T.S. Grewal Class 12 Chapter 7 Q.41 - Dissolution of a Partnership Firm

Question 41

A and B were partners sharing profits and losses as 7/11th to A and 4/11th to B. They dissolved the partnership on 30th May, 2024. On that date their capitals were: A ₹7,000 and B ₹4,000. Loan Accounts also showed ₹4,500 due to A and ₹750 due to B. Other liabilities amounted to ₹5,000. The assets, which had been undervalued in the last Balance Sheet, actually realised ₹24,000. Prepare the necessary accounts showing the final settlement between the partners.

Solution

Memorandum Balance Sheet: Capitals (7,000 + 4,000) + A’s Loan (4,500) + B’s Loan (750) + Other Liabilities (5,000) = ₹21,250 = Sundry Assets (balancing figure).

REALISATION ACCOUNT

Particulars	₹	Particulars	₹
To Sundry Assets A/c	21,250	By Other Liabilities A/c	5,000
To Cash A/c (Liabilities)	5,000	By Cash A/c (Assets realised)	24,000
To Profit transferred to:
A’s Capital A/c 1,750
B’s Capital A/c 1,000	2,750
Total	29,000	Total	29,000

PARTNERS’ CAPITAL ACCOUNTS

Particulars	A	B	Particulars	A	B
To Cash A/c	8,750	5,000	By Balance b/d	7,000	4,000
			By Realisation A/c (Profit)	1,750	1,000
Total	8,750	5,000	Total	8,750	5,000

PARTNERS’ LOAN ACCOUNTS

Particulars	A	B	Particulars	A	B
To Cash A/c	4,500	750	By Balance b/d	4,500	750

CASH ACCOUNT

Particulars	₹	Particulars	₹
To Realisation A/c (Assets)	24,000	By A’s Capital A/c	8,750
		By B’s Capital A/c	5,000
		By A’s Loan A/c	4,500
		By B’s Loan A/c	750
		By Realisation A/c (Other Liabilities)	5,000
Total	24,000	Total	24,000