Ts grewal practical problems of Dissolution of a partnership firm (2023-2024)

Dissolution of a partnership firm Ts grewal solution volume-1(2023-2024)

 

Question 1:

Land and Building (book value) ` 1,60,000 sold for  ` 3,00,000 through a broker who charged 2% commission on the deal. Journalise the transaction, at the time of dissolution of the firm.

Answer:

In the books of the firm Journal
Date	Particulars		L.F.	Debit ( `)	Credit ( `)
On the	Cash/ Bank A/c (3,00,000 – 6,000)	Dr.		2,94,000
Date of	To Realisation A/c (3,00,000 – 6,000)				2,94,000
Dissolution	(Being amount realized from land and building after providing for 2% commission to the broker)

 

Question 2: (a) What Journal entry will be passed when an unrecorded liability of ` 15,000 is settled at ` 10,000 and paid by X, a partner on the dissolution of a firm?

(b) What Journal entry will be passed when a machine having a book value off ` 15,000 is given to Rakesh, a creditor of ` 22,000 at an agreed valuation of ` 12,000 towards partial payment of his dues?

Answer:

Date	Particulars		`  (Dr.)	` (Cr.)
(a)	Realisation A/c	Dr.	10,000
	To X's Capital A/c			10,000
(b)	Realisation A/c	Dr.	10,000
	To Cash/Bank A/c			10,000

 

Question 3:

Pass Journal entries in the following cases?
(a) Expenses of realisation `600 but paid by Mohan, a partner.
(b) Mohan, one of the partners of the firm, was asked to look into the dissolution of the firm for which he was allowed a commission of  ` 2,000.
(c) Motor car of book value  ` 50,000 taken over by Creditors  of the book value of  ` 40,000 in full settlement.

Answer:

Journal
S.N.	Particulars		L.F.	Debits `	Credit `
(a)	Realisation A/c	Dr.		600
	To Mohan’s Capital A/c				600
	(Being Realisation expenses paid by Mohan)
(b)	Realisation A/c	Dr.		2,000
	To Mohan’s capital A/c				2,000
	(Being Commission allowed to Mohan on dissolution of the firm)
(c)	No entry No journal entry is passed because both motor car and Creditors  accounts have already been transferred to Realisation Account and nothing is recovered or paid in terms of Cash and Bank

 

Question 4:

Pass Journal entries for the following:

(a) Realisation expenses of `10,000 were to be met by Mohan, a partner, but were paid by the firm.

(b) Mahesh, a partner, was paid remuneration of `25,000 and he was to meet all expenses.

(c) Suresh, a partner, was paid remuneration of `20,000 and he was to meet all expenses. Firm paid an expense of ` 5,000..

Answer:

Date	Particulars		`  (Dr.)	` (Cr.)
(a)	Mohan's Capital A/c	Dr.	10,000
	To Bank A/c			10,000
	(Realisation expenses were to be met by Mohan, a partner, but were paid by the firm)
(b)	Realisation A/c	Dr.	10,000
	To Mohan's Capital A/c			10,000
	(Mahesh, a partner, was paid remuneration and he was to meet all expenses)
(c)	Suresh's Capita A/c	Dr.	5,000
	To Bank A/c			5,000
	(Suresh, a partner, was paid remuneration of and he was to meet all expenses. Firm paid an expense)

Question 5:

Pass Journal entries for the following:
(a) Realisation expenses amounted to  ` 10,000 were paid by the firm on behalf of Alok, a partner, with whom it was agreed at  ` 7,500.
(b) Realisation expenses amounted to  ` 5,000. It was agreed that the firm will pay  ` 2,000 and balance by Ravinder, a partner.
(c) Dissolution expenses amounted to  ` 10,000 were paid by Amit, a partner, on behalf of the firm.

Answer:

	Journal
S.N.	Particulars		L.F.	Debits `	Credit `
(a)	Realisation A/c	Dr.		7,500
	To Alok’s Capital A/c				7,500
	(Remuneration allowed to Alok)
	Alok’s capital A/c	Dr.		10,000
	To Bank A/c				10,000
	(Expenses paid by the firm on behalf of Alok)
	Alternatively, only one single entry can also be passed instead of above two entries.
	Realisation A/c	Dr.		7,500
	Alok’s Capital A/c	Dr.		2,500
	To Bank A/c				10,000
	(Realisation expenses paid)
(b)	Realisation A/c	Dr.		5,000
	To Ravinder’s Capital A/c				3,000
	To Bank A/c				2,000
	(Realisation expenses paid)
(c)	Realisation A/c	Dr.		10,000
	To Amit’s Capital A/c				10,000
	(Realisation expenses paid by Amit on behalf of the firm)

 

Question 6:

Record necessary Journal entries in the following cases:
(a) Creditors  worth  ` 85,000 accepted  ` 40,000 as cash and Investment worth  ` 43,000, in full settlement of their claim.
(b) Creditors were  ` 16,000. They accepted Machinery valued at  ` 18,000 in settlement of their claim.
(c) Creditors were  ` 90,000. They accepted Building valued at  ` 1,20,000 and paid cash to the firm  ` 30,000.

Answer:

Journal
	Particulars			L.F.	( `)	( `)
(a)	Realisation A/c		Dr.		40,000
	To Cash A/c					40,000
	(Creditors  worth  ` 85,000 accepted 40,000 as cash and investment worth  ` 43,000 in full settlement)
(b)	No Entry
	(Creditors worth  ` 16,000 accepted Machinery worth  ` 18,000 in full settlement. No entry as both asset and liability are already transferred to the Realisation Account)
(c)	Cash A/c	Dr.			30,000
	To Realisation A/c					30,000
	(Creditors  worth  ` 90,000 accepted Building worth  ` 1,20,000 and paid back ` 30,000 as cash after settlement of claim to the firm)

Question 7:

Pass Journal entries for the following at the time of dissolution of a firm:

(a) Sale of Assets − `50,000.
(b) Payment of Liabilities − `10,000.
(c) A commission of 5% allowed to Mr. X, a partner, on sale of assets.
(d) Realisation expenses amounted to `15,000. The firm had agreed with Amrit, a partner, to reimburse him up to  ` 10,000.

(e) Employees provident fund `10,000,
(f) Z, an old customer, whose account for `6,000 was written off as bad in the previous year, paid 60% of the amount written off.
(g) Investment (Book Value `10,000) realised at 150%.

(h) Realisation expenses were `10,000. The firm had agreed with krishan a partner, to reimburse him up to ` 7,500.

Answer:

Journal
S.N.	Particulars		L.F.	Debits `	Credit `
(a)	Cash A/c	Dr.		50,000
	To Realisation A/c				50,000
	(Assets realized for cash)
(b)	Realisation A/c	Dr.		10,000
	To Cash A/c				10,000
	(Payment of liabilities made)
(c)	Realisation A/c	Dr.		2,500
	To X’s Capital A/c				2,500
	(5% commission allowed to Mr. X’s on sale of assets of  ` 50,000)
(d)()                           (e)	Realisation A/c	Dr.		10,000
	To Amrit’s Capital A/c				10,000
	(Amrit was allowed remuneration on account of realisation)
	Amrit’s Capital A/c	Dr.		15,000
	To Cash A/c				15,000
	(Realisation expenses paid on behalf of amrit)
	Alternatively, only one single entry can also be passed instead of above two entries.
	Realisation A/c	Dr.		10,000
	Amrit’s Capital A/c	Dr.		5,000
	To Cash A/c				15,000
	(Realisation expenses paid)
	Realization A/c                                            Dr.
	To Cash A/c
	(Paid provident fund)
(f)	Cash A/c	Dr.		3,600
	To Realisation A/c				3,600
	(60% of  the Bad debts against Z an old customer now recovered)
(g)	Cash A/c	Dr.		15,000
	To Realisation A/c				15,000
	(Investments are realised at 150%)
(h)	Realisation A/c			7,500
	To Krishna’s Capital A/c				7,500
	(Krishna, a partner, reimbursed for realization expenses)

Question 8: The firm of Manjeet, Sujeet and Jagjeet was dissolved on 31st March, 2018. It was agreed that Sujeet will take care of the dissolution related activities and will get 10% of the value of assets realised. Sujeet agreed to bear the realisation expenses. Assets realised 10,00,750 and realisation expenses were 90,000, which were paid from the firm's cash. 4,50,000 were paid to the creditors in full settlement of their claim.

Pass necessary Journal entries for the above transactions in the books of the firm. (CBSE 2019)

 

Answer:         

	Journal
S.N.	Particulars		L.F.	Debits `	Credit `
(a)	Bank A/c	Dr.		10,00,750
	To Realisation A/c				10,00,750
	(Being assets realized on dissolution)
(b)	Realisation A/c	Dr.		1,00,075
	To Sujeet’s Capital A/c				1,00,075
	(Being 10% of assets realized on dissolution)
(c)	Sujeet’s Capital A/c	Dr.		90,000
	To Bank A/c				90,000
	(Being realization expenses paid)
(d)	Realisation A/c	Dr.		4,50,000
	To Bank A/c				4,50,000
	(Being creditors paid in full settlement on dissolution)

Question 9:

Simar, Raja and Rita were partners in a firm sharing profits and losses in the ratio of 2:2:1.The firm was dissolved on 31st March, 2019. After the transfer of assets (other than cash) and external liabilities to the Realisation Account, the following transactions took place:

(a) A debtor whose debt of `90,000 had been written off as bad, paid `88,000 in full settlement.

