DEPARTMENT OF TECHNICAL EDUCATION
ANDHRA PRADESH
Name of the staff : J.Satyanarayana Rao
Designation : Senior Lecturer
Branch : Commercial & Computer Practice
Institute : Govt. Polytechnic for Women, Guntur.
Year/Semester : III Semester
Subject : Accountancy-III
Topic : Partnership
Duration : 50 Minutes
Sub-topic : Model Accounts on Dissolution, when
all
partners are solvent. (Continuation)
Teaching Aids : PPT Animation
CCP402.69 1
Example
A,B & C are sharing profits in the ratio of 3:2:1, agreed
upon dissolution of the firm. A was appointed to realize the
Assets and pay off the liabilities for which he was entitled
to a lump sum amount of Rs.10,000. The balance sheet
of the firm on 31st December, 2001.
CCP402.69 2
BALANCE SHEET AS ON 31st December,2001.
Liabilities Rs. Assets Rs.
Capital A 5,00,000 Machinery 4,05,000
“ B 2,00,000 7,00,000 Stock 75,000
Creditors 1,85,000 Investments 2,00,000
Investment 60,000 Debtors 93,000
Fluctuations Fund Less:
Provision 6,000 87,000
C’s Capital A/c 1,15,000
Cash 63,000
9,45,000 9,45,000
CCP402.69 3
Contd..
The investments are taken by A for Rs.1,80,000. B takes
Overall the stock at Rs.70,000 and debtors amount to
Rs.50,000 at Rs.45,000. Machinery is sold for Rs.5,50,000.
The remaining debtors realise 50% of the book value.
Prepare necessary ledger Accounts on completion of
the dissolution of the firm..
CCP402.69 4
Solution
REALISATION ACCOUNT
Dr. Cr.
2006 2006
Dec.31 Dec.31
To Machinery A/c 4,05,000 By Creditors 1,85,000
To Stock A/c 75,000 By Investment 60,000
To Investment A/c 2,00,000 Fluctuation Fund
To Debtors 93,000 By Provision for 6,000
To A’s capital A/c 10,000 Bad Debts
CCP402.69 5
To Cash A/c 1,85,000 By A’s Capital A/c 1,80,000
(Creditors paid) (Investment taken Over)
To Capital A/c (Gain) By B’s Capital A/c
1,15,000
A….. 74,750 (Stock and part of
B….. 49,830 debtors taken over)
C….. 24,920 By Cash (Machinery
5,50,000
Sold)
1,49,500 By Cash (5% remain-
ing debtors realized) 21,500
-------------
----------
11,17,500CCP402.69 11,17,5006
PARTNERS CAPITAL ACCOUNTS
Dr. Cr.
A B C A B C
2006 2006
Dec.31 Dec.31
To Balance B/d --- 1,15,000 By Balance B/d
5,00,000 2,00,000 ---
By realisation A/c
(Expenses)
10,000
CCP402.69 7
Contd..
To Realization A/c
1,80,000 1,15,000
By Realization (Gain)
A/c 74,750 49,830 24,920
To Cash A/c
4,04,750 1,34,830 – By Cash -- - 90,080
-------------- ----------- --------- --------
---------
5,84,750 2,49,830= 1,15,000 5,84,750 2,49,850 =1,15,000
CCP402.69 8
CASH ACCSOUNT
Dr. Cr.
2006 2006
Dec.31 Dec.31
To Balance B/d 63,000 By Realization 1,85,000
To Realization A/c 5,50,000 (Paid to Creditors)
[Machinery sold]
To Realization A/c 21,500 By A’s Capital A/c 4,04,750
[Debtors realized]
To C’s Capital A/c 90,080 By B’s Capital A/c 1,34,830
------------- ---------------
7,24,580 7,24,580
-------------- --------------
CCP402.69 9
Assignment
A,B & C carrying on a business and sharing profits and
losses equally agreed to dissolve the partnership on 31st
December,2003.
CCP402.69 10
BALANCE SHEET OF A,B,& C as on 31st
Dec.2003
Liabilities Rs. Assets Rs.
Capital A/cs. Land & Buildings 5,00,000
A…. 4,00,000 Plant & Machi. 4,00,000
B… 1,00,000 Furniture 1,00,000
C… 5,00,000 Stock 3,50,000
--------- 10,00,000 S. Debtors 2,50,000
Loan from X 3,00,000 Cash in hand 1,50,000
Sundry creditors 4,50,000
------------- --------------
17,50,000 17,50,000
---------------- --------------
CCP402.69 11
contd..
X agreed to take the entire stock in full settlement of his
Loan. Sundry debtors, were realized at Rs.2,00,000 and
Creditors were settled at Rs. 3,40,000.
It was decided that A&B would take over the following
Assets at the following sums.
CCP402.69 12
Contd..
Land & Building Rs. 6,00,000
Plant & Machinery Rs. 3,00,000
Furniture Rs. 60,000
A&B decided to form a partnership sharing profits and
Losses in the ratio of 3:1. It was agreed that the firm would
require a total capital of Rs. 10,00,000 which
A&B would bring their capitals being in proportion to their
Profit sharing ratio.
Draw up the relevant account to close the books of
A,B, & C . Prepare the opening Balance Sheet of A&B.
CCP402.69 13
