Question 40 Chapter 7 of +2 Part-1 – USHA Publication 12 Class Part – 1

Question 40 Chapter 7 of +2-Part-1

40. (Journal/Realisation A/e/Partner’s Capital A/e) Prakash, Kiran and Rishabh are partners in a firm sharing profits and losses in the ratio of 3:21 Their Balance sheet an at 31 March, 2015 stood as follows:

Liabilities	Rs.	Assets	Rs.
Creditors	25,000	Cash at bank	2,000
Bills payable	10,000	Debtors                 20,000
General reserve	27,000	Less provision       2,000	18,000
Workmen’s compensation	3,000	Stock	25,200
Mrs   Prakash’s  fund loan	5,000	Investments	20,000
Capital A/c :		Bills receivable	8,000
Prakash	60,000	Machinery	60,000
Kiran	40,000	Goodwill	6,000
		Profit & loss A/c	19,800
		Rishabh’s capital A/c	11,000
	1,70,000		1,70,000

On the above date, the firm was dissolved and the following transactions took place:
(i)The Assets were sold off for the following amounts:
Stock-Rs. 20,200, Debtors Rs. 15,000;
Machinery Rs. 40,000 and Investments Rs. 18,000.
(ii) Kiran took over the Bill Receivable at Rs. 7.000 and the Bills Payable at book value.
(iii) There were an unrecorded assets of Rs. 4,000 which was sold for Rs. 1,200.
(iv) Prakash agreed to pay off is wife’s loan.
(v) A contingent liability for a bill discounted at Rs. 8,000 was settled by Prakash.
(vi) Creditors were settled at a discount of 10% and Goodwill realised Rs. 5,000.
(vii) Realisation expenses were Rs. 2,100 which were met by Kiran.
You are required to Pass the necessary journal entries, prepare the Realisation Account on the dissolution of the firm and capital accounts of the partners

The solution of Question 40 Chapter 7 of +2 Part-1: –

Journal
Date	Particulars		L.F.	Debit	Credit
a)	Realisation A/c	Dr.		1,39,200
	To Debtors A/c				20,000
	To Stock A/c				25,200
	To investments A/c				20,000
	To Bill receivable A/c				8,000
	To Machinery A/c				60,000
	To Goodwill A/c				6,000
	(Being different assets transferred to realisation A/c )
b)	Creditors	Dr.		25,000
	Bills payable	Dr.		10,000
	Provision for bad debts	Dr.		2,000
	Mrs. Prakash Loan A/c	Dr.		5,000
	To Realisation A/c				42,000
	(Being the creditors , bill payable . Provision for bad debts & Mrs. Prakash loan transferred to Realisation A/c )
c)	Bank A/c	Dr.		98,200
	To Realisation A/c				98,200
	(Being realisation of different addets stock 22,000+debtors 15,000+machinery 40,000 +investment 18,000+ Goodwill 5,000 )
d)	Kiran’s capital A/c	Dr.		7,000
	To Realisation A/c				7,000
	(Being Kiran’s took over the bills receivable )
e)	Realisation A/c	Dr.		10,000
	To Kiran’s capital A/c				10,000
	(Being Kiran’s took over the bills payable at book halves )
f)	Bank A/c	Dr.		1,200
	To Realisation A/c				1,200
	(Being unrecorded assets sold )
g)	Realisation A/c	Dr.		22,500
	To Bank A/c				22,500
	(Being creditors were settled at 10 % discount )
h)	Realisation A/c	Dr.		8,000
	To Prakash’s capital A/c				8,000
	(Being contingent liability for a bill discounted settled by Prakash )
i)	Realisation A/c	Dr.		5,000
	To Prakash’s capital A/c				5,000
	(Being Mrs. Prakash ‘s loan accepted by Prakash )
j)	Realisation A/c	Dr.		2,100
	To Kiran’s capital A/c				2,100
	(Being realisation expenses met by Kiran)
k)	General reserve A/c	Dr.		27,000
	To Prakash’s capital A/c				13,500
	To Kiran ’s capital A/c				9,000
	To Rishabh’s capital A/c				4,500
	(Being general reserve distributed among the partners in PSR)
l)	Woman Compensations Fund A/c	Dr.		3,000
	To Prakash’s capital A/c				1,500
	To Kiran ’s capital A/c				1,000
	To Kishan’s capital A/c				500
	(Being women compensation fund distributed among the partners)
		Dr.		9,900
m)	Prakash’s capital A/c	Dr.		6,600
	Kiran ’s capital A/c	Dr.		3,300
	Rishabh’s capital A/c				19,800
	To profit & loss A/c
	(Being the undistributed loss distributed among the partners in ratio 3:2:1)
n)	Prakash’s capital A/c	Dr.		19,200
	Kiran ’s capital A/c	Dr.		12,800
	Rishabh’s capital A/c	Dr.		6,400
	To realisation A/c				38,400
	(Being realisation loss distributed among the partners in ratio 3:2:1)
o)	Prakash’s capital A/c	Dr.		58,900
	Kiran ’s capital A/c	Dr.		35,700
	To Bank A/c				94,600
	(Being the final payment on dissolution )
p)	Bank A/c	Dr.		15,700
	To Rishabh’s capital A/c				15,700
	(Being the deficiency brought by rishab )