(b) Creditors to whom `1,21,000 were due to be paid, accepted stock at ` 71,000 and the balance was paid to them by a cheque.

(c) Raja had given a loan to the firm of ` 18.000. He was paid `17,000 in full settlement of his loan.

(d) Investments were ` 53,000 out of which investments worth ` 43,000 were taken over by Simar at ` 52,000 and the balance of the investments were sold for `12,000.

(e) Expenses on dissolution amounted to `19,000 and the same were paid by the firm.

(f) Profit on dissolution amounted to `30,000.

Pass the necessary Journal entries for the above transactions in the books of the firm. (CBSE 2020)

 

Answer:

Date	Particulars		`  (Dr.)	` (Cr.)
(a)	Bank/Cash A/c	Dr.	88,000
	To Realisation A/c			88,000
	(Bad Debts recovered )
(b)	Realisation A/c	Dr.	50,000
	To Bank A/c			50,000
	(Balance paid)
(c)	Raja's Loan A/c                          Dr.		18,000
	To Bank/Cash A/c			17,000
	To Realisation A/c			1,000
	(loan of `18,000 settled at `17,000)
	Alternative treatment
	Raja's Loan A/c	Dr.	17,000
	To Bank/Cash A/c			17,000
	(Loan was paid)
	Raja's Loan A/c                                                   Dr.  To Realisation A/c		1,000	1,000
	(difference transferred to realisation A/c)
(e)	Realisation A/c                                                  Dr.		19,000
	To Cash/Bank A/c			19,000
	(Realisation expenses were paid)
(f)	Realisation A/c                                                   Dr.		30,000
	To Simar's Capital A/c			12,000
	To Raja's Capital A/c			12,000
	To Rita's Capital A/c			6,000
	(Profit of dissolution distributed)

Question 10:

Pass necessary Journal entries to record the following unrecorded assets and liabilities in the books of Paras and Priya:
(a) There was an old furniture in the firm which had been written off completely in the books. This was sold for  ` 3,000.
(b) Ashish, an old customer whose account for  ` 1,000 was written off as bad in the previous year, paid 60%, of the amount.
(c) Paras agreed to takeover the firm's goodwill (not recorded in the books of the firm), at a valuation of  ` 30,000.
(d) There was an old typewriter which had been written off completely from the books. It was estimated to realise  ` 400. It was taken by Priya at an estimated price less 25%.
(e) There were 100 shares of  ` 10 each in Star Limited acquired at a cost of  ` 2,000 which had been written-off completely from the books. These shares are valued @  ` 6 each and divided among the partners in their profit-sharing ratio.

Answer:

Journal
	Particulars		L.F.	(         (`)	( `)
(a)	Cash/Bank A/c	Dr.		3,000
	To Realisation A/c				3,000
	(Being Old and unrecorded furniture sold)
(b)	Cash/Bank A/c	Dr.		600
	To Realisation A/c				600
	(Being Bad debts previously written off now recovered)
(c)	Paras’s Capital A/c	Dr.		30,000
	To Realisation A/c				30,000
	(Being Unrecorded goodwill taken over by Paras)
(d)	Priya’s Capital A/c	Dr.		300
	To Realisation A/c				300
	(Being Unrecorded Typewriter taken over by Priya at25% less price)
(e)	Paras’s Capital A/c	Dr.		300
	Priya’s Capital A/c	Dr.		300
	To Realisation A/c				600
	(Being 100 unrecorded shares of  ` 10 each in the books taken @  ` 6 each by Paras and Priya and divided between them in profit sharing ratio)

 

Question 11:

Aman and Harsh were partners in a firm. They decided to dissolve their firm. Pass necessary Journal entries for the following after various assets (other than Cash and Bank) and third party liabilities have been transferred to Realisation Account:
(a) There was furniture worth  ` 50,000. Aman took over 50% of the furniture at 10% discount and the remaining furniture was sold at 30% profit on book value.
(b) Profit and Loss Account was showing a credit balance of  ` 15,000 on the date of dissolution.
(c) Harsh's loan of  ` 6,000 was discharged at  ` 6,200.
(d) The firm paid realisation expenses amounting to  ` 5,000 on behalf of Harsh who had to bear these expenses.
(e) There was a bill for 1,200 under discount. The bill was received from Soham who proved insolvent and a first and final dividend of 25% was received from his estate.
(f) Creditors  to whom the firm owed  ` 6,000, accepted stock of  ` 5,000 at a discount of 5% and the balance in cash.

Answer:

Journal
Date	Particulars		L.F.	Debit  ( `)	Credit  ( `)
a.	Aman’s Capital A/c	Dr.		22,500
	Bank A/c	Dr.		32,500
	To Realisation  A/c				55,000
	(Being Assets realized)
b.	Profit & Loss A/c	Dr.		15,000
	To Aman’s Capital A/c				7,500
	To Harsh’s Capital A/c				7,500
	(Being Profit distributed)
c.	Harsh’s Loan A/c	Dr.		6,000
	Realisation  A/c	Dr.		200
	To Bank A/c				6,200
	(Being Loan Discharged)
		Dr.		5,000
d.	Harsh’s Capital A/c				5,000
	To Bank A/c
	(Being Expenses paid on behalf of partner)
e.	Bank A/c	Dr.		300
	To Realisation  A/c				300
	(Being Amount received)
	Realisation  A/c	Dr.		1,200
	To Bank A/c				1,200
	(Being Amount paid)
f.	Realisation  A/c	Dr.		1,250
	To Bank A/c				1,250
	(Being Creditors  paid)
g.	Aman’s Capital A/c	Dr.		4,000
	Harsh’s Capital A/c	Dr.		4,000
	To Realisation  A/c				8,000
	(Being Loss on dissolution transferred to Partners Capital A/c)

 

Question 12:

Rohit, Kunal and Sarthak are partners in a firm. They decided to dissolve their firm. Pass necessary Journal entries for the following after various assets (other than Cash and Bank) and the third party liability have been transferred to Realisation Account:
(a) Kunal agreed to pay off his wife's loan of  ` 6,000.
(b) Total Creditors  of the firm were  ` 40,000. Creditors  worth  ` 10,000 were given a piece of furniture costing  ` 8,000 in full and final settlement. Remaining Creditors  allowed a discount of 10%.
(c) Rohit had given a loan of  ` 70,000 to the firm which was duly paid.
(d) A machine which was not recorded in the books was taken over by Kunal at  ` 3,000, whereas its expected value was  ` 5,000.
(e) The firm had a debit balance of  ` 15,000 in the Profit and Loss Account on the date of dissolution.
(f) Sarthak paid the realisation expenses of  ` 16,000 out of his private funds, who was to get a remuneration of  ` 15,000 for completing dissolution process and was responsible to bear all the realisation expenses.

Answer:

Journal
Date	Particulars		L.F.	Debit `	Credit  `
(a)	Realisation A/c	Dr.		6,000
	To Kunal’s Capital A/c				6,000
	(Being Kunal agrees to pay off his wife’s loan)
(b)	Realisation A/c	Dr.		27,000
	To Cash A/c				27,000
	(Being Creditors  worth  ` 30,000 paid off at a discount of 10%)
(c)	Rohit’s Loan A/c	Dr.		70,000
	To Cash A/c				70,000
	(Being Loan paid by the firm)
(d)	Kunal’s Capital A/c	Dr.		3,000
	To Realisation A/c				3,000
	(Being asset taken over by Kunal)
(e)	Rohit’s Capital A/c	Dr.		5,000
	Kunal’s Capital A/c	Dr.		5,000
	Sarthak’s Capital A/c	Dr.		5,000
	To Profit and Loss A/c				15,000
	(Being Loss distributed equally)
(f)	Realisation A/c	Dr.		15,000
	To Sarthak’s Capital A/c				15,000
	(Being remuneration of  ` 15,000 paid for completion of dissolution process)

Question 13:

Suman and Rajan were partners in a firm sharing profits and losses in the ratio of 3: 1. The firm was dissolved on 31st March, 2019. Pass the necessary Journal entries for the following transactions after various assets (other than cash in hand and at bank) and third party liabilities have been transferred to Realisation Account:

(a) Dissolution expenses ` 10,000 were paid by the firm.

(b) Rajan had given a loan of ` 60,000 to the firm for which he accepted ` 58,000 in full settlement.

(c) The firm had a debit balance of ` 40,000 in the Profit &Loss Account on the date of dissolution.

(d) Profit on realisation was ` 12,000. (CBSE 2020)

 

 Answer:

 

Date	Particulars		`  (Dr.)	` (Cr.)
(a)	Realisation A/c	Dr.	10,000
	To Cash/Bank A/c			10,000
	(Dissolution expenses were paid by the firm)
(b)	Rajan's Loan A/c	Dr.	60,000
	To Bank/Cash A/c			58,000
	To Realisation A/c			2,000
	(Rajan‘s loan of ` 60,000 to the firm for which he accepted ` 58,000 in full settlement)
(c)	Dr. Suman's Capital A/c	Dr.	30,000
	Rajan's Capital A/c	Dr.	10,000
	To Profit & Loss A/c			40,000
	(Accumulated loss distributed)
(d)	Realisation A/c                                                  Dr.		12,000
	To Suman's Capital A/c			9,000
	To Rajan's Capital A/c			3,000
	(Profit distributed)

 

Question 14:

Lal and Pal were partners in a firm sharing profits in the ratio of 3 : 7. On 1st April, 2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to Realisation Account, you are given the following information:
(a) A creditor of  ` 3,60,000 accepted machinery valued at  ` 5,00,000 and paid to the firm  ` 1,40,000.
(b) A second creditor for  ` 50,000 accepted stock at  ` 45,000 in full settlement of his claim.
(c) A third creditor amounting to  ` 90,000 accepted  ` 45,000 in cash and investments worth  ` 43,000 in full settlement of his claim.
(d) Loss on dissolution was  ` 15,000.
Pass necessary Journal entries for the above transactions in the books of firm assuming that all payments were made by cheque.

