T.S. Grewal Class 12 Chapter 7 Q.47 - Dissolution of a Partnership Firm

Question 47

P, Q and R are partners sharing profits and losses in the ratio of 3 : 3 : 2. Their capitals are in their profit-sharing proportions. On 1st April, 2024, the total capital of the firm and the balance of General Reserve are ₹80,000 and ₹20,000 respectively. During 2024-25, the firm made a profit of ₹28,000 before charging interest on capital @ 5%. Drawings: P ₹8,000; Q ₹7,000; R ₹5,000. On 31st March, 2025, liabilities were ₹18,000, and they decided to dissolve the firm. Assets realised ₹1,08,600, and realisation expenses amounted to ₹1,800. Prepare the necessary Ledger Accounts to close the books of the firm.

Solution

REALISATION ACCOUNT

Particulars	₹	Particulars	₹
To Sundry Assets A/c	1,26,000	By Creditors A/c	18,000
To Cash A/c:		By Cash A/c (Assets realised)	1,08,600
Creditors 18,000		By Loss transferred to:
Expenses 1,800	19,800	P’s Capital A/c 7,200
		Q’s Capital A/c 7,200
		R’s Capital A/c 4,800	19,200
Total	1,45,800	Total	1,45,800

PARTNERS’ CAPITAL ACCOUNTS

Particulars	P	Q	R	Particulars	P	Q	R
To Drawings A/c	8,000	7,000	5,000	By Balance b/d	30,000	30,000	20,000
To Realisation A/c (Loss)	7,200	7,200	4,800	By Interest on Capital A/c	1,500	1,500	1,000
To Cash A/c	32,800	33,800	22,200	By Profit & Loss Appropriation A/c	9,000	9,000	6,000
				By General Reserve A/c	7,500	7,500	5,000
Total	48,000	48,000	32,000	Total	48,000	48,000	32,000

CASH ACCOUNT

Particulars	₹	Particulars	₹
To Realisation A/c	1,08,600	By Realisation A/c	19,800
		By P’s Capital A/c	32,800
		By Q’s Capital A/c	33,800
		By R’s Capital A/c	22,200
Total	1,08,600	Total	1,08,600

Working Notes: Capitals (in ratio 3 : 3 : 2 of ₹80,000): P ₹30,000; Q ₹30,000; R ₹20,000. Interest on Capital @5%: P ₹1,500; Q ₹1,500; R ₹1,000 (total ₹4,000). Profit after interest = 28,000 – 4,000 = ₹24,000, distributed 3 : 3 : 2: P ₹9,000; Q ₹9,000; R ₹6,000. General Reserve ₹20,000 distributed 3 : 3 : 2: ₹7,500; ₹7,500; ₹5,000. Memorandum Balance Sheet at 31st March, 2025: Capitals after drawings (P 22,000 + Q 23,000 + R 15,000 = 60,000) + General Reserve (20,000) + Profit and Loss A/c (28,000) + Creditors (18,000) = ₹1,26,000 = Sundry Assets (balancing figure).