Datnership-Insolvency, Piecemeal Distribution, Sale of a Firm 463

Close the Books of

17.6 Practical Steps to Amalgamating Firms
Exhibit Revaluation Account to ascertain the profit/loss on revaluation of all assets and
Step1 Prepare
liabilities, and| transfer such profitloss to the partners' capital accounts in the profit sharing ratio.
Goodwill of the firm, Goodwill should be debited and partners' capital accounts
Step2
On raising
should be credited in profit sharing ratio.
Realise those assets which have not been taken over by the new firm and transfer such
Slep3 unsold assets (if any) to the Capital accOunts of all the partners in the ratio of capitals.

Discharge those liabilities which have not been taken over by the newfirm and transfer such
Step4 undischarged liabilities (if any) to the capital accounts of all the partners in the ratio of
capitals.
all accumulated reserves/profits/losses to the capital accounts of partners in profit
Step5 Transfer
sharing ratio.
Cnse the accounts of liabilities taken over and the accounts of assets taken over by passing
the following journal entry:
New Firm's Account Dr. [With excess of agreed values of assets taken over
over the agreed values of liabilities taken over]
Liabilities taken over (individually) Dr. [With agreed values of liabilities taken over]
To Assets taken over (individually) [With agreed values of assets taken over]
Sen 7 Close the partners' capital acCOunts and the new firm's account by passing the following
Jourmal entry:
Patners' Capital Accounts (individually) Dr. [With individual capital of partners]
ToNew Firm's AccOunt With total])
in Exhibit 17.7:
The journal entry to open the books of the new firm is given below
Exhibit 17.7 Journal Entry to Open the Books of New Firm
Assets taken over (Individually) Dr. [With agreed values of assets taken over]
To Liabilities taken over (individually) With agreed values of liabilities taken over]
To Partners' Capital Accounts (lIndividually) With individual capitals of partners]
styles of Black & Co., and White
20. Two partnership firms, carrying on business under the April, 1998.
&Co. respectively, decide to amalgamate into Grey & Co. with
effect from Ist
Ihe respective Balance Sheets as on 31st March, 1998 are:
March 1998
Balance Sheet of BIlack & Co. as at 31st
Assets Rs.
Liabilities Rs.
Mr Bs Capital Plant and Machinery 10,000
Account 19,000
Stock in trade 20,000
Sundry Creditors 10,000
10,000
Bank Overdraft 15,000 Sundry Debtors
Mr A's Capital Account 4,000
44,000
44,000
Aand Bshare profits and losses in the proportion of 1:2.
31st March 1998
Balance Sheet of White & Co. as at
Rs.
MX's Labilities Rs. Assets
10/000
Capital Account 10,000 Goodwill
Stock in trade 5,000
Capital ACCOunt 2,000
Sndy Creditors 28,000 Sundry Debtors
Cash in hand
10,000
6,000
Cash at Bank 9,000
40,000
40,000
464 Financial Accounting