Answer:

In the books of Lal and Pal Journal Entry
Date	Particulars		L.F.	Debit  `	Credit  `
(a)	Bank A/c	Dr.		1,40,000
	To Realisation A/c				1,40,000
	(A creditor of  ` 3,60,000 accepted machinery valued at  ` 5,00,000 and paid  ` 1,40,000 to the firm)
(b)	No entry
(c)	Realisation A/c	Dr.		45,000
	To Cash A/c				45,000
	(A third creditor of  ` 90,000 accepted  ` 45,000 in cash and investments worth  ` 43,000 in full settlement of his claim)
(d)	Lal’s Capital A/c	Dr.		4,500
	Pal’s Capital A/c	Dr.		10,500
	To Realisation A/c				15,000
	(Loss on dissolution transferred to Partners capital accounts)

Note: No entry will be made when asset is taken over by the creditor

 

Question 15:

Pass Journal entries for payment of following unrecorded liabilities on the dissolution of a firm of partners Shiv and Mohan:

(a) There was a contingent liability in respect of bills discounted but not matured of `18,500. An acceptor of one bill of `2,500 became insolvent and fifty paise in a rupee was recovered. The liability of the firm on account of this bill discounted and dishonoured has not so far been recorded

(b) There was a contingent liability in respect of a claim for damages for `75,000, such liability was settled for `50,000 and paid by the partner Shiv.

(c) Firm will have to pay `10,000 as compensation to an injured employee, which was a contingent liability not accepted by the firm.

(d) `5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70% by a compromise between the customer and the firm.

Answer:

Date	Particulars		`  (Dr.)	` (Cr.)
(a) (i)	Realisation A/c	Dr.	2,500
	To Bank A/c			2,500
	(An acceptor of one bill, became insolvent)
(ii)	Bank A/c	Dr.	1,250
	To Realisation A/c			1,250
	(Fifty paise in a rupee was recovered)
(b)	Realisation A/c	Dr.	50,000
	To Shiv's Capital A/c			50,000
	(Liability was settled for `50,000 and paid by the partner Shiv)
(c)	Realisation A/c	Dr.	10,000
	To Bank A/c			10,000
	(Compensation was paid to employee)
(d)	Realisation A/c	Dr.	3,500
	To Bank A/c			3,500
	(Settlement was made)

 

Question 16:

Pass the Journal entries for the following transactions on the dissolution of the firm of P and Q after various assets (other than cash) and outside liabilities have been transferred to Realisation Account:
(a) Stock  ` 2,00,000. 'P' took over 50% of stock at a discount of 10%. Remaining stock was sold at a profit of 25% on cost.
(b) Debtor `  ` 2,25,000. Provision for Doubtful Debts  ` 25,000.  ` 20,000 of the book debts proved bad.
(c) Land and Building (Book value  ` 12,50,000) sold for  ` 15,00,000 through a broker who charged 2% commission.
(d) Machinery (Book value  ` 6,00,000) was handed over to a creditor at a discount of 10%.
(e) Investment (Book value  ` 60,000) realised at 125%.
(f) Goodwill of  ` 75,000 and prepaid fire insurance of  ` 10,000.
(g) Trade Creditors   ` 1,60,000. Half of the trade Creditors accepted Plant and Machinery at an agreed valuation of  ` 54,000 and cash in full settlement of their claims after allowing a discount of  ` 16,000. Remaining trade Creditors were paid 90% in final settlement.
 

Answer:

Journal
Date	Particulars		L.F.	Debit  ( `)	Credit  ( `)
a.	P’s Capital A/c	Dr.		90,000
	Bank A/c	Dr.		1,25,000
	To Realisation  A/c				2,15,000
	(Stock realized)
b.	Bank A/c	Dr.		2,05,000
	To Realisation  A/c				2,05,000
	(Debtor realized)
c.	Bank A/c	Dr.		14,70,000
	To Realisation  A/c				14,70,000
	(Land and Building realized)
d.	No Entry
e.	Bank A/c	Dr.		75,000
	To Realisation  A/c				75,000
	(Investment realized )
f.	No Entry
g.	Realisation  A/c	Dr.		82,000
	To Bank A/c (10,000 + 72,000)				82,000
	(Creditors  paid)

12th | Ts grewal 2022-2023 Question 17 to 20 | Dissolution of a partnership firm

Question 17:

Pass necessary Journal entries on the dissolution of a firm in the following cases:
(a) Dharam, a partner, was appointed to look after the process of dissolution at a remuneration of  ` 12,000 and he had to bear the dissolution expenses. Dissolution expenses  ` 11,000 were paid by Dharam.
(b) Jay, a partner, was appointed to look after the process of dissolution and was allowed a remuneration of  ` 15,000. Jay agreed to bear dissolution expenses. Actual dissolution expenses  ` 16,000 were paid by Vijay, another partner on behalf of Jay.
(c) Deepa, a partner, was to look after the process of dissolution and for this work she was allowed a remuneration of  ` 7,000. Deepa agreed to bear dissolution expenses. Actual dissolution expenses  ` 6,000 were paid from the firm's bank account.
(d) Dev, a partner, agreed to do the work of dissolution for  ` 7,500. He took away stock of the same amount as his commission. The stock had already been transferred to Realisation Account.
(e) Jeev, a partner, agreed to do the work of dissolution for which he was allowed a commission of  ` 10,000. He agreed to bear the dissolution expenses. Actual dissolution expenses paid by Jeev were  ` 12,000. These expenses were paid by Jeev by drawing cash from the firm.
(f) A debtor of  ` 8,000 already transferred to Realisation Account agreed to pay the realisation expenses of  ` 7,800 in full settlement of his account.

Answer:

Journal
Date	Particulars		L.F.	Debit  ( `)	Credit  ( `)
(a)	Realisation A/c	Dr.		12,000
	To Dharam’s Capital A/c				12,000
	(Remuneration paid)
(b)	Realisation A/c	Dr.		15,000
	To Jay's’s Capital A/c				15,000
	(Remuneration paid)
	Jay's Capital A/c	Dr.		16,000
	To Vijay's Capital A/c				16,000
	(Expenses borne by Jay, paid by Vijay)
(c)	Realisation A/c	Dr.		7,000
	To Deepa’s Capital A/c				7,000
	(Remuneration paid)
	Deepa’s Capital A/c	Dr.		6,000
	To Bank A/c				6,000
	(Expenses paid by firm)
(d)	No Entry
(e)	Realisation A/c	Dr.		10,000
	To Jeev's Capital A/c				10,000
	(Remuneration paid)
	Jeev's Capital A/c	Dr.		12,000
	To Bank A/c				12,000
	(Expenses paid by firm)
(f)	No Entry

 

Question 18:

Ramesh and Umesh were partners in a firm sharing profits in the ratio of their capitals. On 31st March, 2013, their Balance Sheet was as follows:

Liabilities			( `)	Assets		( `)
Creditors			1,70,000	Bank		1,10,000
Workmen Compensation Reserve			2,10,000	Debtor		2,40,000
General Reserve			2,00,000	Stock		1,30,000
Ramesh's Current Account			80,000	Furniture		2,00,000
Capital A/cs:				Machinery		9,30,000
Ramesh		7,00,000		Umesh's Current Account		50,000
Umesh		3,00,000	10,00,000
			16,60,000			16,60,000

On the above date the firm was dissolved.
(a) Ramesh took over 50% of stock at  ` 10,000 less than book value. The remaining stock was sold at a loss of  ` 15,000. Debtor were realised at a discount of 5%.
(b) Furniture was taken over by Umesh for  ` 50,000 and machinery was sold for  ` 4,50,000.
(c) Creditors  were paid in full.
(d) There was an unrecorded bill for repai ` for  ` 1,60,000 which was settled at  ` 1,40,000.
Prepare Realisation Account.

