Question 25 Chapter 7 of +2-A
25. P, Q and R were partners in firm sharing profits and losses in the ratio of 5 : 3: 2. They agreed to dissolve their partnership firm on 31st March 2018. P was deputed to realise the assets and pay the liabilities. He as paid 1,000 as commission for his services. The financial position of the firm was:
| Liabilities | Amount | Assets | Amount | ||
| Creditors | 10,000 | Stock | 5,500 | ||
| Bills Payable | 3,700 | Investments | 15,000 | ||
| Investments Fluctuation Reserve | 4,500 | Debtors | 7,100 | ||
| Less: Provision for Doubtful Debtors | 450 | 6,650 | |||
| Capital A/cs: | Cash | 5,600 | |||
| P | 37,550 | R’s Capital A/c | 8,000 | ||
| Q | 15,000 | 52,550 | Plant and Machinery | 30,000 | |
| 70,750 | 70,750 |
P took over Investments for 12,500. Stock and Debtors realized 11,500. Plant and Machinery were sold to Q for 22,500 for cash. Unrecorded assets realized 1,500. Realization expenses paid amounted to 900. Prepare necessary Ledger Accounts to close the books of the firm.
The solution of Question 25 Chapter 7 of +2-A: –
| Realization Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Plant and Machinery | 30,000 | Creditors | 10,000 | ||
| Stock | 5,500 | Bills Payable | 3,700 | ||
| Investments | 15,000 | Investments Fluctuation Reserve | 4,500 | ||
| Debtors | 7,100 | Provision for Doubtful Debts | 450 | ||
| Cash A/c: | P’s Capital A/c Investments | 12,500 | |||
| Creditors | 10,000 | Cash A/c: | |||
| Bills Payable | 3,700 | Stock and Debtors | 11,500 | ||
| Expenses | 900 | 14,600 | Plant and Machinery | 22,500 | |
| P’s Capital A/c | 1,000 | Unrecorded Assets | 1,500 | 35,500 | |
| Realization Loss | |||||
| P’s Capital A/c | 3,275 | ||||
| Q’s Capital A/c | 1,965 | ||||
| R’s Capital A/c | 1,310 | 6,550 | |||
| 73,200 | 73,200 | ||||
| Partners’ Capital Account | |||||||
| Part. | P | Q | R |
Part. |
P | Q | R |
| To Balance B/d | 8,000 | By Balance B/d | 37,550 | 15,000 | – | ||
| To Realization loss A/c | 3,275 | 1,965 | 1,310 | By Realization A/c | 1,000 | – | – |
| To Realization A/c | |||||||
| To Cash A/c | 22,775 | 13,035 | To Cash A/c | 9,310 | |||
| 38,500 | 15,000 | 9,310 | 38,500 | 13,000 | 9,310 | ||
| Bank Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Balance b/d | 5,600 | Realization A/c | 14,600 | ||
| Realization A/c | 35,500 | P’s Capital A/c | 22,775 | ||
| R’s Capital A/c | 9,310 | Q’s Capital A/c | 13,035 | ||
| 50,410 | 50,410 | ||||
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T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
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