The following
Xand Yshare profits and losses equally.20%. further information
AllStock in trade is to
All fixed assets are to be devalued
by
on
is
be apprecigven.
ated by
Rs. 5,000 to White & Co., as 31st March, 1998
50%. Black & Co., owns
settled at Rs. 2.000, Goodwill is to be ignored tor the purpose of
fixed capital accounts in the new firm are to be- Mr. A Rs.
2,000, Mr. B RS.
This
the amalgamation, det
. tis
Rs. 1,000, Mr. YRs. 4,000. Mr Btakes over the bank overdraft of Black &
Co.
The
300, Mr.X
Mr. Athe amount of money to be brought in by Mr. Ato make up his
Mr Xis paid off in cash from White & Co., and Mr. Ybrings in capital and gfts
as on 31st March, 1998.
sufficient cash to
his required capital contribution. Pass the journal entries to closethe books of conir bution
both themake U
Solution: Firms
Journal of Black & Co.
Particulars
Dr. (Rs.)
Revaluation Alc Dr. 2,000
To Plant and Machinery
(For Plant and Machinery devalued by 20%)
Stock in trade A/c
2,000
Dr. 10,000
Sundry Creditors Ac Dr.
To Revaluation Alc 3,000
(For appreciation of stock in trade and debt owing to White & Co. 13,00
setled for Rs. 2,000 instead Rs. 5,000)
Bank overdraft
Dr. 15,000
To B's Capital Alc
(For Bank Overdraft taken over by B) 15,000
Revaluation Alc
To A's Capital Alc Dr. 11,000
To B's Capital Alc 3,67
(For profit on revaluation transferred to Capital Accounts in the profit 7,3
sharing ratio)
Grey &Co.
Sundry Creditors AWc Dr. 41,000
To Plant and Dr. 7,000
Machinery
To Stock-in-trade 8.0
To Sundry Debtors 30,000
(For assets and
books of the firm)liabilities
10,00
transferred to Grey &Co. for closing the
A's Capital A/c
B's Capital A/c Dr. 2.000
To Grey &Co. Dr. 39,000
(Capital accounts of the 41,0
Note: The partners closed by transter to Grey &Co.)
Accounting
Rs. 39 000 which entries show that B's balance o
liquid assets in Blackin&excess by Rs. 36,000 of his Capital Account has a credit therearen
is
Co as a loan from B Co., from which 8can be required capital Contribution. Since inGrey&
repaid, the be taken
excess amount will
 Partnership-Insolvency,
Piecemeal Distribution, Sale of a FFirm 465
Journal of White & Co.
Particulars
Dr. (Rs) Cr. (As)
Sot
inTrade Dr 2,500
ToRevaluationAlc
2,500
trade appreciated by 50%)
Stockin
Revalation
Ac Dr 13,000
ToSundryDebtors 3,000
ToGoodwil 10,000
Black & Co. settled at a concession of
debtduefrom
Fr writen of)
goodwill
e 300: Dr
YsCapitalAc 5,250
s CapitalAc Dr. 5,250
ToRevaluationA/c 10,500
on Revaluation debited to partners' capital Alcs)
Forloss
CashAc
Dr. 7,250
Alc 7,250
To Ys Capital
Forcash
introduced by Yto make up his capital to Rs. 4,000)
XsCapialAc Dr. 3,750
To Cash A/c 3,750
refunded to Xto reduce his capital to Rs. 1,000)
excess capital
Dr. 5,000
Grey&Co.
Dr. 28,000
Sundry Creditors 7,500
ToStock in trade 7.000
To Sundry Debtors 9,500
ToCash in hand 9,000
To Cash at Bank
transferred to Grey &Co. to close
For sundry assets and liabilities
the books)
Dr. 1,000
Xs Capital Alc Dr. 4,000
Ys Capital Ac 5,000
To Grey &Co. transfer to Grey Co.)
(or Capital accounts of partners closed by 3:1 andY
of X and Co., sharing profits and losses in the ratio of
l And Yare partners March,
Co.. sharing profits and losses in the ratio of2:1. On 31st
au are partners of Y& and Z
and form a new firm M/s XYZ & Co., wherein X, Y
O, ney decide to amalgamate losses in the ratio of 3:2:1. The
Balance Sheets of
sharing profits and
uoe partners
TWO firms on the above date are as under: X& Co. Y & Co.
Y& Co. Assets
Liabilities X& Co. Rs. As.
Rs. Rs.
Fixed Assets:
Captals: 4,80,000 Building
1,00,000
3,00,000 3,20,000
4,00,000 Machinery 12,000
3,20,000 40,000
2,00,000 Furniture
Current Assets:
Reserves 1,00,000 3,00,000 2,40,000 2,80,000

