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Question -

The following is the Balance Sheet of Gupta and Sharma as on December 31, 2017:

Balance Sheet of Gupta and Sharma as on December 31, 2017

 

Liabilities

Amount

Assets

Amount

Sundry Creditors

38,000

Cash at Bank

12,500

Mrs.Gupta’s loan

20,000

Sundry Debtors

55,000

Mrs.Sharma’s loan

30,000

Stock

44,000

Reserve fund

6,000

Bills Receivable

19,000

Provision of doubtful debts

4,000

Machinery

52,000

Capital

Investment

38,500

Gupta

90,000

Fixtures

27,000

Sharma

60,000

1,50,000

 

2,48,000

2,48,000

 

 

 

 

The firm was dissolved on December 31, 2017 and asset realised and settlements of liabilities as follows:
(a) The Realisation of the assets were as follows:

 

Sundry Debtors

52,000

Stock

42,000

Bills receivable

16,000

Machinery

49,000

(b) Investment was taken over by Gupta at agreed value of ₹ 36,000 and agreed to pay of Mrs. Gupta’s loan.
(c) The Sundry Creditors were paid off less 3% discount.
(d) The Realisation expenses incurred amounted to ₹ 1,200.
Journalise the entries to be made on the dissolution and prepare Realisation Account, Bank Account and Partners Capital Accounts.



Answer -

Books of Gupta and Sharma

 

Journal

 

Date

Particulars

L.F.

Amount

Amount

2012

Dec. 31

Realisation A/c

Dr.

2,35,500

To Sundry Debtors A/c

55,000

To Stock A/c

44,000

To Bills Receivable A/c

19,000

To Machinery A/c

52,000

To Investment A/c

38,500

To Fixtures A/c

27,000

(Assets transferred to Realisation Account)

Dec. 31

Sundry Creditors A/c

Dr.

38,000

Mrs. Gupta’s Loan A/c

Dr.

20,000

Mrs. Sharma’s Loan A/c

Dr.

30,000

Provision for Doubtful Debts

Dr.

4,000

To Realisation A/c

92,000

(Liabilities transferred to Realisation Account)

Dec. 31

Bank A/c

Dr.

1,59,000

To Realisation A/c

1,59,000

(Assets realised: Sundry Debtors ₹ 52,000, Stock ₹ 42,000,

Bills Receivable ₹ 16,000, Machinery ₹ 49,000)

Dec. 31

Realisation A/c

Dr.

20,000

To Gupta’s Capital A/c

20,000

(Gupta took over Mrs. Gupta’s Loan)

Dec. 31

Gupta’s Capital A/c

Dr.

36,000

To Realisation A/c

36,000

(Investment taken over by Gupta)

Dec. 31

Realisation A/c

Dr.

66,860

To Bank A/c

66,860

(Liabilities paid: Mrs. Sharma’s Loan ₹ 30,000 and Creditors

₹ 38,000 paid off less 3% discount)

Dec. 31

Realisation A/c

Dr.

1,200

To Bank A/c

1,200

(Realisation expenses paid)

Dec. 31

Gupta’s Capital A/c

Dr.

18,280

Sharma’s Capital A/c

Dr.

18,280

To Realisation A/c

36,560

(Loss on Realisation transferred to Partners’ capital Account)

Dec. 31

Reserve Fund A/c

Dr.

6,000

To Gupta’s Capital A/c

3,000

To Sharma’s Capital A/c

3,000

(Reserve fund distributed among partners ratio)

Dec. 31

Gupta’s Capital A/c

Dr.

58,720

Sharma’s Capital A/c

Dr.

44,720

To Bank A/c

1,03,440

(Final payment made to partners)

Realisation Account

Dr.

 

Cr.

Particulars

Amount

Particulars

Amount

Sundry Debtors

55,000

Sundry Creditors

38,000

Stock

44,000

Mrs. Gupta’s Loan

20,000

Bills Receivable

19,000

Mrs. Sharma’s Loan

30,000

Machinery

52,000

Provision for Doubtful Debts

4,000

Investment

38,500

Bank :

Fixtures

27,000

Sundry Debtors

52,000

Gupta’s Capital A/c (Mrs. Gupta Loan)

20,000

Stock

42,000

Bank A/c:

Bills Receivable

16,000

Creditors

36,860

Machinery

49,000

1,59,000

Mrs. Sharma’s Loan

30,000

Gupta’s Capital A/c (Investment)

36,000

Expense

1,200

68,060

Loss transferred to

Gupta’s Capital A/c

18,280

Sharma’s Capital A/c

18,280

36,560

3,23,560

3,23,560

 

Partners’ Capital Account

Dr.

 

Cr.

Particulars

Gupta

Sharma

Particulars

Gupta

Sharma

Realisation (Investment)

36,000

Balance b/d

90,000

60,000

Realisation (Loss)

18,280

18,280

Realisation (Mrs. Gupta Loan)

20,000

Bank

58,720

44,720

Reserve Fund

3,000

3,000

1,13,000

63,000

1,13,000

63,000

Bank Account

Dr.

 

Cr.

Particulars

Amount

Particulars

Amount

Balance b/d

12,500

Realisation

68,060

Realisation (Assets realised)

1,59,000

(Payment of expenses and liabilities)

Gupta’s Capital A/c

58,720

Sharma’s Capital A/c

44,720

1,71,500

1,71,500

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