Answer:

Realisation Account
Dr.						Cr.
Particulars			`	Particulars		`
Sundry Assets-				Creditors		1,70,000
Debtor		2,40,000		Ramesh’s Current A/c (Stock)		55,000
Stock		1,30,000		Cash A/c (Assets Realised)
Furniture		2,00,000		Stock	50,000
Machinery		9,30,000	15,00,000	Machinery	4,50,000
				Debtor	2,28,000	7,28,000
To Cash A/c (Liabilities)				Umesh’s Current A/c (Furniture)		50,000
Creditors		1,70,000
Outstanding Bill		1,40,000	3,10,000	Realisation Loss
				Ramesh’s Current A/c	5,64,900
				Umesh’s Current A/c	2,42,100	8,07,000
			18,10,000			18,10,000

 

Question 19:

Pradeep and Rajesh were partners in a firm sharing profits and losses in the ratio of 3 : 2. They decided to dissolve their partnership firm on 31st March, 2018. Pradeep was deputed to realise the assets and to pay off the liabilities. He was paid  ` 1,000 as commission for his services. The financial position of the firm on 31st March, 2018 was as follows:

BALANCE SHEET as at 31st March, 2018
Liabilities		( `)	Assets		( `)
Creditors		80,000	Building		1,20,000
M `. Pradeep's Loan		40,000	Investment		30,600
Rajesh's Loan		24,000	Debtor	34,000
Investment Fluctuation Fund		8,000	Less: Provision for Doubtful Debts	4,000	30,000
Capital A/cs:			Bills Receivable		37,400
Pradeep	42,000		Bank		6,000
Rajesh	42,000	84,000	Profit and Loss A/c		8,000
			Goodwill		4,000
		2,36,000			2,36,000

Following terms and conditions were agreed upon:
(a) Pradeep agreed to pay off his wife's loan.
(b) Half of the Debtor realised  ` 12,000 and remaining Debtor were used to pay off 25% of the Creditors .
(c) Investment sold to Rajesh for  ` 27,000.
(d) Building realised  ` 1,52,000.
(e) Remaining Creditors  were to be paid after two months, they were paid immediately at 10% p.a. discount.
(f) Bill receivables were settled at a loss of  ` 1,400.
(g) Realisation expenses amounted to  ` 2,500.
Prepare Realisation Account.

 

Answer:

Dr.	Realisation A/c						Cr.
Particulars			( `)	Particulars		( `)
To Building			1,20,000	By Provision for Doubtful Debts		4,000
To Investments			30,600	By Creditors		80,000
To Debtor			34,000	By Mr. Pradeep’s Loan		40,000
To Bills Receivable			37,400	By Investment Fluctuation Fund		8,000
To Goodwill			4,000
To Pradeep’s Capital A/c (Wife loan paid)			40,000	By Bank A/c:
To Cash A/c (Creditors  Paid) (WN1)			59,000	Debtor	12,000
To Pradeep’s Capital A/c (Commission)			1,000	Building	1,52,000
To Cash A/c (Realisation Expenses)			2,500	Bills Receivable	36,000	2,00,000
To Profit transferred to:
Pradeep’s Capital A/c		18,300		By Cash A/c (Sale of Investments)		27,000
Rajesh’s Capital A/c		12,200	30,500
			3,59,000			3,59,000

  Working Notes:

Remaining Creditors  to be paid	=	` (80,000 × 75/100) =  ` 60,000
Discount Received on Creditors	=	` (60,000 × 10/100 × 2/12) =  ` 1,000
Amount paid to the Creditors	=	` (60,000 – 1,000) =  ` 59,000

 

Question 20: Ashish and Kanav were partners ina firm sharing profits and losses in the ratio of 3:2.On 31st March, 2018 their Balance Sheet was as follows:

BALANCE SHEET OF ASHISH AND KANAV as at 315t March, 2018
Liabilities	`	Assets	`
Trade Creditors	42,000	Bank	35,000
Employees' Provident Fund	10,000	Stock	24,000
Mrs. Ashish's Loan	9,000	Debtors	19,000
Kanav's Loan	35,000	Furniture	40,000
Workmen's Compensation Fund	20,000	Plant	2,10,000
Investment Fluctuation Reserve	4,000	Investments	32,000
Capitals: Ashish: 1,20,000 Kanav: 80,000	2,00,000	Profit and Loss A/c	10,000
	3,70,000		3,70,000

On the above date they decided to dissolve the firm.

(a) Ashish agreed to take over furniture at 38,000 and pay off Mrs. Ashishis loan.

(b) Debtors realised 18,500 and plant realised 10% more.

(c) Kanav took over 40% of the stock at 20% less than the book value. Remaining stock was sold ata gain of 10%.

(d) Trade creditors took over investments in full settlement.

(e) Kanav agreed to take over the responsibility of completing dissolution at an agreed remuneration of 12,000 and to bear realisation expenses. Actual expenses of realisation amounted to 8,000.

Prepare Realisation Account. (CBSE 2019)

Answer:

Realisation a/c
Dr.			Cr.
Particulars	`	Particulars	`
To Stock To Debtors To Furnisture To Plant To Investiment To Ashish’s capital a/c Mrs. Ashish loan taken To Kanav’s capital a/c Ageed to bear realization expenses To Bank a/c EPF paid To Captial – profit transferred to; Ashish 20,020×3/5=12,012 Kanav 20,020×2/5=8,008   (In the ratio 3:2)	24,000 19,000 40,000 2,10,000 32,000 9,000   12,000     60,000         20,020	By Creditors By employees provident fund By Mrs. Ashish’s loan By Investment fluctuation reserve By Ashish’s capital a/c (Furniture taken) By Kanav’s capital a/c Stock(24,000×40%×80%) By Bank a/c (Assets realised) Debtors    =       18,500 Plant    =    2,31,000 Stock    =       15,840 (24,000×24%×110%)	42,000 60,000 9,000 4,000   38,000   7,680         2,65,340
	4,26,020		4,26,020

Question 25:

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2022, their Balance Sheet was as follows:

BALANCE SHEET as at 31st March, 2022
Liabilities			( `)	Assets	( `)
Creditors			38,000	Cash at Bank	11,500
Mr. A's Loan			10,000	Stock	6,000
B's Loan			15,000	Debtor	19,000
Reserve			5,000	Furniture	4,000
A's Capital	10,000			Plant	28,000
B's Capital		8,000	18,000	Investments	10,000
				Profit and Loss A/C	7,500
			86,000		86,000

The firm was dissolved on 31st March, 2022 and both the partners agreed to the following:
(a) A took Investments at an agreed value of  ` 8,000. He also agreed to settle M `. A's Loan.
(b) Other assets realised as: Stock −  ` 5,000; Debtor  −  ` 18,500; Furniture  −  ` 4,500; Plant  −  ` 25,000.
(c) Expenses of realisation came to  ` 1,600.
(d) Creditors  agreed to accept  ` 37,000 in full settlement of their claims.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.											Cr.
Particulars				( `)		Particulars			( `)
Stock				6,000		Creditors			38,000
Debtor				19,000		M `. A’s Loan			10,000
Furniture				4,000
Plant				28,000		A’s Capital A/c (Investments)			8,000
Investments				10,000		Bank A/c:
A’s Capital A/c (M `. A’s loan)				10,000		Stock	5,000
Bank A/c :						Debtor	18,500
Expenses		1,600				Furniture	4,500
Creditors		37,000		38,600		Plant	25,000		53,000
						Loss transferred to:
						A’s Capital A/c	3,960
						B’s Capital A/c	2,640		6,600
				1,15,600					1,15,600
Partners Capital Accounts
Dr.											Cr.
Particulars			A		B	Particulars		A		B
Realisation (loss)			3,960		2,640	Balance b/d		10,000		8,000
Realisation A/c			8,000		–	Reserve A/c		3,000		2,000
Profit and Loss A/c			4,500		3,000	Realisation A/c		10,000		–
Bank A/c			6,540		4,360
			23,000		10,000			23,000		10,000

B’s Loan Account
Dr.					Cr.
Particulars		( `)	Particulars	( `)
			Balance b/d	15,000
Bank A/c		15,000
		15,000		15,000

 

Bank Account
Dr.					Cr.
Particulars		( `)	Particulars	( `)
Balance b/d		11,500	Realisation A/c	38,600
Realisation A/c		53,000	A’s Capital A/c	6,540
			B’s Capital A/c	4,360
			B’s Loan A/c	15,000
		64,500		64,500

 

Question 26:

Balance Sheet of P, Q and R as at 31st March, 2022, who were sharing profits in the ratio of 5 : 3 : 1, was:
 

Liabilities		( `)	Assets		( `)
Bills Payable		40,000	Cash at Bank		40,000
Loan from Bank		30,000	Stock		19,000
General Reserve		9,000	Sundry Debtor	42,000
Capital A/cs:			Less: Provision for Doubtful Debts	2,000	40,000
P	44,000
Q	36,000		Building		40,000
R	20,000	1,00,000	Plant and Machinery		40,000
		1,79,000			1,79,000

The partners dissolved the business. Assets realised − Stock  ` 23,400; Debtor 50%; Fixed Assets 10% less than their book value. Bills Payable were settled for  ` 32,000. There was an Outstanding Bill of Electricity  ` 800 which was paid off. Realisation expenses  ` 1,250 were also paid.
Prepare Realisation Account, Partner's Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.						Cr.
Particulars			( `)	Particulars		( `)
Building			40,000	Provision for Doubtful Debts		2,000
Plant and machinery			40,000	Bills Payable		40,000
Stock			19,000	Loan from Bank		30,000
Sundry Debtor			42,000
Bank A/c:				Bank A/c:
Bills Payable		32,000		Stock	23,400
Outstanding Bill		800		Debtor	21,000
Expenses		1,250		Building	36,000
Loan from Bank		30,000	64,050	Plant and Machinery	36,000	1,16,400
				Loss transferred to:
				P’s Capital A/c	9,250
				Q’s Capital A/c	5,550
				RCapital A/c	1,850	16,650
			2,05,050			2,05,050

 

