OMTEX AD 2

Dissolution of Partnership Firm: Umesh and Prakash Problem & Solution | HSC Accounts

Dissolution of Partnership Firm: Umesh and Prakash Problem & Solution

Problem Statement

Umesh and Prakash were partners sharing profit and losses in the proportion of 3/5 and 2/5 respectively. They dissolved their partnership firm on 31st March, 2013, when their financial position was us under: [10]

Balance sheet as on 31st March, 2012

Liabilities Amount Assets Amount
Sundry Creditors 7500 Cash at Bank 1500
Umesh’s Wife’s Loan 15000 Debtors    33750
Capital Accounts: Less: R.D.D. - 3750 30000
Umesh 69000 Stock 67500
Prakash 45000 Machinery 22500
Furniture 15000
Total 136500 Total 136500

Adjustments

(1) The assets realised as under. Goodwill Rs. 7500; Stock Rs. 60000; Debtors Rs. 27000
(2) Machinery was taken over by Prakash at Rs. 20,000 and furniture by Umesh at book value.
(3) Umesh agreed to discharge his wife’s loan.
(4) The creditors were paid at a rebate of Rs. 1500.
(5) The expenses of dissolution amounted to Rs. 3000

Solution: Journal Entries in the books of the firm.

Date Particulars L.F. Debit (Rs.) Credit (Rs.)
31.3.13 Realisation A/c ... Dr. 138750
To Debtor’s A/c 33750
To Stock A/c 67500
To Machinery A/c 22500
To Furniture A/c 15000
[Being various assets transferred to Realisation A/c at their book value]
31.3.13 Sundry Creditors A/c .... Dr. 7500
Umesh’s wife’s Loan A/c ... Dr. 15000
R.D.D. A/c ... Dr. 3750
To Realisation A/c 26250
[Being various liabilities and R.D.D. transferred to Realisation A/c at their book value]
31.3.13 Bank A/c .... Dr. 94500
To Realisation A/c 94500
[Being assets realised]
31.3.13 Prakash’s A/c ... Dr. 20000
To Realisation A/c 20000
[Being Machinery taken over]
31.3.13 Umesh Capital A/c ... Dr. 15000
To Realisation A/c 15000
[Being furniture taken over]
31.3.13 Realisation A/c ... Dr. 3000
To Bank A/c 3000
[Being dissolution expenses paid]
31.3.13 Realisation A/c ... Dr. 15000
To Umesh’s Capital A/c 15000
[Being wife’s loan taken over]
31.3.13 Realisation A/c .... Dr. 6000
To Bank A/c 6000
[Being creditors paid off]
31.3.13 Umesh Capital A/c ...Dr. 4200
Prakash’s Capital A/c ... Dr. 2800
To Realisation A/c 7000
[Being loss on realisation distributed]
31.3.13 Umesh’s Capital A/c ...Dr. 64800
Prakash Capital A/c ...Dr. 22200
To Bank A/c 87000

Previous Years' Accounts Papers

Labels: , , , , , ,