Q5. A, B, and C were partners sharing profits and losses in the proportion of 2:2:1.

Q5. A, B, and C were partners sharing profits and losses in the proportion of 2:2:1. Following is their balance sheet as on 31st March, 2013.  [10]

Balance sheet as on 31st March, 2013



Liabilities
Amount
(Rs. )
Assets
Amount
(Rs.)
Amount
(Rs.)
Capital Account

Machinery

25000
A
30000
Stock

10000
B
10000
Debtors
      27500

C
10000
Less: R.D.D.
  • 1500
26000
General Reserve
3000
Investment

12000
Creditors
20000
Profit and Loss A/c

9000
A’s Loan Account
4000
Bank

2000
Bills Payable
7000




84000


84000

On the above date, the partners decided to dissolve the firm.

(1)  Assets were realised as -
Machinery Rs. 22,500, Stock Rs. 9,000, Investment Rs. 10,500, Debtors Rs. 22,500

(2) Dissolution expenses were Rs. 1,500.

(3) Goodwill of the firm realised Rs. 12,000

Pass the necessary journal entries int he books of the firm.

Answers: Journal Entries in the books of the firm.

Date
Particulars
L.F.
Debit
Rs.
Credit
Rs.
(1)
Realisation A/c ......... Dr.

74500


To Machinery A/c


25000

To Stock A/c


10000

To Debtors A/c


27500

To Investment A/c


12000

[Being assets transferred to Realisation A/c]








(2)
Creditors A/c ....... Dr.

20000


Bills Payable A/c ..... Dr.

7000


To Realisation A/c


27000

[Being outside liabilities transferred to Realisation A/c Credit side]








(3)
R.D.D. A/c ...... Dr.

1500


To Realisation A/c


1500

[Being R.D.D. transferred to Realisation A/c]








(4)
General Reserve A/c .... Dr.

3000


To A’s Capital A/c


1200

To B’s Capital A/c


1200

To C’s Capital A/c


600

[Being General Reserve Transferred to Partners’ capital Account]








(5)
A’s Capital A/c ...... Dr.

3600


B’s Capital A/c ....... Dr.

3600


C’s Capital A/c ....... Dr.

1800


To Profit and Loss A/c


9000

[Being accumulated loss distrubuted]








(6)
Bank A/c .... Dr.

76500


To Realisation A/c


76500

[Being Sundry Assets Realised]








(7)
Realisation A/c ...... Dr.

28500


To Bank A/c


28500

[Being liabilities and dissolution expenses paid]








(8)
A’s Loan A/c .... Dr.

4000


To Bank A/c


4000

[Being A’s Loan is paid]








(9)
Realisation A/c ..... Dr.

2000


To A’s Capital A/c


800

To B’s Capital A/c


800

To C’s Capital A/c


400

[Being Profit made on Realisation]








(10)
A’s Capital A/c ..... Dr.

28400


B’s Capital A/c .... Dr.

8400


C’s Capital A.c .... Dr.

9200


To Bank A/c


46000

[Being the final settlement is made]