Partners Capital Accounts
Dr.									Cr.
Particulars		P	Q	R	Particulars	P	Q	R
Realisation A/c (Loss)		9,250	5,550	1,850	Balance b/d	44,000	36,000	20,000
					Reserve Fund	5,000	3,000	1,000
Bank A/c		39,750	33,450	19,150
		49,000	39,000	21,000		49,000	39,000	21,000

 

Bank  Account
Dr.					Cr.
Particulars		( `)	Particulars	( `)
Balance b/d		40,000	Realisation A/c	64,050
Realisation A/c		1,16,400	P’s Capital A/c	39,750
			Q’s Capital A/c	33,450
			R’s Capital A/c	19,150
		1,56,400		1,56,400

 

Question 27:

Ashu and Harish are partners sharing profit and losses as 3 : 2 . They decided to dissolve the firm on 31st March, 2022. Their Balance Sheet on the above date was:

Liabilities			( `)	Assets		( `)
Capital A/cs:				Building		80,000
Ashu		1,08,000		Machinery		70,000
Harish		54,000	1,62,000	Furniture		14,000
Creditors			88,000	Stock		20,000
Bank Overdraft			50,000	Investments		60,000
				Debtor		48,000
				Cash in Hand		8,000
			3,00,000			3,00,000

Ashu is to take over the building at  ` 95,000 and Machinery and Furniture is taken over by Harish at value of  ` 80,000. Ashu agreed to pay Creditor and Harish agreed to meet Bank overdraft. Stock and Investments are taken by both partner in profit-sharing ratio. Debtor realised for  ` 46,000, expenses of realisation amounted to  ` 3,000. Prepare necessary Ledger Accounts.

Answer:

Realisation Account
Dr.						Cr.
Particulars			( `)	Particulars	( `)
Building			80,000	Creditors	88,000
Machinery			70,000	Bank overdraft	50,000
Furniture			14,000	Ashu’s Capital A/c (see working note)	1,43,000
Stock			20,000	Harish’s Capital A/c (see working note)	1,12,000
Investments			60,000	Cash (Debtor)	46,000
Debtor			48,000
Ashu’s Capital A/c (Creditors )			88,000
Harish’s Capital A/c (Bank Overdraft)			50,000
Cash (Expenses)			3,000
Realisation Profit
Ashu’s Capital A/c		3,600
Harish’s Capital A/c		2,400	6,000
			4,39,000		4,39,000

 

Partners Capital Account
Dr.						Cr.
Particulars		Ashu	Harish	Particulars	Ashu	Harish
Realisation (Assets taken)		1,43,000	1,12,000	Balance b/d	1,08,000	54,000
Cash		56,600		Realisation (Liabilities)	88,000	50,000
				Realisation (Profit)	3,600	2,400
				Cash		5,600
		1,99,600	1,12,000		1,99,600	1,12,000

 

Cash Account
Dr.			Cr.
Particulars	( `)	Particulars	( `)
Balance b/d	8,000	Realisation (Expenses)	3,000
Realisation (Debtor)	46,000	Ashu’s Capital A/c	56,600
Harish’s Capital A/c	5,600
	59,600		59,600

Working Notes :
 

	Ashu	Harish
Building	95,000
Machinery and Furniture		80,000
Stock (3:2)	12,000	8,000
Investment (3:2)	36,000	24,000
	1,43,000	1,12,000

 

Question 28:

A, B and C were equal partners. On 31st March, 2022, their Balance Sheet stood as:

Liabilities		( `)	Assets	( `)
Creditors		50,400	Cash	3,700
Reserve		12,000	Stock	20,100
Capital A/cs:			Debtor	62,600
A	40,000		Loan to A	10,000
B	25,000		Investments	16,000
C	15,000	80,000	Furniture	6,500
			Building	23,500
		1,42,400		1,42,400

 
The firm was dissolved on the above date on the following terms:
(a) For the purpose of dissolution, Investments were valued at  ` 18,000 and A took over the Investments at this value.
(b) Fixed Assets realised  ` 29,700 whereas Stock and Debtor realised  ` 80,000.
(c) Expenses of realisation amounted to  ` 1,300.
(d) Creditors  allowed a discount of  ` 800.
(e) One Bill receivable for  ` 1,500 under discount was dishonoured as the acceptor had become insolvent and was unable to pay anything and hence the bill had to be met by the firm.
Prepare Realisation Account, Partner's Capital Accounts and Cash Account showing how the accounts would finally be settled among the partners.

Answer:

Realisation Account
Dr.						Cr.
Particulars			( `)	Particulars			( `)
Stock			20,100	Creditors			50,400
Debtor			62,600
Investments			16,000	A’s Capital A/c (Investments)			18,000
Furniture			6,500	Cash A/c:
Building			23,500	Furniture and Building	29,700
Cash A/c:				Stock and Debtor	80,000		1,09,700
Expenses		1,300
Creditors		49,600
Bills		1,500	52,400	Loss transferred to :
				A’s Capital A/c	1,000
				B’s Capital A/c	1,000
				C’s Capital A/c	1,000		3,000
			1,81,100				1,81,100

 

Partners Capital Accounts
Dr.									Cr.
Particulars		A	B	C	Particulars	A	B	C
Realisation A/c (Investment)		18,000	–	–	Balance b/d	40,000	25,000	15,000
Realisation A/c (Loss)		1,000	1,000	1,000	Reserve	4,000	4,000	4,000
Cash A/c		25,000	28,000	18,000
		44,000	29,000	19,000		44,000	29,000	19,000

 

A’s Loan A/c
Dr.			Cr.
Particulars		( `)	Particulars	( `)
Balance b/d		10,000	Bank A/c	10,000
		10,000		10,000
Cash  Account
Dr.					Cr.
particulars		( `)	Particulars	( `)
Balance b/d		3,700	Realisation A/c	52,400
Realisation A/c		1,09,700	A’s Capital A/c	25,000
A's Loan A/c		10,000	B’s Capital A/c	28,000
			C’s Capital A/c	18,000
		1,23,400		1,23,400

Yogesh and Naresh were partners sharing profits equally. They dissolved the firm on 1st April, 2022. Naresh was assigned the responsibility to realise the assets and pay the liabilities at a remuneration of  `10,000 including expenses. Balance Sheet of the firm as on that date was as follows:

Liabilities		( `)	Assets		( `)
Creditors		40,000	Cash/Bank		6,000
Bills Payable		40,000	Investments		30,000
Naresh's Loan		44,000	Debtor	40,000
M `. Yogesh's Loan		42,000	Less: Provision for Doubtful Debts	4,000	36,000
Investment Fluctuation Reserve		8,000	Bills Receivable		33,400
Capital A/cs:			Profit and Loss A/c		1,10,600
Yogesh	21,000
Naresh	21,000	42,000
		2,16,000			2,16,000

 

The firm was dissolved on following terms:
(a) Yogesh was to pay his wife's loan.
(b) Debtor realised `30,000.
(c) Naresh was to take investments at an agreed value of  ` 26,000.
(d) Creditors  and Bills Payable were payable after two months but were paid immediately at a discount of 15% p.a.
(e) Bills Receivable were received allowing 5% rebate.
(f) A Debtor previously written off as Bad Debt paid `15,000.
(g) An unrecorded asset realised `10,000.
Prepare Realisation Account, Partners' Capital Accounts, Partners' Loan Account and Cash/Bank Account.

Answer:

Dr.	Realisation A/c							Cr.
Particulars				( `)	Particulars		( `)
To Investments				30,000	By Investment Fluctuation Reserve		8,000
To Debtor				40,000	By Provision for Doubtful Debts		4,000
To Bills Receivable				33,400	By Creditors		40,000
					By Bills Payable		40,000
To Yogesh’s Capital A/c (Wife’s Loan)				42,000	By M `. Yogesh’s Loan		42,000
To Cash/Bank A/c:
Creditors  [40,000 – (40,000 × 15/100 × 2/12)]		39,000			By Cash/Bank A/c:
Bills Payable [40,000 – (40,000 × 15/100 × 2/12)]		39,000		78,000	Debtor	30,000
					Bills Receivable	31,730
To Naresh’ Capital A/c (Commission)				10,000	Bad Debt Recovered	15,000
To Realisation Gain transferred to:					Unrecorded Asset	10,000	86,730
Yogesh’s Capital A/c			6,665
Naresh’s Capital A/c			6,665	13,330	By Naresh’s Capital A/c (Investment taken over)		26,000
				2,46,730			2,46,730

       

Dr.	Partner’s Capital A/c						Cr.
Particulars		Yogesh ( `)	Naresh ( `)	Particulars	Yogesh ( `)	Naresh ( `)
To Realisation A/ c (Asset taken over)			26,000	By balance b/d	21,000	21,000
				By Realisation A/c (Gain)	6,665	6,665
To Profit & Loss A/c		55,300	55,300	By Realisation A/c (Liability paid)	42,000
To Cash/Bank A/c		14,365	–
				By Realisation A/c (Commission)		10,000
				By Naresh’s Loan A/c		43,635
		69,665	81,300		69,665	81,300

 

Dr.	Naresh’s Loan A/c			Cr.
Particulars		( `)	Particulars		( `)
To Naresh’s Capital A/c		43,635	By balance b/d		44,000
To Cash/Bank A/c		365
		44,000			44,000

 

Dr.	Cash/ Bank A/c			Cr.
Particulars		( `)	Particulars		( `)
To balance b/d		6,000	By Yogesh’s Capital A/c		14,365
To Realisation A/c (Asset Realised)		86,730	By Naresh’s Loan A/c		365
			By Realisation A/c (Liabilities Paid)		78,000
		92,730			92,730

 

Question 30:

Michael, Jackson and John are in partnership sharing profits and losses in the proportions of 1/2, 1/3 and 1/6 respectively. On 31st March, 2022, 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:				Stock	50,000
Michael			10,000	Sundry Debtor	50,000
Workmen Compensation Reserve			21,000	Land and Building	57,000
Capital A/cs:				Profit and Loss A/c	15,000
Michael	60,000			Advertisement Suspense A/c	6,000
Jackson	40,000
John		10,000	1,10,000
			1,81,000		1,81,000

During the realisation, a 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 Debtor 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. It was taken by Michael 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.