CeDisetotors X&Co. 2,40,000 2,32,000

2,00,000
Stock
Debtors
3,20,000 4,00,000
(Contd!)
466 Financial Accounting

(Contd.)
Bank Loan 1,60,000 Cash at Bank
Cash in hand
Due from Y& Co.
60,40,000000
13,00,000 13,32,000
Advances 2,00,000
The amalgamated firm took over the business on the
(a) Building of X& Co., was valued at Rs. 2,00,000. (b)
following terms:13,00 (000 |13.32T
Machinery of X
at Rs. 4,50,000 and that of Y & Co. at Rs. 4,00,000, (c)
Rs. 1.00.000 and Y& Co. Rs. 82,000 but the same will not Goodwi l &Co.
appear in thevalued, WasX valued
Co. (d) Partners of the new firm will bring the necessary cash to pay other books
and Co
their capitals according to the profit sharing ratio. Show journal entries in part
theners tO adug
XYZ & Co. and Prepare the Balance Sheet as on 31.3.1998.
Solution:
books of Mis
Journal of XYZ & Co.

Particulars
Dr. (Rs)
Goodwill Alc Dr. 1,00,000
Buiding Ac Dr. 2,00,000
Machinery Ac Dr.
4,50,000
Furniture Ac Dr.
Stock Ac
40,000
Dr. 2,40,000
Debtors AWc Dr.
Cash at Bank Alc
3,20,000
Dr. 60,000
Cash in hand Alc Dr. 40,000
Due from Y& Co. A/c
Dr. 2,00,000
To Creditors A/c
To Bank Loan Alc 2,40
1,60,0
To X's Capital Alc
8,1750
To Y's Capital Alc
432510
(Being the Assets and Liabilities of X& Co. taken over)
Goodwill A/c
Dr 82,000
Machinery ANc Dr 4,00,000
Furniture AC
Stock Alc Dr 12,000
Debtors A/c Dr 2,80,000
Cash at Bank AWc Dr 4,00,000
Cash in hand Alc Dr 1,80,000
Advanoes Ac Dr 20,000
To Creditors Ac Dr. 1,20,000 220
To Due to X& Co. Ac 20041
To Ys Capital A/c
To Z's Captal Alc
(Be.ng the Assets and
Liabilites of Y& Co. taken over)
 Partnership- -lnsolvency, Piecemeal Distribution, Sale of a Firm 467

s Capial
Ae Dr. 91,000
s Capital
Ae Dr. 60,667
; Capial
Ae Dr. 30,333
ToGoodwilAc
1,82,000
Goodwill writen off)
Being
Dr. 3,69,833
CapitalAlc 3,38,500
ToX'sCapitalAlc
31,333
ToZs
Beingthe
Cash brought in by Xand Zto make
aotalsproportionate)
'sCapitalAlc Dr. 3,69,833
ToBankAc 3,69,833
excesS capital withdrawn by )
Berngthe
Co.Alc Dr. 2,00,000
DuetoX& Alc
To Due from Y& Co. 2,00,000
(Beingthe
elimination of mutual indebtedness of the merged
Co..)
fims X& Co.,and Y&
Balance Sheet of M/s XYZ & Co. as on 31st March, 1998
Llabilities Rs Assets Rs.

Building 2,00,000
Capitals:
X 10,65,000Machinery 8,50,000
7,10,000 Furniture 52,000
3,55,000 Stock 5,20,000
Creditors 4,72,000 Debtors 7,20,000
Bank Loan 1,60,000 Advances 1,20,000
Cash at Bank 2,40,000
Cash in hand 60,000
27,62,000 27,62,000
Working Notes:
) Statement showing the Computation of Purchase Consideration
Particulars X&Co. Y& Co.
A Assets: Rs. Rs.
1,00,000 82,000
Goodwll 2,00,000
Building 4.50,000 4,00,000
Machi
Furnitunreery 40,000 12,000
Slock 2,40,000 2,80,000
Debtors
Cash at Bank
3,20,000
60,000
4,00,000
1,80,000
Cash in Harnd 40,000 20,000
Due trom Y& Co. 2,00,000
Advances
B Labilities 16,50,000
1,20,000
14.94,000

