X, Y and Z were partners sharing profit & losses in the ratio of 3:2:1. They decided to dissolve the business as on 31st March, 2025 when their…

CA Foundation · Accounting · MTP · January 2026
X, Y and Z were partners sharing profit & losses in the ratio of 3:2:1. They decided to dissolve the business as on 31st March, 2025 when their Balance Sheet was as follows: Liabilities Amount (₹) Assets Amount (₹) Capital A/c: Land & Building 4,85,000 X 3,55,000 Machinery 1,88,000 Y 2,20,000 Furniture 1,05,000 Z 1,25,000 Stock 55,800 General Reserve 1,50,000 Trade Debtors 1,56,000 Trade Creditors 1,84,000 Cash & Bank 44,200 10,34,000 10,34,000 The following information is given to you: (i) There was an unrecorded investment which was sold for 30,000. (ii) One of the creditors agreed to take over some items of furniture of Book value - 25,000 at 24,000. The rest of the creditors were realised at its value. (iii) Out of the trade debtors - 9,000 proved bad, remaining were fully realized. (iv) The other assets were realised as under: Land & Building - 5,30,000 Machinery 1,70,000 Furniture Remaining taken over by X at 75,000 Stock - 60,000 (v) Expenses of dissolution amounted to 18,700. (vi) There was an outstanding bill for repairs which had to be paid for 3,500. You are required to prepare: (1) Realisation A/c (2) Cash & Bank A/c (3) Partner’s Capital A/c in the books of partnership firm.

Suggested Answer and Working Notes:

Realisation Account Particulars Amount (₹) Amount (₹) Particulars Amount (₹) Amount (₹) To Sundry Assets: By Creditors 1,84,000 Debtors 1,56,000 Stock 55,800 By Bank A/c: Furniture 1,05,000 Land and Building 5,30,000 Machinery 1,88,000 Debtors 1,47,000 Land and Building 4,85,000 9,89,800 Stock 60,000 To Bank-Creditors: (W.No.1) 1,60,000 Machinery 1,70,000 To Bank A/c o/s bill for repairs 3,500 Unrecorded Investment 30,000 9,37,000 To Bank A/c (expenses) 18,700 By X’s Capital A/C 75,000 To Profit transferred to: X’s Capital A/c 12,000 Y’s Capital A/c 8,000 Z’s Capital A/c 4,000 24,000 11,96,000 11,96,000 Partner’s Capital Accounts Particulars X (₹) Y (₹) Z (₹) Particulars X (₹) Y (₹) Z (₹) To Realisation A/c - Furniture 75,000 By Bal. b/d 3,55,000 2,20,000 1,25,000 To Bank 3,67,000 2,78,000 1,54,000 By General. Reserve 75,000 50,000 25,000 By Realisation Profit 12,000 8,000 4,000 4,42,000 2,78,000 1,54,000 4,42,000 2,78,000 1,54,000 Bank Account Particulars ₹ Particulars ₹ To Balance b/d 44,200 By Realisation A/c: To Realisation A/c (Assets realized) 9,37,000 (Liabilities Paid) 1,82,200 By X’s Capital A/c 3,67,000 By Y’s Capital A/c 2,78,000 By Z’s Capital A/c 1,54,000 9,81,200 9,81,200 Working Note 1: Payment to Trade Creditors Particulars Amount (₹) Trade creditors as per Balance sheet 1,84,000 Less: Furniture (Book Value - 25,000 accepted at 24,000) 24,000 1,60,000

Topics: Dissolution of Partnership Firms and LLPs

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