A, B and C are partners sharing profits and losses equally. They dissolve the firm on 31-03-2025 on which date their balance sheet was as follows:
| Liabilities | Amount | Assets | Amount |
|---|---|---|---|
| Capital: A | 30,000 | Fixed Assets | 1,00,000 |
| Capital: B | 30,000 | Current Assets | 40,000 |
| Capital: C | 30,000 | Cash | 10,000 |
| Creditors | 60,000 | ||
| Total | 1,50,000 | Total | 1,50,000 |
All assets realised 10% less than book value. Creditors were paid in full. Expenses of liquidation amounted to Rs 500. Prepare necessary ledger accounts.
OR
A, B and C were partners sharing profits and losses equally with capitals of 2,00,000, 1,00,000 and 1,00,000 respectively. Their creditors were Rs 1,00,000 and cash balance was Rs 1,00,000. The Assets realised Rs 5,00,000.
Prepare realisation A/c, partner's capital A/cs, cash A/c and Memorandum Balance Sheet.
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Start your 14-day free trial to unlock the full solution →All assets realise 10% less than book value and creditors are paid in full; after charging Rs 500 of liquidation expenses the firm shows a loss on realisation of Rs 14,500, shared equally, leaving Rs 25,166.67 payable to each partner.
Step 1: Amount realised from assets (each 10% less than book value)
- Fixed Assets: 1,00,000 x 90% = Rs 90,000
- Current Assets: 40,000 x 90% = Rs 36,000
Step 2: Realisation Account
| Dr | Rs | Cr | Rs |
|---|---|---|---|
| To Fixed Assets A/c | 1,00,000 | By Creditors A/c (transferred) | 60,000 |
| To Current Assets A/c | 40,000 | By Bank A/c (Fixed Assets realised) | 90,000 |
| To Bank A/c (Creditors paid in full) | 60,000 | By Bank A/c (Current Assets realised) | 36,000 |
| To Bank A/c (Realisation expenses) | 500 | ||
| Total | 2,00,500 | Total | 1,86,000 |
| To Loss on Realisation transferred to Capital A/cs (A, B, C equally) | 14,500 (balancing, shown on credit side to close) |
Loss on Realisation = 2,00,500 - 1,86,000 = Rs 14,500, shared equally: A = B = C = 14,500 / 3 = Rs 4,833.33 each.
Step 3: Partners' Capital Accounts
| Dr | A | B | C | Cr | A | B | C |
|---|---|---|---|---|---|---|---|
| To Realisation A/c (loss) | 4,833.33 | 4,833.33 | 4,833.33 | By Balance b/d | 30,000 | 30,000 | 30,000 |
| To Bank A/c (final payment) | 25,166.67 | 25,166.67 | 25,166.67 |
Step 4: Cash/Bank Account
| Dr | Rs | Cr | Rs |
|---|---|---|---|
| To Balance b/d | 10,000 | By Creditors A/c | 60,000 |
| To Realisation A/c (Fixed Assets) | 90,000 | By Realisation A/c (expenses) | 500 |
| To Realisation A/c (Current Assets) | 36,000 | By A's Capital A/c | 25,166.67 |
| By B's Capital A/c | 25,166.67 | ||
| By C's Capital A/c | 25,166.67 | ||
| Total | 1,36,000 | Total | 1,36,000 (approx., rounded) |
| … |
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