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Atul and Basu are in partnership sharing profits and losses in the ratio of 3 : 2. On 31st March, 2023, they decided to dissolve the firm and the Balance Sheet of the firm on this date is as follows:

Liabilities Assets  

Creditors

Loan from Atul

Workmen Compensation Reserve

Capital A/cs:

Atul

Basu

20,000

16,000

25,000

 

1,20,000

90,000

Cash at Bank

Sundry Debtors

Less: PDD

Loan to Basu

Stock

Investments

Machinery

Land and Building

 

40,000

1,800

8,000

 

38,200

10,000

54,800

20,000

40,000

1,00,000

  2,71,000     2,71,000

In order to give effect to the above decision, draw up the Realisation Account, Partner’s Capital Accounts and the Bank Account after taking the following into consideration:

(i) Assets realised as follows: Stock – ₹ 45,000; Machinery 20% less than book value, Debtors ₹ 35,000. Land and Building ₹ 30,000 more than the book value.

(ii) Atul took investments at an agreed value of ₹ 15,000.

(iii) Creditors agreed to accept 5% less.

(iv) Atul, who carried out the dissolution was to be paid ₹ 1,200 (including expeses). Realisation expenses were ₹ 1,200 which were paid by the firm.

(v) There was an old computer in the firm which had been written off completely from the books. It is now sold for ₹ 5,000.

Anurag Pathak Changed status to publish February 10, 2024
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