Revaluation A/c
Particulars		Amount	Particulars		Amount
To Sundry Assets			By provision for bad debts		2,000
Debtors A/c	20,000		By Creditors		25,000
Stock A/c	25,200		By bills payable		10,000
investments A/c	20,000		By Mrs. Prakash loan A/c		5,000
Bill receivable A/c	8,000		By bank A/c assets
Machinery A/c	60,000		Stock	20,200
Goodwill A/c	6,000	1,39,200	Debtors	15,000
To Kiran ’s capital A/c bills payable		10,000	Machinery	40,000
To Prakash’s capital A/c			Investments	18,000
Contingent liability	8,000		Goodwill	5,000	98,200
Wife’s loan	5,000	13,000	By Kiran ’s capital A/c bills receivable		7,000
To Bank A/c creditors		22,500	By bank A/c unrecorded assets		1,200
To Kiran ’s capital A/c Expenses		2,100	By loss transferred
			Prakash’s capital A/c	19,200
			Kiran ’s capital A/c	12,800
			Rishabh’s capital A/c	6,400	38,400
		1,86,800			1,86,800

Partners’ Capital Account
Particulars	Prakash	Kiran	Rishabh	Particulars	Prakash	Kiran	Rishabh
To balance b/d			11,000	By Balance b/d	60,000	40,000
To Realisation A/c loss	19,200	12,800	6,400	By workmen’s cop. fund	1,500	1,000	500
To Profit & loss A/c	9,900	6,600	3,300	By gen. reserve	13,500	9,000	4,500
To Bank A/c		7,000		By realisation A/c
				Contingent liability	8,000
				Wife’s loan	5,000
				Realisation expenses		2,100
				Bills payable		10,000
To Cash A/c	58,900	35,700	–	By Cash A/c			15,700
	88,000	62,100	20,700		88,000	62,100	20,700

Bank A/c
Particulars		Amount	Particulars		Amount
To balance b/d		2,000	By realisation A/c
To Realisation A/c			Liabilities paid		6,140
Assets realised		98,200	By Y’s capital A/c		1,933
To Realisation A/c		1,200	By Z’s capital A/c		717
Recorded Assets realised
To Rishabh’s capital A/c		15,700
		1,17,100			1,17,100

Also, Check out the solved question of previous Chapters: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

• Chapter No. 1 – Accounting Not for Profit Organisations
• Chapter No. 2 – Partnership Accounts – I (Introduction)
• Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
• Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
• Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
• Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
• Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
• Chapter No. 8 – Company Accounts (Share Capital)
• Chapter No. 9 – Company Accounts (Issue of Debentures)
• Chapter No. 10 – Company Accounts (Redemption of Debentures)

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

• Chapter No. 1 – Financial Statements of a Company
• Chapter No. 2 – Financial Statement Analysis
• Chapter No. 3 –  Tools of Financial Statement Analysis- Comparative and Common Size
• Chapter No. 4 – Ratio Analysis
• Chapter No. 5 – Cash Flow Statement

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication