question_answer
The following in the balance sheet of A and B as on 31st March, 2018. Balance Sheet as at 31st March, 2018 | Liabilities | | Amt (Rs.) | Assets | | Amt (Rs.) |
| Sundry Creditors | | 4,80,000 | Cash at Bank | | 6,00,000 |
| Loan from Mrs A | | 2,08,000 | Stock | | 96,000 |
| Loan from Mrs B | | 1,60,000 | Sundry Debtors | 3,20,000 | |
| Reserve | | 3,20,000 | (-) Provision for | | |
| Investment Fluctuation Fund | | 16,000 | Doubtful Debts | (32,000) | 2,88,000 |
| Capital A/cs | | | Investments | | 1,60,000 |
| A | 3,20,000 | | Fixed Assets | | 6,24,000 |
| B | 3,20,000 | 6,40,000 | Advertisement Suspense A/c | | 8,000 |
| | | | Profit and Loss A/c | | 48,000 |
| | | 18,24,000 | | | 18,24,000 |
The firm was dissolved on 31st March, 2018 and the following was found: | (i) Debtors falling due on 1st February, 2019 were realised at a discount of 6% p.a. |
| (ii) Creditors falling due on 30th April, 2018 were paid at a discount of 6% p.a. |
| (iii) A promised to pay off Mrs As Loan and took the stock at 10% discount. |
| (iv) B took half the investments at 10% discount. |
| (v) Fixed assets realised Rs. 11,36,000 and investment realised Rs. 72,000. |
| (vi) There was an old furniture which has been written off completely from the books, B agreed to take the same for Rs. 4,800. |
| (vii) Realisation expenses were Rs. 32,000 paid by A. |
| You are required to prepare the realisation account, bank account and capital accounts of the partners. |
Answer:
Dr Realisation Account Cr | Particulars | | Amt (Rs.) | Particulars | | Amt (Rs.) |
| To Stock | | 96,000 | By Provision for Doubtful Debts | | 32,000 |
| To Sundry Debtors | | 3,20,000 | By Investment Fluctuation Fund | | 16,000 |
| To Investment | | 1,60,000 | By Sundry Creditors | | 4,80,000 |
| To Fixed Assets | | 6,24,000 | By Mrs. A?s Loan | | 2,08,000 |
| To Bank A/c (Creditors) | | 4,77,600 | By Mrs B?s Loan | | 1,60,000 |
| (Rs. 4,80,000 ? Rs. 2,400) | | | By Bank A/c-Assets realised | | |
| To A's Capital A/c-Expenses | | 32,000 | Debtors (Rs. 3,20,000 ? Rs. 16,000) | | |
| To A's Capital A/c-Mrs A's loan | | 2,08,000 | (W.N.1.) | 3,04,000 | |
| To Bank A/c-Mrs B's loan | | 1,60,000 | Fixed Assets | 11,36,000 | |
| To Profit on Realisation | | | Investments | 72,000 | 15,12,000 |
| Tranferred to | | | By B?s Capital A/c-Furniture | | 4,800 |
| A's Capital A/c | 2,46,800 | | By A?s Capital A/c-Stock | | 86,400 |
| B'S Capital A/c | 2,46,800 | 4,93,600 | (Rs. 96,000 ? Rs. 9,600) | | |
| | | | By B's Capital A/c-Investment | | 72,000 |
| | | | (Rs. 80,000 ? Rs. 8,000) | | |
| | | 25,71,200 | | | 25,71,200 |
Dr Partners' Capital Account Cr | Particulars | A (Rs.) | B (Rs.) | Particulars | A (Rs.) | B (Rs.) |
| To Profit and Loss A/c | 24,000 | 24,000 | By Balance b/d | 3,20,000 | 3,20,000 |
| To Advertisement | | | By Reserve | 1,60,000 | 1,60,000 |
| Suspense A/c | 4,000 | 4,000 | By Realisation A/c | 32,000 | - |
| To Realisation A/c | - | 72,000 | (Expenses) | | |
| (Investment) | | | By Realisation A/c | 2,08,000 | - |
| To Realisation A/c | - | 4,800 | (Mrs A?s Loan) | | |
| (Furniture) | | | By Realisation A/c (Profit) | 2,46,800 | 2,46,800 |
| To Realisation A/c | 86,400 | - | | | |
| (Stock) | | | | | |
| To Bank A/c | 8,52,400 | 6,22,000 | | | |
| | 9,66,800 | 7,26,800 | | 9,66,800 | 7,26,800 |
Dr Bank Account Cr | Particulars | Amt (Rs.) | Particulars | | Amt (Rs.) |
| To Balance b/d | 6,00,000 | By Realisation A/c (Creditors) | | 4,77,600 |
| To Realisation A/c | 15,12,000 | By Realisation A/c (Mrs. Z?s loan) | | 1,60,000 |
| (Assets realised) | | By A?s Capital A/c | 8,52,400 | |
| | | (Final Payment) | | |
| | | By B?s Capital A/c | | |
| | | (Final Payment) | 6,22,000 | 14,74,400 |
| | 21,12,000 | | | 21,12,000 |
Working Notes 1. Discount on Debtors\[=Rs.\,3,20,000\times 6\text{ }/100\times 10/12\text{ =}\,\text{Rs}.16,000\] 2. Discount on Creditors\[=Rs.\,4,80,000\times 6/100\times 1/2=Rs.\text{ }2,400\] 3. Advertisement suspense is a fictitious asset. Therefore, it is to be debited to partner?s capital accounts in the profit sharing ratio.