CrDueeditotorsX& 2,40,000 2,32,000

2,00,000
Bark Loan Co 1,60,000
4,00,000 4,32,000

Dychase Consideration (A - B) 12,50,000 10,62,000

468 Financial Accounting
(ü) Statement showing the Computation of Proportionate Capitals

Particulars
12,50,000 + Rs.
10,62,000) Rs.
Co. (Rs.
AM/s XYZ & Adjustment
B Less: Goodwill 23,12
182 90
CTotal Capital of
new Firm
proportionate Capital (Rs. 21,30,000 *3/6)
D X's proportionate Capital (Rs. 21,30,000 *2/6) 21309
E Ys
F {s Proportionate
Capital (Rs. 21,30,000 *1/6) 1100
35504
(ii) Statement showing the 213009
Computation of Capital Adjustments
X
Particulars
Rs. Rs. Rs. Total
Balance transferred from Xand Co. 8,17,500 4,32,500
Balance transferred from Yand Co. 7,08,000 3,54,000 1250 0
8,17,500 11,40,500 3,54,000 10,62,0
Less: Goodwillwritten off in the 23,12,0
ratio of (3 :2:1) 91,000 60,667 30,333
(a) Existing Capital 7,26,500 10,79,833 1,82,0
3,23,667 21,30,0
(b) Proportionate Capital 10,65,000 7,10,000 3,55,000 21,30,00
(c) Amount to be brought in
(paid off) [(a) - (b)) 3,38,500 (3,69,833) 31,333
Dr. Capital Accounts (In the Books of X & Co.)
Particulars X
Rs.
Particulars X
Rs. Rs.
To Capital Alc - M/s 8,17,500 Rs.
XYZ &Co. 4,32,500 By Balance b/d
(Transfer) By Reserve (3: 1)
4,80,000 3,20,0
75,000 25,00
By Goodwill (3 : 1) 75,000 25,00
By Realisation Alc*
- Profit (3: 1) 1,87,500 6250
8,17,500
*For Building Rs. 4,32,500
1,00,000and Machinery 8,17,500 4,3250
Dr. Rs. 1,50,000.
Capital Accounts (In the
Particulars Y Books of Y & Co.)
Z
To Capital Alc - Rs. Rs. Particulars Y
XYZ &Co. Ws
(Transter)l 7,08,000 3,54,000 By Balance bld
Rs.
4,00,000 10000
By Reserve (2 : 1) 2,00,000 27,38
By Goodwil (2: 1) 54,667
By Realisation Ac 268
'For
Macthinery Rs. 80,000.708,000 3,54,000 - Profit
(2:1) 53,333
7,08,000
35400
 Vency, Piecemeal
Distribution, Sale of a Firm
B.COM. EXAMINATION QUESTIONS 469
1.A.
Band Ccarry on
31st March 1998
business partnership sharing
they
in
On agreed to sell their profits and losses
ha date was as follows:
business to alimited 4:3:1 respectively.
Liabilities Rs.
company. Their position
AsCapital
20,000
Assets
8sCapital
CsCapital 15,000 Freehold
MachineryProperty Rs.
18,000
Loan on Mortgage 13,000 Book Debts 12,000
4,000 Stock 15,000
SundryCreditors
8,000 Cash 13,000
60,000 2,000
The company took the following assets at the 60,000
Freehold Property Rs. 22,000, valuation shown below:
Machinery 11,000,
Goodwill4,000. Book Debts 14,000, Stock 12,000,
Cash was not taken
over by the
.bich were agreed at Rs. 7,/O0. Thecompany. The company also agreed to pay the creditors
nch and the balance in cash. The company paid Rs. 33,500 in fully paid shares of Rs. 10
expenses
Prepare Ledger Accounts the books of theamounted to Rs. 500.
firm.
Solution: (B. Com. (Delhi), 1993 (E)]
Dr.
Realisation Account Cr.
Particulars Rs. Particulars Rs.
To Freehold Property 18,000 By Loans
To Machinery 4,000
12,000 By Sundry Creditors 8,000
To Book Debts 15,000
To Stocks
By Company A/c 59,000
13,000
To Cash Alc (Crs.) 7,700
To Cash (Expenses) 500
To Profit on realisation t/f to:
As Capital Ac 2,400
Bs Capital Ac 1,800
Cs Capital Alc 600
71,000 71,000
Dr. Cash Account Cr.

