,000 1,92,000Creditors 12,000 By Rushi’s Capital A/c

To Rushabh’s Capital A/c Furniture and Stock 30,000Bills Payable 9,000 By Rushabh’s Capital A/c Dissolution Expenses 1,500 10,500 Bills Receivable 5,000 By Rushabh’s Loan A/c 1,000

To Partner’s Capital A/c (Profit on Realisation)

Rushabh 3,500 Rushi 2,500 Manali 1,500 7,500

2,50,000 2,50,000


Particulars Rushabh `

Rushi `

Manali `

Particulars Rushabh `

Rushi `

Manali`

To Balance b/d − − 10,000 By Balance b/d 90,000 80,000 −To Realisation A/c − 30,000 − By General Reserve A/c 7,000 5,000 3,000To Realisation A/c 5,000 − − By Realisation A/c − 12,000 −To Manali’s Capital A/c 1,604 1,146 − By Realisation A/c 1,500 − −


20

By Realisation A/c (Profit) 3,500 2,500 1,500 By Rushabh’s Loan A/c 26,000 − − By Bank A/c − − 2,750 By Rushabh’s Capital A/c − − 1,604To Bank A/c 1,21,396 68,354 − By Rushi’s Capital A/c − − 1,146

1,28,000 99,500 10,000 1,28,000 99,500 10,000 Rushabh’s Loan Account

Dr. Cr.



To Rushabh’s Capital A/c 26,000 By Balance b/d 27,000To Realisation A/c 1,000

27,000 27,000 Bank Account

Dr. Cr.



To Balance b/d 4,000 By Realisation A/c 9,000To Realisation A/c 1,92,000 By Rushabh’s Capital A/c 1,21,396To Manali’s Capital A/c 2,750 By Rushi’s Capital A/c 68,354




Amount `


Amount `

To Sundry Assets A/c By Sundry Liabilities A/c Machinery 2,000 Creditors 4,000Goodwill 3,000 Overdraft 6,000 10,000Stock & Debtors 19,000 24,000 By Bank A/c

To Bank A/c Stock and Debtors 18,000Contingent Liability 3,000 Machinery 2,000 20,000Creditors 3,600 Overdraft 6,000 12,600 By Partner’s Capital A/c (Loss on Realisation) Vijay 3,520 Vinod 1,760

Vivek 1,320 6,600 36,600 36,600


Particulars Vijay `

Vinod `

Vivek `

Particulars Vijay `

Vinod `

Vivek `

To Balance b/d – – 1,000 By Balance b/d 12,000 9,000 –To Profit & Loss A/c 3,200 1,600 1,200 By Bank A/c – – 880To Realisation A/c (Loss) 3,520 1,760 1,320 By Vijay’s Capital A/c – – 1,760To Vivek’s Capital A/c 1,760 880 – By Vinod’s Capital A/c – – 880 To Bank A/c 3,520 4,760 –

12,000 9,000 3,520 12,000 9,000 3,520


21




To Realisation A/c 20,000 By Realisation A/c 12,600To Vivek’s Capital A/c 880 By Vijay’s Capital A/c 3,520 By Vinod’s Capital A/c 4.760 20,880 20,880


Dr. Cr.


Amount `


Amount `

To Sundry Assets A/c By Sundry Liabilities A/c Building 19,000 Creditors 12,500Machinery 13,500 Bills Payable 7,500 20,000Furniture 3,000 By Bank A/c Stock 20,500 Building 18,000Debtors 10,000 Machinery 12,000Bills Receivable 6,000 72,000 Debtors 5,000

To Kulkarni’s Capital A/c Goodwill 900 35,900Creditors 12,000 By Kulkarni’s Capital A/c

To Solkar’s Capital A/c Furniture & Stock 20,000Bills Payable 7,500 By Solkar’s Capital A/c

To Bank A/c Bills Receivable 5,200Dissolution Expenses 1,600 By Partner’s Capital A/c

(Loss on Realisation) Kulkarni 6,000 Solkar 2,000 Bhave 4,000 12,000 93,100 93,100


Particulars Kulkarni `

Solkar `

Bhave `

Particulars Kulkarni `

Solkar `

Bhave `

To Balance b/d – – 8,500 By Balance b/d 24,000 21,500 – To Profit & Loss A/c 750 250 500 By General Reserve A/c 6,000 2,000 4,000 To Realisation A/c 20,000 5,200 – By Realisation A/c 12,000 7,500 – To Realisation A/c (Loss) 6,000 2,000 4,000 By Kulkarni’s Capital A/c – – 6,750 To Bhave’s Capital A/c 6,750 2,250 – By Solkar’s Capital A/c – – 2,250 To Bank A/c 8,500 21,300 –

42,000 31,000 13,000 42,000 31,000 13,000 Bank Account

Dr. Cr.



