OMTEX CLASSES: Umesh and Prakash were partners sharing profit and losses in the proportion of 3/5 and 2/5 respectively

Umesh and Prakash were partners sharing profit and losses in the proportion of 3/5 and 2/5 respectively

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





136500

136500

(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