Question 28 Chapter 7 of +2-A
28. A, B and C are in partnership sharing profits and losses in the proportions of 1/2, 1/3 and 1/6 respectively. On 31st March 2018, they decided to dissolve the partnership and the position of the firm on this date is represented by the following Balance Sheet :
| Liabilities | Amount | Assets | Amount | |
| Creditors | 40,000 | Cash at Bank | 3,000 | |
| Loan A/c: A | 10,000 | Stock | 50,000 | |
| Workmen Compensation Reserve | 21,000 | Land and Building | 57,000 | |
| Capital A/cs: | Profit and Loss A/c | 6,000 | ||
| A | 60,000 | Advertisement Suspense A/c | 6,000 | |
| B | 40,000 | |||
| C | 10,000 | 1,10,000 | ||
| 1,81,000 | 1,81,000 |
During the course of realisation, liability under a suit for damages is settled at 20,000 as against 5,000 only provided for in the books of the firm. Land and Building were sold for 40,000 and the Stock and Sundry Debtors realised 30,000 and 42,000 respectively. The expenses of realisation amounted to 1,200. There was a car in the firm, which was completely written off from the books. Ir was taken over by A for 20,000. He also agreed to pay Outstanding Salary of 20,000 not provided in books. Prepare Realisation Account, Partners’ Capital Accounts and Bank Account in the books of the firm.
The solution of Question 28 Chapter 7 of +2-A: –
| Realization Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Land and Building | 57,000 | Creditors | 40,000 | ||
| Stock | 50,000 | ||||
| Bank A/c | |||||
| Land and building | 40,000 | ||||
| Bank A/c | Stock | 30,000 | |||
| Creditors 40,000 + 15,000 | 55,000 | Sundry Debtors | 42,000 | 1,12,000 | |
| Expenses | 1,200 | 56,200 | |||
| Loss transferred to: | |||||
| A’s Capital A/c | 30,600 | ||||
| B’s Capital A/c | 20,400 | ||||
| C’s Capital A/c | 10,200 | 61,200 | |||
| 2,13,200 | 2,13,200 | ||||
| Partners’ Capital Account | |||||||
| Part. | A | B | C |
Part. |
A | B | C |
| To Profit and Loss A/c | 7,500 | 5,000 | 2,500 | By Balance B/d | 60,000 | 40,000 | 10,000 |
| To Realization loss A/c | 30,600 | 20,400 | 10,200 | By Compensation Reserve A/c | 10,500 | 7,000 | 3,500 |
| To Suspense A/c Realization | 3,000 | 2,000 | 1,000 | ||||
| To Cash A/c | 29,400 | 19,600 | By cash A/c | 200 | |||
| 70,500 | 47,000 | 13,700 | 70,500 | 47,000 | 13,700 | ||
| A’s Loan Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Bank A/c | 10,000 | Balance b/d | 10,000 | ||
| 10,000 | 10,000 | ||||
| Bank Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Balance b/d | 3,000 | A’s Loan A/c | 10,000 | ||
| Realization A/c | 1,12,000 | A’s Capital A/c | 56,200 | ||
| C’s Capital A/c | 200 | A’s Capital A/c | 29,400 | ||
| B’s Capital A/c | 19,600 | ||||
| 1,15,200 | 1,15,200 | ||||
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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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