Particulars
To Balance b/d
Rs. Particulars Rs.
2,000 By Realisation Alc
To Company Alc 25,500 Creditors 7,700
Expenses 500
By A's Capital Alc 8,200
By Bs Capital Alc 6,100
By Cs Capital Alc 5,000
27,500
27,500
Dr Cr.
Capital Accounts of Partners
A
Pariculars A
Rs. As.
C
Rs.
Particulars
Rs. As. Rs.

ToShares
To Cash ANC 14,200
8,200
10,700
6,100
8,600
5,000
By Balance b/d
By Realisation A/c
2,400
20,000

22,400
15,000
1,800
16,800
13,000
600
13,600
22,400 16,800 13,600
Refer o Append1x V for latest questions
470 Financial Accounting

THEORETICAL QUESTIONS

1. What is Garner vs. Murray Rule? State

whether this rule is applicable in
2. Explain the Maximum Loss Method of picemeal
distribution. India.
3. Explain the Proportionate Capitals Method of piecemeal distribution
4. Write a short note on 'Amalgamation of firms'.
PRACTICAL EXERCISES

1.A, Band Care in partnership sharing profits and losses as three sixths, two
sixths and One
sixth respectively. The state of affairs on the date of dissolution was as followe:
Liabilities Rs. Assets
Sundry Creditors 38,500 Cash in hand Rs.
A's Loan Account 2,750 Sundry Debtors 9,860
Capital AccOunts: Stock 30,560
A
15,200 Furniture 18440
B
11,200 Cs Capital Account (Dr.) 1,20
67,650 1,590
The assets realised: Stock Rs. 13,840. Furniture Rs. 67,650
5,150, and Debtors Rs. 29.200. The
creditors were paid less discount amounting to Rs. 250. A and B
insolvent and he is unable to bring in anything. The are solvent but 'C is
Prepare Realisation Account, Cash Account and Capital expenses of winding up were Rs. 520.
Accounts of the partners.
[Loss on Realisation Rs. 8,280, Cash paid
2. A, B and C are partners in A& Co. to : ARs. 9,350, B Rs.
sharing profits and losses in the ratio of 27,180]
respectively. The Balance Sheet of A & Co. as at 31st March, 1998 is :2:1
as follows:
Liabilities Rs.
Capitals: Assets Rs.
A Fixed Assets
1,46,000 2,00,000
B Stocks 1,25,000
C 54,000 Debtors
50,000 1,25,000
C's Loan Account Cash
25,000 5,000
Loan from Mrs. A Bs Current Account
50,000 20,000
Sundry Creditors 1,25,000
Provision for Doubtful Debts 25.000
4,75,000
The firm was 4,75,000
dissolved
on the date of
preparing the above Balance Sheet as on Balance sheet due to continued
losses. h
March, 1998 were31.3.98,
Ing to Rs. 20,000 in it was
not discovered that purchases aitoa
received during March, recorded in books,
1998. Fixed Assets realised Rs. goods were
though the
Debtors Rs. 1,02,500. Creditors 1.00.000, Stocks
of realisation came to Rs.
5,400.
were paid after deduction of discount @ Rs. 1,0,000
A 2%o. The expelib
his estate is
unable to contribute agreed to take over the loan of Mrs. A. Bis insolvent and
of A&Co. applying the anything. Prepare the
Vs. Murray.relevant accounts
close the books
decision of
[Loss on Realisation Garner
to
3. P, Qand Rcarrying on Rs. 1,40,000, Cash paid to: ARs. 1,79,612, Rs. 44,388]
