[6] Dissolution of Partnership Firm - Practical problem - (Balbharati Book Keeping and Accountancy 12th Board Exam)
Practical problem | Q 9 | Page 248
Following is the Balance Sheet of Vaibhav, Sanjay, and Santosh.
Balance Sheets as on 31st March 2019
Liabilities | Amount ₹ | Assets | Amount ₹ |
Captital Accounts : | Machinery | 6,000 | |
Vaibhav | 36,000 | Goodwill | 9,000 |
Sanjay | 27,000 | Stock and Debtors | 57,000 |
Creditors | 12,000 | Profit and Loss Account | 18,000 |
Bank Overdraft | 18,000 | Santosh’s Capital | 3,000 |
93,000 | 93,000 |
Santosh is declared insolvent so firm is dissolved and assets realised as follows:
1. Stock and Debtors ₹ 54,000, Goodwill - NIL, Machinery at Book value.
2. Creditors allowed discount at 10%.
3. Santosh could pay only 25 paise in rupee of the balance due.
4. Profit-sharing ratio was 8:4:3.
5. A contingent liability against the firm ₹ 9,000 is cleared.
Give Ledger Account to close the books of the firm.
SOLUTION: In the books of Vaibhav, Sanjay and Santosh
Realisation Account
Particulars | Amount (₹) | Amount (₹) | Particulars | Amount (₹) | Amount (₹) |
To Sundry Assets A/c | By Sundry Liabilities A/c – Creditors | 12,000 | |||
Machinery | 6,000 | By Bank A/c | |||
Goodwill | 9,000 | Stock and Debtors | 54,000 | ||
Stock and Debtors | 57,000 | 72,000 | Machinery | 6,000 | 60,000 |
To Bank A/c | By Partners’ Capital A/c (Loss on realisation transferred | ||||
Creditors | 10,800 | Vaibhav | 10,560 | ||
Contingent Liability | 9,000 | 19,800 | Sanjay | 5,280 | |
Santosh | 3,960 | 19,800 | |||
91,800 | 91,800 |
Partners’ Capital Accounts
Particulars | Vaibhav (₹) | Sanjay (₹) | Santosh (₹) | Particulars | Vaibhav (₹) | Sanjay (₹) | Santosh (₹) |
To Balance c/d | 3,000 | By Balance b/d | 36,000 | 27,000 | |||
To Profit and Loss A/c | 9,600 | 4,800 | 3,600 | By Bank A/c (25 % of due amount) | 2,640 | ||
To Realisation A/c – Loss | 10,560 | 5,280 | 3,960 | By Vaibhav’s Capital A/c | 5,280 | ||
To Santosh’s Capital A/c | 5,280 | 2,640 | By Sanjay’s Capital A/c | 2,640 | |||
To Bank A/c | 10,560 | 14,280 | |||||
36,000 | 27,000 | 10,560 | 36,000 | 27,000 | 10,560 |
Bank Account
Particulars | Amount (₹) | Particulars | Amount (₹) |
To Realisation A/c – Assets | 60,000 | By Balance b/d (overdraft) | 18,000 |
To Santosh’s Capital A/c (25 % of amount due received from him) | 2,640 | By Realisation A/c – Liabilities | 19,800 |
By Vaibhav’s Capital A/c | 10,560 | ||
By Sanjay’s Capital A/c | 14,280 | ||
62,640 | 62,640 |
Working Notes :
(1) Contingent liability paid, so realisation A/c is debited and Bank A/c is credited.
(2) Santosh could pay only 25 paise in a rupee of the balance due i.e. Balance due from Santosh (Debit side of Partners Capital A/c) = ₹ 10,560 25 % of ₹ 10,560 = ₹ 2,640 (Amount recorded on debit side of Bank A/c) Capital deficiency of Santosh = 10,560 – 2,640 = ₹ 7,920
₹ 7,920 to be distributed among continuing partner in their profit-loss ratio = 8 : 4 i.e. 2 : 1.
7920 × (2/3) = ₹ 5280
7920 × (1/3) = ₹ 2640
