Asha, Usha and Nisha are partners in the firm sharing profits and losses in the ratio of 3 : 2 : 1 respectively. On 31st March, 2019 they decided to dissolve the firm when their Balance Sheet was as under:
| Balance Sheet as on 31st March, 2019 | |||
|---|---|---|---|
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Creditors | 28,800 | Building | 1,02,000 |
| Bills Payable | 21,600 | Machinery | 73,000 |
| Capitol Accounts: | Motor Car | 1,67,600 | |
| Asha | 2,27,160 | Goodwill | 45,600 |
| Usha | 1,44,000 | Investment | 62,400 |
| Nisha | 1,08,000 | Debtors | 30,600 |
| Stock | 45,000 | ||
| Bank | 3,360 | ||
| 5,29,560 | 5,29,560 | ||
| The firm was dissolved on the above date and the assets realised as under: | |||
| Asha agreed to take over the Building at ₹ 1,23,600 | |||
| Usha took over Goodwill Stock and Debtors at book value and agreed to pay Creditors and Bills payable. | |||
| Motor car and Machinery realised at ₹ 1,51,080 and ₹ 31,680 respectively. | |||
| Investment were taken by Nisha at an agreed value of ₹ 55,440. | |||
| Realisation Expenses amounted to ₹ 6,800. | |||
| Prepare: | |||
| Realisation Account | |||
| Partners' Capital Account | |||
| Bank Account |
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Start your 14-day free trial to unlock the full solution →The firm is dissolved. Assets are taken over by partners or realised in cash; Usha assumes the creditors and bills payable. Realisation produces a loss of ₹50,000 shared 3:2:1. All partners have credit balances, paid off through the Bank Account (total ₹1,86,120).
Working Note 1 — Take-overs
Asha takes Building at ₹1,23,600. Usha takes Goodwill 45,600 + Stock 45,000 + Debtors 30,600 = ₹1,21,200 (book value) and pays Creditors 28,800 + Bills Payable 21,600 = ₹50,400. Nisha takes Investment at ₹55,440. Motor Car ₹1,51,080 and Machinery ₹31,680 realised in cash.
Working Note 2 — Loss on realisation
Book value of assets transferred ₹5,26,200 + expenses ₹6,800 = ₹5,33,000 debit against realisation of ₹4,83,000 ⇒ loss ₹50,000, shared 3:2:1.
Realisation Account
| Dr. Particulars | Amount (₹) | Cr. Particulars | Amount (₹) |
|---|---|---|---|
| To Building A/c | 1,02,000 | By Creditors A/c | 28,800 |
| To Machinery A/c | 73,000 | By Bills Payable A/c | 21,600 |
| To Motor Car A/c | 1,67,600 | By Asha's Capital A/c (Building) | 1,23,600 |
| To Goodwill A/c | 45,600 | By Usha's Capital A/c (Goodwill+Stock+Debtors) | 1,21,200 |
| To Investment A/c | 62,400 | By Bank A/c (Motor Car) | 1,51,080 |
| To Debtors A/c | 30,600 | By Bank A/c (Machinery) | 31,680 |
| To Stock A/c | 45,000 | By Nisha's Capital A/c (Investment) | 55,440 |
| To Usha's Capital A/c (Creditors & B/P taken over) | 50,400 | By Loss t/f to Capital A/cs — Asha 25,000, Usha 16,666.67, Nisha 8,333.33 | 50,000 |
| To Bank A/c (Realisation expenses) | 6,800 | ||
| Total | 5,83,400 | Total | 5,83,400 |
Partners' Capital Accounts
| Dr. Particulars | Asha | Usha | Nisha | Cr. Particulars | Asha | Usha | Nisha |
|---|---|---|---|---|---|---|---|
| To Realisation A/c (assets taken over) | 1,23,600 | 1,21,200 | 55,440 | By Balance b/d | 2,27,160 | 1,44,000 | 1,08,000 |
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