T.S. Grewal Class 12 Chapter 7 Q.43 - Dissolution of a Partnership Firm

Question 43

A, B and C started business on 1st April, 2024 with capitals of ₹1,00,000, ₹80,000 and ₹60,000 respectively, sharing profits (losses) in the ratio of 4 : 3 : 3. For the year ended 31st March, 2025, the firm suffered a loss of ₹50,000. Each partner withdrew ₹10,000 during the year. On 31st March, 2025, the firm was dissolved; Creditors stood at ₹24,000, and Cash in Hand was ₹4,000. The assets realised ₹3,00,000, and Creditors were paid ₹23,500 in full settlement of their claims. Prepare the Realisation Account, and show your workings clearly.

Solution

REALISATION ACCOUNT

Particulars	₹	Particulars	₹
To Sundry Assets A/c	1,80,000	By Sundry Creditors A/c	24,000
To Cash A/c (Creditors)	23,500	By Cash A/c (Assets)	3,00,000
To Profit transferred to:
A’s Capital A/c 48,200
B’s Capital A/c 36,150
C’s Capital A/c 36,150	1,20,500
Total	3,24,000	Total	3,24,000

PARTNERS’ CAPITAL ACCOUNTS

Particulars	A	B	C	Particulars	A	B	C
To Cash A/c	1,18,200	91,150	71,150	By Balance b/d	70,000	55,000	35,000
				By Realisation A/c (Profit)	48,200	36,150	36,150
Total	1,18,200	91,150	71,150	Total	1,18,200	91,150	71,150

CASH ACCOUNT

Particulars	₹	Particulars	₹
To Balance b/d	4,000	By Realisation A/c	23,500
To Realisation A/c	3,00,000	By A’s Capital A/c	1,18,200
		By B’s Capital A/c	91,150
		By C’s Capital A/c	71,150
Total	3,04,000	Total	3,04,000

Working Notes: Capital as at 1st April, 2024, after deducting drawings (₹10,000 each) and share of loss (4 : 3 : 3, i.e. ₹20,000/₹15,000/₹15,000): A ₹70,000; B ₹55,000; C ₹35,000. Memorandum Balance Sheet: Capitals (1,60,000) + Creditors (24,000) = ₹1,84,000, less Cash in Hand ₹4,000 = Sundry Assets ₹1,80,000 (balancing figure).