 

Answer:

Realisation Account
Dr.								Cr.
Particulars			( `)	Particulars			( `)
Land and Building			57,000	Creditors			40,000
Stock			50,000	Bank
Sundry Debtor			50,000	Land and building		40,000
				Stock		30,000
Bank A/c:				Sundry   Debtor		42,000	1,12,000
Creditors  (40,000 + 15,000)		55,000
Expenses		1,200	56,200	Loss transferred to:
				Michael’s Capital A/c	30,600
				Jackson’s Capital A/c	20,400
				John’s Capital A/c	10,200		61,200
			2,13,200				2,13,200

 

	Partners Capital Accounts
	Dr.									Cr.
Particulars			Michael	Jackson	John	Particulars	Michael	Jackson	John
Profit and Loss A/c Advertisement Suspense A/c Realisation A/c (Loss)			7,500 3,000 30,600	5,000 2,000 20,400	2,500 1,000 10,200	Balance b/d Workmen Compensation Reserve A/c   Bank A/c	60,000 10,500 ------	40,000 7,000 ------	10,000 3,500 200
Bank A/c			29,400	19,600	-------
			70,500	47,000	13,700		70,500	47,000	13,700

 

Michael’s Loan Account
Dr.					Cr.
Particulars		( `)	Particulars	( `)
Bank A/c		10,000	Balance b/d	10,000
		10,000		10,000

 

Bank Account
Dr.					Cr.
Particulars		( `)	Particulars	( `)
Balance b/d		3,000	Michael’s Loan A/c Realisation A/c	10,000 56,200
Realisation A/c		1,12,000	Michael’s Capital A/c	29,400
John’s Capital A/c		200	Jackson’s Capital A/c	19,600
		1,15,200		1,15,200

 

Question 31:

Prashant and Rajesh are partners in a firm sharing profits and losses in the ratio of 2 : 1. On 31st March, 2022, their Balance Sheet was:

Liabilities		( `)	Assets			( `)
Bank Overdraft		30,000	Cash in Hand			6,000
General Reserve		56,000	Bank Balance			10,000
Investments Fluctuation Reserve		20,000	Sundry Debtor		26,000
Prashant 's Loan		34,000	Less: Provision for Doubtful Debtor		2,000	24,000
Capital A/c:
Prashant		50,000	Investments			40,000
			Stock			10,000
			Furniture			10,000
			Building			60,000
			Rajesh 's Capital			30,000
		1,90,000				1,90,000

On that date, the partners decide to dissolve the firm. Prashant took over Investments at an agreed valuation of  ` 35,000. Other assets were realised as follows:
Sundry Debtor: Full amount. The firm could realise Stock at 15% less and Furniture at 20% less than the book value. 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.

Answer:

Realisation Account
Dr.								Cr.
Particulars				( `)	Particulars		( `)
Sundry Debtor				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
Building				60,000	Prashant’s Capital A/c (Investments)		35,000
Bank A/c:					Bank A/c:
Compensation to Employees			10,000		Sundry Debtor	26,000
Bank Overdraft			30,000	40,000	Stock	8,500
Profit transferred to:					Furniture	8,000
Prashant’s Capital A/c		29,000			Building	1,00,000	1,42,500
Rajesh’s Capital A/c		14,500		43,500
				2,29,500			2,29,500

 

Partners Capital Accounts
Dr.							Cr.
Particulars		Prashant	Rajesh	Particulars	Prashant	Rajesh
Balance b/d		–	30,000	Balance b/d	50,000	–
Realisation A/c (Investment)		35,000		General Reserve A/c	37,333	18,667
Bank A/c		81,333	3,167	Realisation A/c (Profit )	29,000	14,500
		1,16,333	33,167		1,16,333	33,167

 

Prashant’s Loan Account
Dr.					Cr.
Particulars		Amount ( `)	Particulars	Amount ( `)
			Balance b/d	34,000
Bank A/c		34,000
		34,000		34,000

 

Bank Account
Dr.				Cr.
Particulars		Amount ( `)	Particulars	Amount ( `)
Balance b/d		10,000	Realisation A/c	40,000
Cash A/c		6,000	Prashant’s Capital A/c	81,333
Realisation A/c		1,42,500	Rajesh’s Capital A/c	3,167
			Prashant’s Loan  A/c	34,000
		1,58,500		1,58,500

 

 

Question 32:

Ashok, Babu and Chetan are in partnership sharing profit in the proportion of 1/2, 1/3, 1/6 respectively. They dissolve the partnership of the 31st March, 2022 when the Balance Sheet of the firm as under:

Liabilities			( `)	Assets			( `)
Sundry Creditors			20,000	Bank			7,500
Bills Payable			25,500	Sundry Debtor			58,000
Babu's Loan			30,000	Stock			39,500
Capital A/cs:				Machinery			48,000
Ashok		70,000		Investments			42,000
Babu		55,000		Freehold Property			50,500
Chetan		27,000	1,52,000
Current A/cs:
Ashok		10,000
Babu		5,000
Chetan		3,000	18,000
			2,45,500				2,45,500

The Machinery was taken over by Babu for  ` 45,000, Ashok took over the Investments for  ` 40,000 and Freehold property took over by Chetan at  ` 55,000. The remaining Assets realised as follows:
Sundry Debtor  ` 56,500 and Stock  ` 36,500. Sundry Creditors  were settled at discount of 7%. A Office computer, not shown in the books of accounts realised  ` 9,000. Realisation expenses amounted to  ` 3,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.								Cr.
Particulars			( `)	Particulars			( `)
Sundry Debtor			58,000	Sundry Creditors			20,000
Stock			39,500	Bills Payable			25,500
Machinery			48,000	Ashok’s Current A/c (Investment)			40,000
Investment			42,000	Babu’s Current A/c (Machinery)			45,000
Freehold property			50,500	Chetan’s Current A/c			55,000
Bank:				(Freehold property)
Sundry Creditors		18,600		Bank:
Bills Payable		25,500		Sundry Debtor		56,500
Expenses		3,000	47,100	Stock		36,500
Realisation Profit				Unrecorded Computer		9,000	1,02,000
Ashok’s Current A/c		1,200
Babu’s Current A/c		800
Chetan’s Current A/c		400	2,400
			2,87,500				2,87,500

 

Partners' Current Account
Dr.									Cr.
Particulars		Ashok	Babu	Chetan	Particulars	Ashok	Babu	Chetan
Realisation		40,000	45,000	55,000	Balance b/d	10,000	5,000	3,000
(Assets taken)					Realisation (Profit)	1,200	800	400
					Ashok's Capital A/c	28,800
					Babu's Capital A/c		39200
					Chetan's Capital A/c			51600
		40,000	45,000	55,000		40,000	45,000	55,000

 

Partners' Capital Account
Dr.									Cr.
Particulars		Ashok	Babu	Chetan	Particulars	Ashok	Babu	Chetan
Ashok's Current A/c		28,800			Balance b/d	70,000	55,000	27,000
Babu's Current A/c			39200		Bank A/c			24,600
Chetan's Current A/c				51600
Bank A/c		41,200	15,800
		70,000	55,000	51,600		70,000	55,000	51,600

 

Babu’s Loan A/c
Dr.			Cr.
Particulars		( `)		Particulars	( `)
Bank A/c		30,000		Balance b/d	30,000
		30,000			30,000

 

Bank Account
Dr.				Cr.
Particulars		( `)	Particulars		( `)
Balance b/d		7,500	Realisation A/c (Payment of Expenses& Liabilities)		47,100
Realisation A/c (Assets realised)		102,000	and Liabilities)
Chetan’s Capital A/c		24,600	Babu’s Loan		30,000
			Ashok’s Capital A/c		41,200
			Babu’s Capital A/c		15,800
		1,34,100			1,34,100

 

Question 33:

Rita and Sobha are partners in a firm, Fancy Garments Exports, sharing profits and losses equally. On 1st April, 2022, the Balance Sheet of the firm was:

Liabilities			( `)	Assets			( `)
Sundry Creditors			75,000	Cash			6,000
Bills Payable			30,000	Bank			30,000
Rita's Loan			15,000	Stock			75,000
Reserve			24,000	Book Debts		66,000
Capital A/cs:				Less: Provision for Doubtful Debts		6,000	60,000
Rita		90,000
Sobha		30,000	1,20,000	Plant and Machinery			45,000
				Land and Building			48,000
			2,64,000				2,64,000

The firm was dissolved on the date given above. The following transactions took place:
(a) Rita took 25% of the Stock at a discount of 20% in settlement of her loan.
(b) Book Debts realised  ` 54,000; balance of the Stock was sold at a profit of 30% on cost.
(c) Sundry Creditors  were paid out at a discount of 10%. Bills Payable were paid in full .
(d) Plant and Machinery realised  ` 75,000. Land and Building  ` 1,20,000.
(e) Rita took the goodwill of the firm at a value of  ` 30,000.
(f) An unrecorded asset of  ` 6,900 was handed over to an unrecorded liability of  ` 6,000 in full settlement.
(g) Realisation expenses were  ` 5,250.
Show Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.

