Q. 5. Aadesh and Sandesh were partners sharing profits and losses in the ratio 3 : 2. Their Balance Sheet on 31st March, 2016 was as under:
Balance Sheet as on 31st March, 2016
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Capital accounts: | Cash at bank | 5,000 | |
| Aadesh | 20,000 | Stock in trade | 21,000 |
| Sandesh | 14,000 | Debtors | 12,000 |
| Current accounts: | Bills receivable | 4,000 | |
| Aadesh | 3,000 | Furniture | 15,000 |
| Sandesh | 2,000 | ||
| Creditors | 15,000 | ||
| Bills payable | 3,000 | ||
| 57,000 | 57,000 |
On the above date the firm was dissolved:
(1) Assets were realised as follows: Furniture ₹ 12,000, stock in trade ₹ 18,000, bills receivable ₹ 2,500 and debtors could be realised ₹ 9,500 only.
(2) Aadesh agreed to discharge the bills payable.
(3) Creditors were paid under 5% discount.
(4) Realisation expenses amounted to ₹ 3,000.
Pass Journal Entries in the books of the firm.
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Start your 14-day free trial to unlock the full solution →Assets of book value ₹ 52,000 realise ₹ 42,000; creditors ₹ 15,000 are paid at 5% discount (₹ 14,250), Aadesh takes over bills payable ₹ 3,000, and realisation expenses are ₹ 3,000, giving a realisation loss of ₹ 12,250 (3 : 2). Final payments: Aadesh ₹ 18,650, Sandesh ₹ 11,100; the Bank Account ties at ₹ 47,000.
Working notes:
- Assets transferred to Realisation (book value): Stock 21,000 + Debtors 12,000 + Bills receivable 4,000 + Furniture 15,000 = ₹ 52,000.
- Assets realised: Furniture 12,000 + Stock 18,000 + Bills receivable 2,500 + Debtors 9,500 = ₹ 42,000.
- Creditors paid = 15,000 x 95% = ₹ 14,250 (discount ₹ 750 is a gain).
- Bills payable ₹ 3,000 taken over by Aadesh (his capital credited).
Journal Entries in the books of the firm:
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| Realisation A/c ... Dr. / To Stock A/c 21,000, To Debtors A/c 12,000, To Bills Receivable A/c 4,000, To Furniture A/c 15,000 [Assets transferred] | 52,000 | 52,000 |
| Creditors A/c ... Dr. 15,000, Bills Payable A/c ... Dr. 3,000 / To Realisation A/c [Liabilities transferred] | 18,000 | 18,000 |
| Bank A/c ... Dr. / To Realisation A/c [Assets realised] | 42,000 | 42,000 |
| Realisation A/c ... Dr. / To Aadesh's Capital A/c [Bills payable taken over by Aadesh] | 3,000 | 3,000 |
| Realisation A/c ... Dr. / To Bank A/c [Creditors paid at 5% discount] | 14,250 | 14,250 |
| Realisation A/c ... Dr. / To Bank A/c [Realisation expenses paid] | 3,000 | 3,000 |
| Aadesh's Current A/c ... Dr. 3,000, Sandesh's Current A/c ... Dr. 2,000 / To Respective Capital A/cs [Current balances transferred] | 5,000 | 5,000 |
| Aadesh's Capital A/c ... Dr. 7,350, Sandesh's Capital A/c ... Dr. 4,900 / To Realisation A/c [Realisation loss 3:2] | 12,250 | 12,250 |
| Aadesh's Capital A/c ... Dr. 18,650, Sandesh's Capital A/c ... Dr. 11,100 / To Bank A/c [Final settlement to partners] | 29,750 | 29,750 |
Supporting - Realisation Account (loss check):
| Particulars | Amount (₹) | Particulars | Amount (₹) |
| --- | --- | --- | --- | …
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