T.S. Grewal Class 12 Chapter 7 Q.45 - Dissolution of a Partnership Firm

Question 45

The partnership between A and B was dissolved on 31st March, 2025. On that date the respective credits to the capitals were A ₹1,70,000 and B ₹30,000. ₹20,000 were owed by B to the firm; ₹1,00,000 were owed by the firm to A; and ₹2,00,000 were due to Trade Creditors. Profits and losses were shared in the proportion of 2/3 to A and 1/3 to B. The assets, represented by the above net liabilities, realised ₹4,50,000, exclusive of the ₹20,000 owed by B. The liabilities were settled at book figures. Prepare the Realisation Account, Partners’ Capital Accounts and Cash Account showing the distribution to the partners.

Solution

Memorandum Balance Sheet: Capitals (A 1,70,000 + B 30,000 = 2,00,000) + A’s Loan (1,00,000) + Trade Creditors (2,00,000) = ₹5,00,000, less the amount receivable from B (₹20,000) = Sundry Assets ₹4,80,000 (balancing figure).

REALISATION ACCOUNT

Particulars	₹	Particulars	₹
To Sundry Assets A/c	4,80,000	By Trade Creditors A/c	2,00,000
To B’s Loan A/c (amount receivable from B)	20,000	By Cash A/c (Assets realised)	4,50,000
To Cash A/c (Creditors)	2,00,000	By B’s Capital A/c (B’s debt recovered)	20,000
		By Loss transferred to:
		A’s Capital A/c 20,000
		B’s Capital A/c 10,000	30,000
Total	7,00,000	Total	7,00,000

PARTNERS’ CAPITAL ACCOUNTS

Particulars	A	B	Particulars	A	B
To Realisation A/c (B’s debt)	–	20,000	By Balance b/d	1,70,000	30,000
To Realisation A/c (Loss)	20,000	10,000
To Cash A/c	1,50,000	–
Total	1,70,000	30,000	Total	1,70,000	30,000

CASH ACCOUNT

Particulars	₹	Particulars	₹
To Realisation A/c (Assets)	4,50,000	By Realisation A/c (Creditors)	2,00,000
		By A’s Capital A/c	1,50,000
		By A’s Loan A/c	1,00,000
Total	4,50,000	Total	4,50,000