Page 184 - DEBKVOL-1

Chapter 8 Dissolution of a Partnership Firm 8.9
.
Solution:
Dr. REALISATION ACCOUNT Cr.
Particulars ` Particulars `
To Debtors 3,40,000 By Creditors 1,50,000
To Stock A/c 1,50,000 By Bank A/c (Assets Realised):
To Furniture A/c 4,60,000 Debtors (` 3,40,000 – 5%) 3,23,000
To Machinery A/c 8,20,000 Stock 65,000
To Bank A/c (Creditors) 1,50,000 Machinery 74,000 4,62,000
To Hanif’s Capital A/c 8,000 By Hanif’s Capital A/c 67,500
(Realisation Expenses) (Stock) (` 75,000 – 10%)
By Jubed’s Capital A/c (Furniture) 1,35,000
By Loss transferred to:
Hanif’s Capital A/c 7,42,333
Jubed’s Capital A/c 3,71,167 11,13,500
19,28,000 19,28,000

Illustration 7 (Dissolution and Unrecorded Liability).
Following is the Balance Sheet of Vishnu, Sanjiv and Sudhir as at 31st March, 2018:
Liabilities ` Assets `
Bills Payable 20,000 Cash/Bank 8,000
Creditors 18,000 Bills Receivable 12,000
Mrs. Vishnu’s Loan 20,000 Stock 25,000
Outstanding Salary 5,000 Sundry Debtors 40,000
Investments Fluctuation Fund 10,000 Less: Provision for
Workmen Compensation Reserve 15,000 Doubtful Debts 4,000 36,000
Capital A/cs: Land and Building 50,000
Vishnu 40,000 Furniture 10,000
Sanjiv 30,000 Computer 5,000
Sudhir 18,000 88,000 Investments 30,000
1,76,000 1,76,000

Profit and loss sharing ratio of the partners is 5 : 3 : 2. On the above date, partners decided to
dissolve the firm. The assets realised as follows:
Bills Receivable were realised at a discount of 5%. All Debtors were good. Stock realised
` 22,000. Land and Building realised at 40% higher than the book value. Furniture was sold for
` 8,000 by auction and auctioneer’s commission amounted to ` 500. Computer was taken by
Vishnu for an agreed valuation of ` 3,000. Investments were sold in the open market at a price
of ` 35,000, for which a commission of ` 600 was paid to the broker. Bills Payable were paid
at full amount. Creditors, however, agreed to accept 10% less. All other liabilities were paid at
their book value. The firm retrenched their employees three months before the dis solution of
the firm and firm had to pay ` 20,000 as compensation. This liability was not appearing in the
above Balance Sheet. A Workmen Compensation Claim of ` 5,000 has arisen.
Close the books of the firm by preparing Realisation Account, Partners’ Capital Accounts and
Bank Account.