Devendra and Ganesh were partners sharing profits and losses in the ratio of 3:2. They dissolved the partnership firm on 31st March, 2013 when their position was as follows.:



Balance Sheet as on 31. 03. 2013

Liabilities
Rs.
Rs.
Assets
Rs.
Rs.
Sundry Creditors
12,500
Debtors
56250
Bank overdraft
10,000
(-) R.D.D.
( - ) 6250
50,000
Reserve Fund

15,000
Stock

1,12,500
Capital Accounts


Furniture

25,000
Devendra
1,15,000

Motor Car

37,500
Ganesh
75000
190000
Cash in hand

2500


227500


227500

The assets realised as follows:
(1) Debtors Rs. 45,000, stock Rs. 1,00,000 and goodwill Rs. 12,500
(2) Motor car was taken over by Devendra for Rs. 35,000 and furniture by Ganesh for Rs. 30,000.
(3) The creditors were paid Rs. 11,250 in full settlement.
(4) The realisation expenses were Rs. 5,000.
Pass necessary journal entries in the books of the firm.


Solution:

Date

Particulars

LF

Debit

Credit

1.
Reserve Fund A/c ……… Dr.

15,000


To Devendra's Capital A/c


9000

To Ganesh's Capital A/c


6000

[Being the Reserve fund Transferred to Partners' capital account at the time of Realisation]








2.
Realisation A/c …………Dr.

231250


To Debtors


56250

To Stock


112500

To Furniture


25000

Motor car


37500

[Being the Sundry Assets Transferred to Realisation A/c at book value]








3.
Sundry Creditors A/c .... Dr.

12500


To Realisation A/c


12500

[Being the Sundry Liabilities transferred to Realisation A/c]








4.
Cash A/c ……… Dr.

157500


To Realisation A/c  [W.N. 1]


1,57,500

[Being the Sundry Assets Realised]








5.
Devendra's A/c ………… Dr.

35000


Ganesh's A/c …………… Dr.

30,000


To Realisation A/c


65,000

[Being Motor car and Furniture were taken over by former and later respectively]








6.
Realisation A/c ………… Dr.

11,250


To Cash A/c


11250

[Being the Creditors were paid at a discount on Realisation]








7.
Realisation A/c ………… Dr.

5000


To Cash A/c


5000

[Being the realisation expenses incurred and paid]








8.
Bank Overdraft A/c ………… Dr.

10000


To Cash A/c


10000





9.
Devendra's Capital A/c .... Dr.

3750


Ganesh's capital A/c .... Dr.

2500


To Realisation A/c


6250

[Being loss made on Realisation A/c Transferred to Partners Capital A/c]








10.
Devendra's capital A/c ……… Dr

85250


Ganesh's Capital A/c ………… Dr.

48500


To Cash A/c


133750

[Being the final settlement is made between the partners on Realisation]




W.N. 1. Realisation A/c
Particulars
Rs.
Rs.
Particulars
Rs.
Rs.
To Sundry Assets A/c


By Sundry Liabilities A/c


Debtors
56250

Sundry Creditors

12,500
Stock
112500




Furniture
25000

By R.D.D.

6250
Motor Car
37500
231250









To Cash A/c

11,250
By Cash A/c


[Creditors were paid]


Debtors
45000




Stock
100000

To Cash A/c

5000
Goodwill
12500
157500
[Realisation expenses paid]








By Devendra's Capital  A/c
[Motor Car Taken Over]

35000









By Ganesh 's Capital  A/c
[Furniture Taken Over]

30,000









By Loss On Realisation A/c [3:2]





Devendra
3750




Ganesh
2500
6250


247500


247500

W.N. 2. Partners Capital A/c
Particulars
Devendra
Ganesh
Particulars
Devendra
Ganesh
To Realisation A/c
35000
30000
By Balance B/d
115000
75000
To Realisation A/c [3:2]
[Loss on Realisation]
3750
2500
By Reserve Fund
[3:2]
9000
6000






To Cash A/c
[Balancing Fig.]
85250
48500




124000
81000

124000
81000
W.N. 3. Cash A/c
Particulars
Rs.
Rs.
Particulars
Rs.
Rs.
To balance B/d

2500
By Realisation A/c

11250
To Realisation A/c

157500
By Realisation A/c

5000



By Devendra's Capital A/c

85250



By Ganesh's Capital A/c

48500



By Bank's Over Draft A/c

10,000








160000


160000

W.N. 4. Bank Overdraft A/c

Particulars
Rs.
Rs.
Particulars
Rs.
Rs.
To Cash A/c

10,000
By Balance B/d

10,000








10000


10000