2:2:1. dissolved their firmbusiness as
merchants and
March 1998 onsharing
as on 3Ist, profits and losses in ratio of
as follows: which date their Balance i
 Partnership-Insolvency, Piecemeal Distribution,Sale of a Firm 471
Liabilities Rs. Assets Rs.
SundryCreditors 20,300 Cash at bank 4,500
Reserve Fund 10,000 Stock
Reserve 16,000
Joint Life Policy 8,000 Debtors 10,000
Capitals: Less: Provision 500 9,500
15,000 Joint Life Policy 11,000
15,000 Premises 30,300
3,000
71,300 71,300
Mate: There is a billfor Rs. 1,000 under discount. The bill was
received from Z.
The assets except cash at bank and joint life policy were sold to a
Rs. 65,000 in cash. The policy was surrendered and Rs. 11,300 werecompany
received.
which paid
Z proved
insolvent and a dividend of 50% was received from his estate. Sundry
Pe 19.500 in full settlement. Expenses amounted to Rs. Creditors were paid
3,000. Prepare Realisation Account,
Cash Account and the Partners Capital Accounts.
[B.Com. (Hons.) (Delhi), 1983]
[Profit on Realisation Rs. 6,800; Final payment to: P Rs. 24,920, O
Rs. 24,920
4. The Balance Sheet of A, B and C, who are R Rs. 7,960]
sharing profits and losses in the ratio of2:2:1,
was as follows on 31st March, 1998, the date of
dissolution:
Liabilities Rs. Assets Rs.
Sundry Creditors 1,20,000 Cash
Bank Loan (with a charge on Stock) 1,000
50,000 Stock
Capitals: 60,000
Other Assets
A
30,000 Goodwill
1,09,000
30,000
20,000 Capital: C
20,000
2,20,000
Stock realised Rs. 52,00 and other assets were sold for 2,20,000
Rs. 90,000. Expenses on realisation
amounted to Rs. 3,000. Assuming that all the partners are
ledger accounts to close the books of the firm. insolvent, prepare the necessary
[B.Com. (Hons.), Delhi, 1987]
S. A, Band C were in partnership sharing
[Loss on Realisation Rs. 60,0001
profits and losses in the ratio of 2:3: 5. They
prepared the following Balance Sheet on 31.3.1998 when they
decided to dissolve:
Liabilities Rs. Assets Rs.
Loan from Bank
Plant and Machinery 5,00,000
(against the security of Plant Debtors
and Machinery) 3,00,000 Stock
50,000
Loan from C 50,000
40,000 Advance to A
Trade Creditors 2,50,000 Cash
40,000
Bills Payable 10,000 Profit & Loss A/c (Dr. Balance)
10,000
Capitals:
A
1,50,000
8 60,000
C 80,000
60,000
8,00,000 8,00,000
472 Financial Accounting

Debtors, Rs. 30,000 and Stock,

Plant and Machincry rcal1sed Rs. 3,50,000;
Ahas a private cstatc, valued at Rs.
1,00,000 and his liabilitics
is insolvent. C can
amounted Ra.Rs.40,(09
to

paise 40,(inM0the
Rs. 60,000. B pay only S0
The private estate realised only
rupec of what is payable on his own
account to the firm. Prcpare the
accounts, assuming that the loss on realisation is
to be determined
after necessary \edger
amount ultimately paid to the creditors.
[Loss on Realisation Rs.
[B.Com.
76,667, Cash to be brought in by: A Rs. Delhi.considerin,1g98%
(Hons.),the.

