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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
C, D and E were partners in a firm sharing profits in the ratio of 3 : 1 : 1. Their Balance Sheet as at 31st March, 2022 showed Capitals – C ₹4,00,000, D ₹2,00,000, E ₹1,00,000; C’s Loan ₹1,20,000, Sundry Creditors ₹1,00,000, Bills Payable ₹2,00,000; Machinery ₹3,20,000, Investments ₹3,00,000, Stock ₹2,00,000, Debtors ₹1,00,000, Cash at Bank ₹2,00,000. On the above date, the firm was dissolved due to disagreement among the partners: (i) Machinery of ₹1,00,000 was given to creditors in full settlement of their account, and the remaining machinery was sold for ₹10,000. (ii) Investments realised ₹2,90,000. (iii) Stock was sold for ₹1,80,000. (iv) Debtors of ₹20,000 proved bad. (v) Realisation expenses amounted to ₹10,000. Prepare the Realisation Account. (CBSE 2023)
REALISATION ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Machinery A/c | 3,20,000 | By Sundry Creditors A/c | 1,00,000 |
| To Investments A/c | 3,00,000 | By Bills Payable A/c | 2,00,000 |
| To Stock A/c | 2,00,000 | By Bank A/c: | |
| To Debtors A/c | 1,00,000 | Machinery 10,000 | |
| To Bank A/c (Bills Payable) | 2,00,000 | Investments 2,90,000 | |
| To Bank A/c (Expenses) | 10,000 | Stock 1,80,000 | |
| Debtors 80,000 | 5,60,000 | ||
| By Loss transferred to: | |||
| C’s Capital A/c 1,62,000 | |||
| D’s Capital A/c 54,000 | |||
| E’s Capital A/c 54,000 | 2,70,000 | ||
| Total | 11,30,000 | Total | 11,30,000 |
Note: Machinery worth ₹1,00,000 (matching the Creditors’ claim exactly, for their “full settlement”) was given to Creditors; the remaining Machinery (book value ₹2,20,000) was sold for only ₹10,000, which, together with similar shortfalls on Investments, Stock and Debtors, produces the overall loss of ₹2,70,000, shared in the profit-sharing ratio 3 : 1 : 1. C’s Loan of ₹1,20,000, being a partner’s loan, is settled separately and does not pass through the Realisation Account.
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 7 Q.19 - Dissolution of a Partnership Firm", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 7 - Dissolution of a Partnership Firm.
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