Dissolution Of Partnership Firms

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:

%5Cbegin%7Barray%7D%7Brl%7D%20%5Cbullet%20%26%20%5Ctext%7BSharmila%20agreed%20to%20take%20over%20the%20building%20at%20%E2%82%B9%201%2C23%2C600.%7D%20%5C%5C%20%5Cbullet%20%26%20%5Ctext%7BUrmila%20took%20over%20goodwill%2C%20stock%2C%20and%20debtors%20at%20book%20value%20and%20agreed%20to%20pay%20creditors%20and%20bills%20payable.%7D%20%5C%5C%20%5Cbullet%20%26%20%5Ctext%7BMotor%20car%20and%20Machinery%20were%20realised%20at%20%E2%82%B9%201%2C51%2C080%20and%20%E2%82%B9%2031%2C680%20respectively.%7D%20%5C%5C%20%5Cbullet%20%26%20%5Ctext%7BInvestments%20were%20taken%20by%20Leela%20at%20an%20agreed%20value%20of%20%E2%82%B9%2055%2C440.%7D%20%5C%5C%20%5Cbullet%20%26%20%5Ctext%7BRealisation%20expenses%20amounted%20to%20%E2%82%B9%206%2C800.%7D%20%5C%5C%20%5Cend%7Barray%7D

Prepare:

%5Cbegin%7Barray%7D%7Brl%7D%20%5Cbullet%20%26%20%5Ctext%7B(a)%20Realisation%20Account%7D%20%5C%5C%20%5Cbullet%20%26%20%5Ctext%7B(b)%20Partners'%20Capital%20Account%7D%20%5C%5C%20%5Cbullet%20%26%20%5Ctext%7B(c)%20Bank%20Account%7D%20%5C%5C%20%5Cend%7Barray%7D

(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.

High-Yield Trend

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Dissolution Of Partnership Firms

High-Yield Trend

Chapter Questions 1 MCQs

Official Solution

Chapter Questions
1 MCQs