Question 38 Chapter 7 of +2-A
38. Krishna and Arjun are partners in a firm. They share profits in the ratio of 4: 1. They decided to dissolve the firm on 31st March 2018 at which date their Balance Sheet stood as:
| Liabilities | Amount | Assets | Amount | ||
| Bank Loan | 1,500 | Trademarks | 1,200 | ||
| Creditors for Goods | 8,000 | Machinery | 12,000 | ||
| Bills Payable | 500 | Furniture | 400 | ||
| Capital A/cs: | Stock | 6,000 | |||
| Krishna | 16,000 | Debtors | 9,000 | ||
| Arjun | 6,000 | 22,000 | Provision for Bad | 400 | 8,600 |
| Cash at Bank | 2,800 | ||||
| Advertisement Suspense | 1,000 | ||||
| 32,000 | 32,000 |
The realization shows the following results:
a Goodwill was sold for 1,000.
b Debtors were realized at book value less 10%.
c Trademarks were realized for 800.
d Machinery and Stock-in-Trade were taken over by Krishna for 14,400 and 3,600 respectively.
e An unrecorded asset estimated at 500 was sold for 200.
f Creditors for goods were settled at a discount of 80. The expenses on realization were 800.
Prepare Realization Account, Partners’ Capital Accounts and Bank Account.
The solution of Question 38 Chapter 7 of +2-A: –
| Realization Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Trade Marks | 1,200 | Provision for Doubtful Debts | 3,000 | ||
| Machinery | 12,000 | Bank Loan | 45,000 | ||
| Furniture | 400 | Creditors for Goods | 12,000 | ||
| Stock | 6,000 | Bills Payable | 7,500 | ||
| Debtors | 9,000 | ||||
| Bank A/c: | |||||
| Bank A/c :- | Goodwill | 1,000 | |||
| Bank Loan | 1,500 | Debtors | 8,100 | ||
| Creditors | 7,920 | Trade Marks | 800 | ||
| Bills Payable | 500 | Unrecorded Assets | 2000 | 10,100 | |
| Expense | 800 | Krishna’s Capital A/c: | |||
| Machinery | 14,400 | ||||
| Stock in Trade | 3,600 | 18,000 | |||
| Loss on Revaluation | |||||
| Krishna’s Capital A/c | 656 | ||||
| Arjun’s Capital A/c | 164 | 820 | |||
| 39,320 | 39,320 | ||||
| Partners’ Capital Account |
|||||
| Part. | Krishna | Arjun |
Part. |
Krishna | Arjun |
| To Advertisement Suspense A/c | 800 | 200 | By Balance B/d | 16,000 | 6,000 |
| To Realization A/c Assets | 18,000 | – | By Realization A/c | 38,000 | – |
| To Realization A/c Loss | 656 | 164 | |||
| To Cash A/c | 5,363 | By cash A/c | 3,456 | ||
| 19,456 | 6,000 | 19,456 | 6,000 | ||
| Bank Account |
|||||
| Particular |
Amount | Particular | Amount | ||
| Balance b/d | 2,800 | Realization A/c | 10,720 | ||
| Krishna’s Capital A/c | 10,100 | Arjun’s Capital A/c | 5,636 | ||
| Realization A/c | 3,456 | ||||
| 16,356 | 16,356 | ||||
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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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