Sharmila, Urmila and Leela are partners in the firm ‘Jeevan Stores’ sharing profits and losses in the ratio of 2 : 2 : 1 respectively. On 31st March 2020, they decided to dissolve the firm when their Balance Sheet was as under.
| Balance Sheets as on 31st March 2020 | |||
|---|---|---|---|
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capital Account: | Goodwill | 45,600 | |
| Sharmila | 2,27,160 | Machinery | 73,000 |
| Urmila | 1,44,000 | Motor Car | 1,67,600 |
| Leela | 1,08,000 | Building | 1,02,000 |
| Creditors | 28,800 | Investment | 62,400 |
| Bills Payable | 21,600 | 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 were realised as under: | |||
| Sharmila agreed to take over the building at ₹ 1,23,600. | |||
| Urmila took over goodwill, stock, and debtors at book values and agreed to pay creditors and bills payable. | |||
| Motor car and Machinery realised ₹ 1,51,080 and ₹ 31,680 respectively. | |||
| Investments were taken by Leela 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 →Transfer all assets (₹5,26,200) and Urmila's take-over of liabilities (₹50,400) plus expenses (₹6,800) to the debit of Realisation; credit liabilities (₹50,400), assets taken over (Sharmila building ₹1,23,600, Urmila goodwill+stock+debtors ₹1,21,200, Leela investment ₹55,440) and cash realised (motor car ₹1,51,080 + machinery ₹31,680). Loss ₹50,000 shared 2:2:1. Capitals are then settled through the Bank Account, which balances at ₹1,86,120.
Realisation Account
| Particulars | Amount (₹) | Particulars | Amount (₹) |
|---|---|---|---|
| To Goodwill A/c | 45,600 | 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 Sharmila's Capital A/c (Building) | 1,23,600 |
| To Building A/c | 1,02,000 | By Urmila's Capital A/c (Goodwill+Stock+Debtors) | 1,21,200 |
| To Investment A/c | 62,400 | By Leela's Capital A/c (Investment) | 55,440 |
| To Debtors A/c | 30,600 | By Bank A/c (Motor Car 1,51,080 + Machinery 31,680) | 1,82,760 |
| To Stock A/c | 45,000 | ||
| To Urmila's Capital A/c (Creditors + B/P taken over) | 50,400 | ||
| To Bank A/c (Realisation expenses) | 6,800 | By Loss transferred to Capital A/cs: | |
| Sharmila (2/5) | 20,000 | ||
| Urmila (2/5) | 20,000 | ||
| Leela (1/5) | 10,000 | ||
| Total | 5,83,400 | Total | 5,83,400 |
Partners' Capital Accounts
| Particulars | Sharmila (₹) | Urmila (₹) | Leela (₹) | Particulars | Sharmila (₹) | Urmila (₹) | Leela (₹) |
|---|---|---|---|---|---|---|---|
| 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 |
| To Realisation A/c (loss) | 20,000 | 20,000 | 10,000 | By Realisation A/c (liab. taken over) | — | 50,400 | — |
| To Bank A/c (final payment) | 83,560 | 53,200 | 42,560 | ||||
| Total | 2,27,160 | 1,94,400 | 1,08,000 | Total | 2,27,160 | 1,94,400 | 1,08,000 |
| … |
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