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.
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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