6. A, B and C had the following Balance Sheet on 31st March, 1998: CRs.20,000666T)and
Liabilities Rs. Assets
Creditors 40,000 Fixed Assets Rs
Loan from Mrs. A Debtors
(with a charge on Stock) 15,000 Stock
Loan from A
Capitals:
10.000 Cash at bank
Loss
20000
B
20,000
20.000
3090
10,000
1,15,000
The firm was dissolved. Stock realised Rs. 10,000 and fixed assets and debtors realiea 1,15,0
Rs. 30,000 in all. The private position of the partners was as under:
Private Estate
Rs.
Private Liabiltes
Rs
A
10,000 15,000
8,000 6,000
Cwas able to pay 50 paise in the rupee of what was
payable his own account to the
on
partnership. The partners shared profits in the ratio of 4: 3:3for A, Band Crespectively.
The loss on realisation is to be determined after considering the
amount finally paid to the
creditors. You are required to close of the firm by preparing the necessary ledger accounts.
[B. Com. (Hons), Delhi, 1994)
[Loss on Realisation Rs. 37,059, Amount to be brought in by B Rs. 2,000
and C Rs. 5,059]
7. X, Yand Z were in partnership sharing profits and losses in the
ratio of 1/5: 3/10: l2.
They prepared the following Balance Sheet as on 31.3.98, when they
decided to dissolve.
Liabilities Rs. Assets Rs
Capitals Accounts: Plant &Machinery 50,000
30,000 Sundry Debtors 2,00,000
40,000 Advance to X 20,000
30,000 Cash 10,000
Loan from Bank on Book 80,00
debts and Plant
Profit and Loss Alc (Balance)
1,20,000
Loan from Z (advanced on 1.4.97) 20,000
Trade Creditors
1,20,000
3,60,000 360
00
You ascertain that the balance in Profit and Loss Account is prior to charging interest,
Plant & Machinery and Debtors realised 80%. X's private estate which was valuedat
Rs. 70,000 has a liability thereon Rs. 30,000. The private estate realised only Rs. 40,000. Y
is insolvent. Z can pay only 50 paise in the rupee of what is payable on his own account to
 partnership -nsolvency, Piecemeal Distribution, Sale of a Firm 473
partnership. Show Realisation Account, Cash Account and Partners' Capital
the
loss
on
realisation is to be determined after considering the amount ultimatelyAccounts.
paid to
The
creditors.
[Loss on Realisation Rs. 32,933, Amount to be brought in: by XRs. 10,000,
by Z Rs. 2,933]
and C were in
partnership sharing profits and losses in the ratio of 2:3: 5. They
B
prepared
8A, the following Balance Sheet on 31.3.99, when they decided to dissolve:
Liabilities Rs. Assets As.
the
Bank (against Plant and Machinery 3,00,000
Ioanfrom Plant and Machinery) 1,50,000 Debtors 1,00,000
security of
Loanfrom
Mrs. C(with acharge Stock 2,00,000
onStock) 2,07,500 Advance to A 40,000
Loanfrom C 40,000 Cash 10,000
TradeCreditors 2,02,500Profit and Loss Account 1,50,000
Capitals:
A
60,000
B
80,000
60,000
8,00,000 8,00,000
Dlant and Machinery, Debtors and Stock realised 70%. Prepare the necessary ledger ac
anunts (including Loan from Mrs C A/c & Trade Creditors' A/c) in each of the following
alternative cases:
Case I--lf the position of partners was as under:
A B C
Private Estate Rs. 2,00,000 Rs. 1,00,000 Rs. 1,00,000
Private Liabilities Rs. 76,667 Rs. 46,000 Rs. 93,333
Case l|-If the position of
partners was as under:
A B
Private Estate Rs. 2,00,000 Rs. 1,00,000 Rs. 1,00,000
Private Liabilities Rs. 76.667 Rs. 1,70,000 Rs. 93,333
Case lIf the position of
partners was as under:
A C
Rs. 2,00,000 Rs. 1,00,000 Rs. 1,00,000
Private Estate
Rs. 1,80,000 Rs. 1,70,000 Rs. 93.333
Private Liabilities
liabilities amounted to Rs.
vase 1V-A has a private estate valued at Rs. 1,00,000 and his
50 paise
OO. The private estate realised only Rs. 60,000. B is insolvent. C can pay only
on realisation is to
G rupee of what is pavable on his own account to the firm. The loss
be determined before considering the amount ultimately paid to creditors.
Case V-A has a private estate valued at Rs. 1,00,000 and his liabilities amounted to Rs.
40,000. The private estate realised only Rs. 60,000. Bis insolvent. Ccan pay only 50 paise
In the rupee of what is payable on his own account tothe firm. The loss on realisation is to
be determined after considering the amount ultimately paid to the creditors.
Case VIA has a private estate valued at Rs. 1.38,000 and his liabilities amounted to Rs.
40,000, Bis insolvent. Ccan pay only 50 paise in the rupee of what is payable on his own
account to the firm.
|Loss on Realisation: Case I, II, II, IV & VI Rs. 1,80,000, Case V, Rs. 76,667, Total
C Rs. 6,667,
Amount to be brought in by partners: Case I, A Rs. 71,000, BRs. 52,333, Rs. 6.667.
20,000, C
Case II, A Rs. 1.23.333. C Rs. 6,667, Case III, A Rs. C Rs 6,667.
V, A Rs 20,000,
Case IV, ARs. 20.000, C Rs. 32,500, Case Case VI, ARs. 97,500, C Rs. 32,5001
474 Financial Accounting

