Following is the Balance Sheet as on 31st March, 2019 of a firm having Three equal partners Priti, Priya and Prachi. - Book Keeping and Accountancy

[6] Dissolution of Partnership Firm - Practical problem - (Balbharati Book Keeping and Accountancy 12th Board Exam)

Practical problem | Q 11 | Page 249

Following is the Balance Sheet as on 31st March 2019 of a firm having Three equal partners Priti, Priya, and Prachi.

Balance Sheets as on 31st March 2019

Liabilities

Amount ₹

Assets

Amount ₹

Capital


Machinery

23,000

Priti

40,000

Furniture

16,000

Priya

35,000

Stock

47,000

Prachi

25,000

Cash at Bank

10,000

Trade Creditors

50,000

Profit and Loss Account

84,000

Loan (secured by Machinery)

30,000




1,80,000


1,80,000

The firm was dissolved due to insolvency of all the partners. Machinery was sold for  18,000, while Furniture fetched  14,000, Stock realised  35,000. Realisation expenses amounted to  2,000. Nothing could be recovered from Priya and Prachi, but  3,400 could be collected from Priti’s private estate.

Close the books of accounts of the firm.

SOLUTION: In the books of Priti, Priya and Prachi 

Realisation Account

Particulars

Amount (₹)

Amount (₹)

Particulars

Amount (₹)

Amount (₹)

To Sundry Assets A/c



By Bank A/c



Machinery

23,000


Machinery

18,000


Furniture

16,000


Furniture

14,000


Stock

47,000

86,000

Stock

35,000

67,000

To Bank A/c (realisation Expense)


2,000

By Partners’ Capital A/c (Loss on realisation transferred






Priti

7,000





Priya

7,000





Prachi

7,000

21,000



88,000



88,000

 

Partners’ Capital Accounts

Particulars

Priti (₹)

Priya (₹)

Prachi (₹)

Particulars

Priti (₹)

Priya (₹)

Prachi (₹)

To Profit and Loss A/c

28,000

28,000

28,000

By Balance b/d

40,000

35,000

25,000

To realisation A/c – Loss

7,000

7,000

7,000

By Bank A/c (Asset)

3,400



To Deficiency A/c

8,400



By Deficiency A/c



10,000


43,400

35,000

35,000


43,400

35,000

35,000

 

Trade Creditors A/c

Particulars

Amount (₹)

Particulars

Amount (₹)

To Deficiency A/c

1,290

By Balance b/d

50,000

To Bank A/c

48,710




50,000


50,000

 

Loan A/c

Particulars

Amount (₹)

Particulars

Amount (₹)

To Deficiency A/c

310

By Balance b/d

30,000

To Bank A/c

29,690




30,000


30,000

 

Deficiency Account

Particulars

Amount (₹)

Particulars

Amount (₹)

To Prachi’s Capital A/c

10,000

By Priti’s Capital A/c

8400



By Trade Creditors A/c

1,290



By Loan A/c

310


10,000


10,000

 

Bank Account

Particulars

Amount (₹)

Particulars

Amount (₹)

To Balance b/d

10,000

By Sundry Creditors A/c

48,710

To Priti’s Capital A/c

3,400

By realisation Expense A/c

2,000

To realisation A/c (Assets)

67,000

By Loan A/c

29,690


80,400


80,400

Working Notes :

1) Amount paid to loan from sale of machinery =  18,000

Balance of Loan = 30,000 – 18,000 =  12,000

(2) ratio of Trade creditors and Loan = 50,000 : 12,000 = 50 : 12 i.e. 25 : 6

(3) Balance of cash available = 10,000 + 67,000 + 3,400 – 18,000 – 2,000

= 80,400 – 20,000 =  60,400

Amount paid towards loan = (6/31) × 60400 =  11690.

Amount paid to Trade Creditors = (25/31) × 60400 =  48710

Amount paid towards loan = 18000 + 11690 =  29690.