Answer:

Realisation Account
Dr.						Cr.
Particulars			( `)	Particulars		( `)
Stock			75,000	Provision for Doubtful Debts		6,000
Book Debts			66,000	Sundry Creditors		75,000
Plant and Machinery			45,000	Bills Payable		30,000
Land and building			48,000
				Rita’s Capital A/c		30,000
				(Goodwill taken over)
Bank A/c:				Rita’s Loan A/c (Stock taken over)		15,000
Sundry Creditors		67,500
Bills Payable		30,000		Bank A/c:
Expenses		5,250	1,02,750	Book Debts	54,000
Profit transferred to:				Stock	73,125
Rita’s Capital A/c		70,688		Plant and Machinery	75,000
Sobha’s Capital A/c		70,687	1,41,375	Land and Building	1,20,000	3,22,125
			4,78,125			4,78,125

 

Partners Capital Accounts
Dr.							Cr.
Particulars		Rita ( `)	Sobha ( `)	Particulars	Rita ( `)	Sobha ( `)
Realisation A/c (Assets)		30,000	–	Balance b/d	90,000	30,000
				Reserve Fund	12,000	12,000
Bank A/c		1,42,688	1,12,687	Realisation A/c (Profit)	70,688	70,687
		1,72,688	1,12,687		1,72,688	1,12,687

 

Rita’s Loan A/c
Dr.		Cr.
Particulars	( `)	Particulars	( `)
To Realisation A/c	15,000	Balance b/d	15,000
	15,000		15,000

 

Bank Account
Dr.					Cr.
Particulars		( `)	Particulars	( `)
Balance b/d		30,000	Realisation A/c	1,02,750
Cash A/c		6,000	Rita’s Capital A/c	1,42,688
Realisation A/c		3,22,125	Sobha’s Capital A/c	1,12,687
		3,58,125		3,58,125

Working Notes:

WN1: Value of Stock Taken Over by Rita

Stock taken over by Rita=Book Value of Stock×25100×80100                       

[Since stock is taken over at a discount of 20%]Stock taken over by Rita=75,000×25100×80100=15,000

WN2: Value of Stock Sold

Book Value of Balance of Stock Sold=Value of Stock - Stock Taken over by RitaBook Value of Balance of Stock Sold

=(75,000 - 18,750)= 56,250

Value of Stock Sold=56,250×130100=73,125  [Sold at 30% Profit]

Question 34:

Mala, B and Kala were in partnership sharing profits in the ratio of 7 : 2 : 1 and the Balance Sheet of the firm as at 31st March, 2022 was:

Liabilities		( `)	Assets	( `)
Capital A/cs:			Building	20,000
Mala	12,410		Plant	31,220
Neela	8,650		Goodwill	10,000
Kala	80,620	1,01,680	100 Shares in X Ltd. (At cost)	2,400
Creditors		11,210	1,000 Shares in Y Ltd. (At cost)	10,000
Reserve for Depreciation on Plant		20,000	Stock	11,240
			Debtor	8,740
			Bank	1,210
			Patents	38,080
		1,32,890		1,32,890

It was agreed to dissolve the partnership as on 31st March, 2022 and the terms of dissolution were−
(a) Mala to take over the Building at an agreed amount of  ` 31,500.
(b) Neela, who was to carry on the business, to take over the Goodwill, Stock and Debtor at book value, the Patents at  ` 30,000 and Plant at  ` 5,000. He was also to pay the Creditors .
(c) Kala to take over shares in X Ltd. at  ` 15 each.
(d) The shares in Y Ltd. to be divided in the profit-sharing ratio.
Show Ledger Accounts recording the dissolution in the books of the firm.

Answer:

Realisation Account
Dr.						Cr.
Particulars		`	Particulars		`
Building		20,000	Creditors		11,210
Plant		31,220	Reserve for Depreciation on Plant		20,000
Good will		10,000	Mala’s Capital A/c:
100 Shares in X Ltd.		2,400	Building	31,500
1,000 Shares in Y Ltd.		10,000	Shares of Y Ltd.	7,000	38,500
Stock		11,240	Neela’s Capital A/c:
Debtor		8,740	Good will	10,000
Patents		38,080	Stock	11,240
Neela’s Capital A/c (Creditors )		11,210	Debtor	8,740
			Patents	30,000
			Plant	5,000
			Shares of Y Ltd.	2,000	66,980
			Kala’s Capital:
			Shares of X Ltd.	1,500
			Shares of Y Ltd.	1,000	2,500
			Loss transferred to:
			Mala’s Capital A/c	2,590
			Neela’s Capital A/c	740
			Kala’s Capital A/c	370	3,700
		1,42,890			1,42,890

 

Partners Capital Accounts
Dr.								Cr.
Particulars		Mala	Neela	Kala	Particulars	Mala	Neela	Kala
Realisation A/c (Assets)		38,500	66,980	2,500	Balance b/d	12,410	8,650	80,620
Realisation A/c (Loss)		2,590	740	370	Realisation A/c (Creditors )	–	11,210	–
Bank A/c		–	–	77,750	Bank A/c	28,680	47,860
		41,090	67,720	80,620		41,090	67,720	80,620

 

Bank Account
Dr.				Cr.
Particulars		Amount  `	Particulars		Amount  `
Balance b/d		1,210	Kala’s Capital A/c		77,750
Mala’s Capital A/c		28,680
Neela’s Capital A/c		47,860
		77,750			77,750

Working Notes:

Distribution of Shares in Y Ltd.

Distribution of shares in Y Ltd. among the partners:

Mala's Share = 10,000×7/10= `.7,000

Neela's Share = 10,000×2/10= `.2,000

Kala's Share = 10,000×1/10= `.1,000

 

Question 35:

Srijan, Raman and Manan were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. On 31st, March, 2017 their Balance Sheet was as follows:
 

BALANCE SHEET OF SRIJAN, RAMAN AND MANAN as on 31st March, 2017
Liabilities		( `)	Assets	( `)
Capitals:			Capital: Manan	10,000
Srijan	2,00,000		Plant	2,20,000
Raman	1,50,000	3,50,000	Investments	70,000
Creditors		75,000	Stock	50,000
Bills Payable		40,000	Debtor	60,000
Outstanding Salary		35,000	Bank	10,000
			Profit and Loss Account	80,000
		5,00,000		5,00,000

On the above date they decided to dissolve the firm.
(a) Srijan was appointed to realise the assets and discharge the liabilities. Srijan was to receive 5% commission on sale of assets (except cash) and was to bear all expenses of realisation.
(b)

Assets were realised as follows:	`
Plant	85,000
Stock	33,000
Debtor	47,000

(c) Investments were realised at 95% of the book value.
(d) The firm had to pay  ` 7,500 for an outstanding repair bill not provided for earlier.
(e) A contingent liabillity in respect of bills receivable, discounted with the bank had also materialised and had to be discharged for  ` 15,000.
(f) Expenses of realisation amounting to  ` 3,000 were paid by Srijan.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Dr.	Realisation A/c						Cr.
Particulars			( `)	Particulars		( `)
To Plant			2,20,000	By Creditors		75,000
To Investments			70,000	By Bills Payable		40,000
To Stock			50,000	By Outstanding Salary		35,000
To Debtor			60,000
To Srijan’s Capital A/c (Commission)			11,575	By Bank A/c:
To Bank A/c:				Investments	66,500
Outstanding Bill Repair		7,500		Plant	85,000
Contingent liability against bills payable		15,000		Stock	33,000
Creditors		75,000		Debtor	47,000	2,31,500
Bills Payable		40,000
Outstanding Salary		35,000	1,72,500	By Loss on Realisation transferred to:
				Srijan’s Capital A/c	81,030
				Raman’s Capital A/c	81,030
				Manan’s Capital A/c	40,515	2,02,575
			5,84,075			5,84,075

    

Dr.	Partner’s Capital A/c								Cr.
Particulars		Srijan ( `)	Raman ( `)	Manan ( `)	Particulars	Srijan ( `)	Raman ( `)	Manan ( `)
To balance b/d				10,000	By balance b/d	2,00,000	1,50,000
To Realisation A/c (Loss)		81,030	81,030	40,515	By Realisation A/c (Commission)	11,575
To Profit & Loss A/c		32,000	32,000	16,000
To Bank A/c (Final Payment)		98,545	36,970	–	By Bank A/c			66,515
		2,11,575	1,50,000	66,515		2,11,575	1,50,000	66,515

 

Dr.	Bank A/c			Cr.
Particulars		( `)	Particulars		( `)
To balance b/d		10,000	By Srijan’s Capital A/c		98,545
To Realisation A/c (Asset Realised)		2,31,500	By Raman’s Capital A/c		36,970
To Manan’s Capital A/c		66,515	By Realisation A/c (Liabilities Paid)		1,72,500
		3,08,015			3,08,015

 

Question 36:

There are two partners X and Y in a firm and their capitals are  ` 50,000 and  ` 40,000. The Creditors  are  ` 30,000. The assets of the firm realise  ` 1,00,000. How much will X and Y receive?

