Question 29 Chapter 7 of +2-A
29. A and B are partners in a firm sharing profits and losses in the ratio of 2: 1. On 31st March 2018, their Balance Sheet was:
| Liabilities | Amount | Assets | Amount | |
| Bank Overdraft | 30,000 | Cash in Hand | 6,000 | |
| General Reserve | 56,000 | Bank Balance | 10,000 | |
| Investments Fluctuation Reserve | 20,000 | Sundry Debtors | 26,000 | |
| A’s Loan | 34,000 | Less: Provision for Doubtful Debtors | 2,000 | 24,000 |
| Capital A/c: | Investments | 40,000 | ||
| A | 50,000 | Stock | 10,000 | |
| Furniture | 10,000 | |||
| Building | 60,000 | |||
| B’s Capital | 30,000 | |||
| 1,90,000 | 1,90,000 |
On that date, the partners decide to dissolve the firm. A took over Investments at an agreed valuation of 35,000. Other assets were realised as follows: Sundry Debtors: Full amount. The firm could realise Stock at 15% less and Furniture at 20% less than the book value. The building was sold at 1,00,000. Compensation to employees paid by the firm amounted to 10,000. This liability was not provided for in the above Balance Sheet. You are required to close the books of the firm by preparing Realisation Account, Partners’ Capital Accounts and Bank Account
The solution of Question 29 Chapter 7 of +2-A: –
| Realization Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Sundry Debtors | 26,000 | Provision for Doubtful Debts | 2,000 | ||
| Investments | 40,000 | Bank Overdraft | 30,000 | ||
| Stock | 10,000 | Investments Fluctuation Reserve | 20,000 | ||
| Furniture | 10,000 | A’s Capital A/c Investments | 35,000 | ||
| Building | 60,000 | ||||
| Bank A/c | |||||
| Compensation to Employees | 10,000 | Bank | |||
| Bank Overdraft | 30,000 | 40,000 | Sundry Debtors | 26,000 | |
| Stock | 8,500 | ||||
| Furniture | 8,000 | ||||
| Profit transferred to | Building | 1,00,000 | 1,42,500 | ||
| A’s Capital A/c | 29,000 | ||||
| B’s Capital A/c | 14,500 | 43,500 | |||
| 2,29,500 | 2,29,500 | ||||
| Partners’ Capital Account | |||||
| Part. | A | B |
Part. |
A | B |
| To Balance b/d | 30,000 | By Balance B/d | 50,000 | ||
| To Realization loss A/c | 56,600 | – | By Realization Liabilities A/c | 37,333 | 18,667 |
| By Realization profit A/c | 29,000 | 14,500 | |||
| To Cash A/c | 81,333 | 3,167 | |||
| 1,16,333 | 33,167 | 1,16,333 | 33,167 | ||
| A’s Loan Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Bank A/c | 34,000 | Balance b/d | 34,000 | ||
| 34,000 | 34,000 | ||||
| Bank Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Balance b/d | 10,000 | Realization A/c | 40,000 | ||
| Cash A/c | 6,000 | A’s Capital A/c | 81,333 | ||
| Realization A/c | 1,42,500 | A’s Capital A/c | 3,167 | ||
| A’s Loan A/c | 34,000 | ||||
| 1,58,500 | 1,58,500 | ||||
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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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