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

Q.18. 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 (Rs.)	Assets	Amount (Rs.)
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
		Investment	38,500
Capital :		Fixtures	27,000
Gupta 90,000
Sharma 60,000	150,000
	248,000		248,000

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:

	Rs.
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 Rs 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 Rs 1,200.
Journalise the entries to be made on the dissolution and prepare Realisation Account, Bank Account and Partners Capital Accounts.

SOLUTION

Books of Gupta and Sharma
Journal Entries

Date	Particulars		L.F.	Amount (Rs.)	Amount (Rs.)
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 Rs 52,000, Stock Rs 42,000, Bills Receivable Rs 16,000, Machinery Rs 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 Rs 30,000 and Creditors Rs 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)
	Reserve Fund A/c	Dr.		6,000
Dec,31	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

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
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 :	1,59,000
Fixtures	27,000	Sundry Debtors	52,000
Gupta’s Capital A/c (Mrs. Gupta Loan)	20,000	Stock	42,000
Bank A/c:	68,060	Bills Receivable	16,000
Creditors	36,860	Machinery	49,000
Mrs. Sharma’s Loan	30,000	Gupta’s Capital A/c (Investment)	36,000
Expense	1,200	Loss transferred to :
		Gupta’s Capital A/c	18,280
		Sharma’s Capital A/c	18,280
	3,23,560		3,23,560

            Partners’ Capital Account

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

Particulars	Amount (Rs.)	Particulars	Amount  (Rs.)
Balance b/d	12,500	Realisation  (Payment of expenses and liabilities)	68,060
Realisation  (Assets realised)	1,59,000	Gupta’s Capital A/c	58,720
		Sharma’s Capital A/c	44,720
	1,71,500		1,71,500

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