9. Aand Bwere carrying on business in Partnership sharing profits and losses in the raüo of
3/5 and 2/5. On 30th June, 1998they transferred their business to AB Pvt. Ltd. The
shect of Aand B as on 30th June. 1998 was as follows:
Liabilities Rs. Assets
balance
A's capital 30,000 Land Rs.
B's capital 15,000 Building 5000
Sundry creditor 8,000 Machinery
Stocks
20,10,00000
Debtors 8,(000
Cash 9,00
53,000 1.000
The company took the following assets at the following valuation: 53,00
Land Rs. 7,500; Building Rs. 25,000; Stocks Rs. 7,500; Machinery Rs. 8,000:
Rs. 8,500; Goodwill Rs. 6,000.
Dehte
Creditors were paid Rs. 7,500 in full and final settlement. Company paid Rs.
fullypaid equity shares of Rs. 10 each and balance in cash.Expenses 50,000 in
Rs. 500,
of transfer amounted to
Prepare ledger accounts in the books of the firm and make opening
of the company. entries in the bo0ks
[Profit on Realisation Rs. 10,500 Cash brought in by B Rs. Rs. 800.
10. Anand Prakash, Satya Prakash, Shiv Cash paid to A Rs. 6,300]
Prakash and Gyan Prakash were partners in a firm
sharing profits and losses in the ratio of 4:3:2:1. Their Balance
1998 stood as follows: Sheet as on 31st March.
Liabilities Rs. Assets
R
Accounts Payable 10,000 Machinery
Capital AcCounts: 40,000
Goodwill 10,000
Anand Prakash 30,000 Book Debts
Satya Prakash 20,000
8,000
Stock
Shiv Prakash 4,000
3,000 Capital Account: 1,00
Gyan Prakash
63,000
Gyan Prakash did not have any private assets or 63,000
partners. Prepare ledger accounts to close the booksliabilities. The firm was dissolved by the
of the firm under each of the
two circumstances: following
(a) The partners agrecd to sell the fixed
fully paid equity shares of Rs. 10 each (at theassets to Sharda Limited which allotted 2,125
10,000. Stock and book debts were realised atmarket value of Rs. 13) and paid cash Rs.
amounted to Rs. 450. Shiv Prakash had sufficient book value, and the costs of realisatiOn
(b) The partners disposed of the private assets.
Rs. 30,000 and stock and book assets through an auctioneer. The machinery
debts Rs. 10,000. The costs of realiseo
3.000. Shiv Prakash could contribute Rs. realisarion
500 only from his personal amounted to KS.
resources.
[Loss on Realisation Rs. 12,825, Shares [B. Com. (Hons. ), Delhi, 1972)
distribution: Anand Rs. 16,627,
Satya Rs. 10,790, Shiv Rs. 208]