Answer:

Realisation Account
Dr.					Cr.
Particulars		`	Particulars		`
Sundry Assets (WN)		1,20,000	Creditors		30,000
Cash A/c		30,000	Cash A/c		1,00,000
			Loss transferred to:
			X’s Capital A/c	10,000
			Y’s Capital A/c	10,000	20,000
		1,50,000			1,50,000

 

Partners Capital Accounts
Dr.												Cr.
Particulars			X		Y		Particulars	X	Y
Realisation A/c (Loss)			10,000		10,000		Balance b/d	50,000	40,000
Cash A/c			40,000		30,000
			50,000		40,000			50,000	40,000
Cash Account
Dr.										Cr.
Particulars				Amount  `		Particulars		Amount  `
Realisation A/c				1,00,000		Realisation A/c		30,000
						X’s Capital A/c		40,000
						Y’s Capital A/c		30,000
				1,00,000				1,00,000

Working Note: 

Memorandum Balance Sheet
Liabilities		`	Assets	`
Capital A/c			Sundry Assets	1,20,000
X	50,000		(Balancing Figure)
Y	40,000	90,000
Creditors		30,000
		1,20,000		1,20,000

Question 37:

A, B and C were partners sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2022, A's Capital and B's Capital were  ` 30,000 and  ` 20,000 respectively but C owed  ` 5,000 to the firm. The liabilities were ` 20,000. The assets of the firm realised ` 50,000.
Prepare Realisation Account, Partner's Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.				Cr.
Particulars		`	Particulars			`
Sundry Assets (WN)		65,000	Creditors			20,000
Cash A/c (Creditors )		20,000	Cash A/c (Assets realised)			50,000
			Loss transferred to:
			A’s Capital A/c		7,500
			B’s Capital A/c		4,500
			C’s Capital A/c		3,000	15,000
		85,000				85,000

 

Partners Capital Accounts
Dr.								Cr.
Particulars		A	B	C	Particulars	A	B		C
Balance b/d		–	–	5,000	Balance b/d	30,000	20,000		–
Realisation A/c (Loss)		7,500	4,500	3,000	Cash A/c	–	–		8,000
Cash A/c		22,500	15,500	–
		30,000	20,000	8,000		30,000	20,000		8,000

 

Cash Account
Dr.				Cr.
Particulars		`	Particulars		`
Realisation A/c (Assets)		50,000	Realisation A/c (Creditors )		20,000
C’s Capital A/c		8,000	A’s Capital A/c		22,500
			B’s Capital A/c		15,500
		58,000			58,000

Working Note:

Memorandum Balance Sheet as on March 31, 2022
Liabilities		`	Assets	`
Capital A/c			C’s Capital A/c	5,000
A	30,000		Sundry Assets	65,000
B	20,000	50,000	(Balancing Figure)
Other liabilities		20,000
		70,000		70,000

 

Question 38:

A and B were partners sharing profits and losses as to 7/11th to A and 4/11th to B. They dissolved the partnership on 30th May, 2021. As on that date their capitals were: A  ` 7,000 and B  ` 4,000. There were also due on Loan A/c to A  ` 4,500 and to B  ` 750. The other liabilities amounted to  ` 5,000. The assets proved to have been undervalued in the last Balance Sheet and actually realised  ` 24,000.
Prepare necessary accounts showing the final settlement between partners.
 

Answer:

Realisation Account
Dr.					Cr.
Particulars			`	Particulars	`
Sundry Assets (WN)			21,250	Other liabilities	5,000
Cash A/c (Liabilities)			5,000	Cash A/c (Assets Realised)	24,000
Profit transferred to:
A’s Capital A/c		1,750
B’s Capital A/c		1,000	2,750
			29,000		29,000

 

Partners Capital Accounts
Dr.					Cr.
Particulars		A	B	Particulars		A	B
Cash A/c		8,750	5,000	Balance b/d		7,000	4,000
				Realisation A/c (Profit)		1,750	1,000
		8,750	5,000			8,750	5,000

 

Partners Loan Accounts
Dr.									Cr.
Particulars			A		B	Particulars				A		B
Cash A/c			4,500		750	Balance b/d				4,500		750
			4,500		750					4,500		750
Cash Account
Dr.								Cr.
Particulars				`			Particulars				`
Realisation A/c  (Assets)				24,000			A’s Capital A/c				8,750
							B’s Capital A/c				5,000
							A’s Loan A/c				4,500
							B’s Loan A/c				750
							Realisation A/c				5,000
				24,000							24,000

Working Note: 

Memorandum Balance Sheet as on May 30, 2021
Liabilities		`	Assets	`
Capital A/cs:			Sundry Assets	21,250
A	7,000		(Balancing Figure)
B	4,000	11,000
A’s Loan		4,500
B’s Loan		750
Other Liabilities		5,000
		21,250		21,250

Question 39:

A, B and C started business on 1st April, 2021 with capitals of  ` 1,00,000;  ` 80,000 and  ` 60,000 respectively sharing profits (losses) in the ratio of 4 : 3 : 3. For the year ended 31st March, 2022, the firm suffered a loss of  ` 50,000. Each of the partners withdrew  ` 10,000 during the year.
On 31st March, 2022, the firm was dissolved, the Creditors  of the firm stood at  ` 24,000 on that date and Cash in Hand was  ` 4,000. The assets realised  ` 3,00,000 and Creditors  were paid  ` 23,500 in full settlement of their claims.
Prepare Realisation Account and show your workings clearly.

Answer:

Realisation Account
Dr.										Cr.
Particulars					( `)		Particulars		( `)
Sundry Assets (WN 2)					1,80,000		Sundry Creditors		24,000
Cash A/c (Creditors )					23,500		Cash A/c (Assets)		3,00,000
Profit transferred to:
A’s Capital A/c			48,200
B’s Capital A/c			36,150
C’s Capital A/c			36,150		1,20,500
					3,24,000				3,24,000
Partners Capital Accounts
Dr.											Cr.
Particulars		A		B		C	Particulars	A	B			C
							Balance b/d	70,000	55,000			35,000
Cash A/c		1,18,200		91,150		71,150	Realisation A/c	48,200	36,150			36,150
		1,18,200		91,150		71,150		1,18,200	91,150			71,150

Cash Account
Dr.					Cr.
Particulars		( `)	Particulars	( `)
Balance b/d		4,000	Realisation A/c	23,500
Realisation A/c		3,00,000	A’s Capital A/c	1,18,200
			B’s Capital A/c	91,150
			C’s Capital A/c	71,150
		3,04,000		3,04,000

Working Notes:

WN 1 Calculation of Partners Capital as on April 01, 2022
 

Particulars	X	Y	Z
Capital as on April 01, 2021	1,00,000	80,000	60,000
Less: Drawings	(10,000)	(10,000)	(10,000)
Less: Share of Loss (4 : 3 : 3)	(20,000)	(15,000)	(15,000)
Capital as on April 01, 2022	70,000	55,000	35,000

WN 2

Memorandum Balance Sheet as on March 31, 2022
Liabilities	( `)	Assets	( `)
Capital A/cs:		Cash in Hand	4,000
A	70,000	Sundry Assets	1,80,000
B	55,000	(Balancing figure)
C	35,000
Creditors	24,000
	1,84,000		1,84,000

 

Question 40:

A, B and C were in partnership sharing profits and losses in the ratio of 2 : 1 : 1. They decided to dissolve the partnership. On that date of dissolution, Sundry Assets (including cash  ` 5,000) amounted to  ` 88,000, assets realised  ` 80,000 (including an unrecorded asset which realised  ` 4,000). A contingent liability on account of bills discounted  ` 8,000 was paid by the firm. The Capital Accounts of A, B and C showed a balance of  ` 20,000 each.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account.

Answer:

Realisation Account
Dr.												Cr.
Particulars						`		Particulars			`
Sundry Assets						83,000		Sundry Liabilities (WN )			28,000
								Cash A/c (Assets realised)			80,000
Cash A/c:								Loss transferred to:
Sundry  Liabilities				28,000				A’s Capital A/c		5,500
Contingent Liabilities				8,000		36,000		B’s Capital A/c		2,750
								C’s Capital A/c		2,750	11,000
						1,19,000					1,19,000
Partners Capital Accounts
Dr.														Cr.
Particulars			A		B		C		Particulars	A	B		C
Realisation A/c (Loss)			5,500		2,750		2,750		Balance b/d	20,000	20,000		20,000
Bank A/c			14,500		17,250		17,250
			20,000		20,000		20,000			20,000	20,000		20,000

Cash Account
Dr.					Cr.
Particulars		`	Particulars	`
Balance b/d		5,000	Realisation A/c	36,000
Realisation A/c		80,000	A’s Capital A/c	14,500
			B’s Capital A/c	17,250
			C’s Capital A/c	17,250
		85,000		85,000

Working Notes:

Memorandum Balance Sheet
Liabilities		`	Assets	`
Capital A/cs:			Cash in Hand	5,000
A	20,000		Sundry Assets	83,000
B	20,000
C	20,000	60,000
Sundry Liabilities		28,000
(Balancing figure)
		88,000		88,000