To Balance b/d 3,000 By Realisation A/c 1,600To Realisation A/c 35,900 By Kulkarni’s Loan A/c 7,500 By Kulkarni’s Capital A/c 8,500 By Solkar’s Capital A/c 21,300 38,900 38,900


22


Dr. Cr.


Amount `


Amount `

To Sundry Assets A/c By Sundry Liabilities A/c Machinery 22,000 Creditors 29,000Stock 29,400 By Bank A/c Debtors 36,600 88,000 Machinery, Stock and Debtors 65,000

To Investments A/c Settlement of Nayan’s Loan 3,000

To Bank A/c Creditors 28,500 Dissolution Expenses 1,700 30,200 By Partner’s Capital A/c (Loss on Realisation) Nayan 13,600

Prem 9,067 Rupa 4,533 27,200

1,21,200 1,21,200


Dr. Cr.

Particulars Nayan `

Prem `

Rupa `

Particulars Nayan `

Prem `

Rupa `

To Balance b/d − − 3,600 By Balance b/d 70,000 5,000 −To Realisation A/c (Loss) 13,600 9,067 4,533 By Bank A/c − − 3,253To Prem’s Capital A/c 4,067 − − By Nayan’s Capital A/c − 4,067 4,880To Rupa’s Capital A/c 4,880 − − To Bank A/c 47,453 − −

70,000 9,067 8,133 70,000 9,067 8,133

Nayan’s Loan Account Dr. Cr.



To Investments A/c 18,000 By Balance b/d 18,000

18,000 18,000




To Balance b/d 9,400 By Realisation A/c 1,700To Realisation A/c 65,000 By Realisation A/c 28,500To Rupa’s Capital A/c 3,253 By Nayan’s Capital A/c 47,453

77,653 77,653


23


` Credit

`2012

Mar 31 Realisation A/c To Sundry Assets A/c

(Being assets transferred to realisation A/c)

Dr. 88,000 88,000



Dr. 29,000 29,000


(Being machinery, debtors and stock realised)

Dr. 65,000 65,000



Dr. 28,500 28,500



Dr. 1,700 1,700

Mar 31 Nayan’s Loan A/c Realisation A/c To Investments A/c (Being settlement of Nayan’s loan by take over of Investments)

Dr. Dr.

18,000 3,000

21,000

Mar 31 Nayan’s Capital A/c Prem’s Capital A/c Rupa’s Capital A/c


Dr. Dr. Dr.

13,600 9,067 4,533

27,200

Mar 31 Bank A/c To Rupa’s Capital A/c (Being 40% recovered of the amount due from Rupa )

Dr. 3,253 3,253

Mar 31 Nayan’s Capital A/c To Rupa’s Capital A/c (Being deficiency of Rupa transferred to Nayan’s capital A/c)

Dr. 4,880 4,880

Mar 31 Nayan’s Capital A/c To Prem’s Capital A/c (Being deficiency of Prem transferred to Nayan’s capital A/c)

Dr. 4,067 4,067

Mar 31 Nayan’s Capital A/c To Bank A/c

(Being cash paid on final settlement)

Dr. 47,453 47,453




Amount `


Amount `

To Sundry Assets A/c By Sundry Liabilities A/c Building 37,500 Bank Loan 33,000Machinery 7,500 Bank Overdraft 6,000 39,000Furniture 9,000 By Cash A/c Stock 5,550 Furniture 3,000Debtors 22,500 82,050 Debtors 10,000


24

To Cash A/c Stock 3,500Bank Loan 33,000 Building 33,000Bank Overdraft 6,000 39,000 Machinery 7,000 56,500 By Partner’s Capital A/c (Loss on Realisation)

D 12,775 C 12,775 25,550

1,21,050 1,21,050Partner’s Capital Account

Dr. Cr.

Particulars D `

C `

Particulars D `

C `

To Realisation A/c (Loss) 12,775 12,775 By Balance b/d 12,000 9,000 By Bank A/c − 1,133 By Deficiency A/c 775 2,642

12,775 12,775 12,775 12,775




To Balance b/d 750 By Realisation A/c 39,000To Realisation A/c 56,500 By Creditors A/c 14,537To C’s Capital A/c 1,133 By Bills Payable A/c 4,846

58,383 58,383

Creditors Account Dr. Cr.



To Cash A/c 14,537 By Balance b/d 17,100 To Deficiency A/c 2,563

17,100 17,100

Bills Payable Account Dr. Cr.



To Cash A/c 4,846 By Balance b/d 5,700 To Deficiency A/c 854

5,700 5,700

Deficiency Account Dr. Cr.



To D’s Capital A/c 775 By Creditors A/c 2,563To C’s Capital A/c 2,642 By Bills Payable A/c 854

3,417 3,417

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