Question

Sharmila, Urmila, and Leela are partners in the firm 'Jeevan Stores' sharing profit and losses in the ratio 2 : 2 : 1 respectively. On 31st March 2020, they decided to dissolve the firm when their Balance Sheet was as follows: \begin{table}[h!] \centering \begin{tabular}{|l|r|l|r|} \hline Liabilities & Amount (₹) & Assets & Amount (₹)
\hline 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
\hline Total: & 5,29,560 & Total: & 5,29,560
\hline \end{tabular} \end{table} The firm was dissolved on the above date and the assets were realised as under: \[\begin{array}{rl} \bullet & \text{Sharmila agreed to take over the building at ₹ 1,23,600.} \\ \bullet & \text{Urmila took over goodwill, stock, and debtors at book value and agreed to pay creditors and bills payable.} \\ \bullet & \text{Motor car and Machinery were realised at ₹ 1,51,080 and ₹ 31,680 respectively.} \\ \bullet & \text{Investments were taken by Leela at an agreed value of ₹ 55,440.} \\ \bullet & \text{Realisation expenses amounted to ₹ 6,800.} \\ \end{array}\] Prepare: \[\begin{array}{rl} \bullet & \text{(a) Realisation Account} \\ \bullet & \text{(b) Partners' Capital Account} \\ \bullet & \text{(c) Bank Account} \\ \end{array}\]

Hint:

In a partnership dissolution, assets are realised, liabilities settled, and any remaining amounts are distributed among the partners based on their profit-sharing ratio.

Answer 1

(a) Realisation Account \begin{tabbing} \hspace{6cm} \= \hspace{4cm} \= \kill Realisation Account \> Dr. \> Cr.
\hline \text{To Sharmila (Building)} \> ₹ 1,23,600 && \text{By Goodwill} \> ₹ 45,600
\text{To Realisation Expenses} \> ₹ 6,800 && \text{By Machinery (Realised)} \> ₹ 31,680
\text{To Motor car (Realised)} \> ₹ 1,51,080 && \text{By Motor car (Realised)} \> ₹ 1,51,080
\text{To Machinery (Realised)} \> ₹ 31,680 && \text{By Building (Taken over by Sharmila)} \> ₹ 1,23,600
\text{To Leela (Investment)} \> ₹ 55,440 && \text{By Debtors (Taken over by Urmila)} \> ₹ 30,600
\text{To Debtors (Taken over by Urmila)} \> ₹ 30,600 && \text{By Stock (Taken over by Urmila)} \> ₹ 45,000
\text{To Stock (Taken over by Urmila)} \> ₹ 45,000 && \text{By Creditors} \> ₹ 28,800
\text{To Creditors} \> ₹ 28,800 & \text{By Bills Payable} \> ₹ 21,600
\hline \text{Total} \> ₹ 3,92,500 & \text{Total} \> ₹ 3,92,500
\hline \end{tabbing} (b) Partners' Capital Account \begin{tabbing} \hspace{6cm} \= \hspace{4cm} \= \kill Partners' Capital Account \> Dr. \> Cr.
\hline \text{To Realisation Account (Sharmila's Share)} \> ₹ 1,23,600 && \text{By Balance b/d (Sharmila)} \> ₹ 2,27,160
\text{To Realisation Account (Urmila's Share)} \> ₹ 1,44,000 && \text{By Realisation Account (Urmila's Share)} \> ₹ 1,44,000
\text{To Realisation Account (Leela's Share)} \> ₹ 1,08,000 && \text{By Realisation Account (Leela's Share)} \> ₹ 1,08,000
\hline \text{Total} \> ₹ 3,75,600 & \text{Total} \> ₹ 3,75,600
\hline \end{tabbing} (c) Bank Account \begin{tabbing} \hspace{6cm} \= \hspace{4cm} \= \kill Bank Account \> Dr. \> Cr.
\hline \text{To Balance b/d (Cash from Realisation)} \> ₹ 3,360 & \text{By Creditors (Paid)} \> ₹ 28,800
\hline \text{Total} \> ₹ 3,360 & \text{Total} \> ₹ 28,800
\hline \end{tabbing} Final Answer: The Realisation Account shows the distribution of assets and liabilities as they are realised. The Partners' Capital Account reflects the adjustments made in the capital accounts of the partners. The Bank Account shows the cash balance post-settlement of creditors and other liabilities.