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6.30 Double Entry Book Keeping (Section A)—ISC XII

Advanced Level Questions

Illustration 14.
Lion and Tiger were in partnership sharing profits and losses in the ratio of 3 : 1. On 31st March, 2020, the
Balance Sheet of the firm was as follows:
Liabilities ` Assets `
Capital A/cs: Fixed Assets 2,10,000
Lion 2,40,000 Stock 1,12,000
Tiger 80,000 3,20,000 Sundry Debtors 1,96,000
Current A/cs: Cash at Bank 37,200
Lion 42,000
Tiger 20,000 62,000
Loan (Tiger) 30,000
Creditors 1,43,200
5,55,200 5,55,200

They decided to dissolve the partnership firm on the date of the Balance Sheet.
Classmate Ltd. took Stock and Fixed Assets excluding motor car having a book value of ` 41,000, for a
consideration of ` 4,80,000 which is to be satisfied by payment of cash ` 1,60,000, allotment of 1,600
Debentures of ` 100 each valued at ` 75 per share and the balance by allotment of 1,600 Equity Shares
of the face value of ` 100 each.
The Debtors realised ` 1,92,000 and the Creditors were settled for ` 1,40,000.
Following was the agreement between the partners:
(i) The Equity Shares should be allotted in the ratio of the Partners’ Capital Accounts as per
Balance Sheet.
(ii) Lion to take over the motor car at an agreed value of ` 42,000.
(iii) Debentures to be allotted to Tiger to the value of his loan and the remaining to be allotted equally
between the partners.
(iv) Balance remaining to be settled in cash.
You are required to show Realisation Account, Partners’ Capital Accounts, Classmate Ltd.’s Account, Bank
Account and Statement showing distribution of shares and debentures.
Solution:
Dr. REALISATION ACCOUNT Cr.
Particulars ` Particulars `
To Fixed Assets A/c 2,10,000 By Creditors A/c 1,43,200
To Stock A/c 1,12,000 By Classmate Ltd. 4,80,000
To Debtors A/c 1,96,000 By Lion’s Capital A/c 42,000
To Bank A/c (Creditors) 1,40,000 (Motor Car Taken Over)
To Gain (Profit) transferred to: By Bank A/c (Debtors) 1,92,000
Lion’s Capital A/c (3/4) 1,49,400
Tiger’s Capital A/c (1/4) 49,800 1,99,200
8,57,200 8,57,200