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

Question 40 Chapter 7 of +2- Part

Question 40 Chapter 7 of +2-Part-1

Free Accounting book Solution - Class 11 and Class 12

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

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

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

2 Book 1 min - Question 40 Chapter 7 of +2 Part-1 - USHA Publication 12 Class Part - 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firm

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