A, B and C were partners sharing profits and losses in the ratio of 4:3: 1. Their Balance Sheet as on 31st March, 2025 was as follows : Liabilities…
CA Foundation · Accounting · RTP · September 2026
A, B and C were partners sharing profits and losses in the ratio of 4:3: 1. Their Balance Sheet as on 31st March, 2025 was as follows : Liabilities ₹ Assets ₹ A's Capital A/c 1,05,000 Building 90,000 B's Capital A/c 45,000 Machinery 30,000 C's Capital A/c 75,000 Stock 82,500 Creditors 39,000 Debtors 90,000 Bank Loan (Secured) 13,500 A's Loan 15,000 2,92,500 2,92,500 They decided to dissolve the business. The assets were realised gradually and the net amounts were distributed immediately as follows: 2025 ₹ Expenses ₹ May, 30 33,000 Expenses paid 3,000 July, 30 25,200 Expenses paid 2,200 Sept. 30 57,000 Expenses paid 4,500 Nov. 30 68,000 Expenses paid 8,000 Dec. 31 1,08,000 Expenses paid 10,000 Show the distribution of cash among partners using maximum possible loss method.
Suggested Answer and Working Notes:
Statement showing distribution of cash Details Bank Loan Creditors A's Loan A's Capital B's Capital C's Capital Amount due on 1-4-2025 13,500 39,000 15,000 1,05,000 45,000 75,000 Net cash realized (33,000 – 3,000) 30,000 Paid Bank Loan (13,500) Paid Creditors (16,500) Balance due 30-07-2025 Nil 22,500 15,000 1,05,000 45,000 75,000 Net Cash realized (25,200 – 2,200) 23,000 Paid to Creditors (22,500) Paid A's Loan (500) Balance due 30-9-2025 Nil Nil 14,500 1,05,000 45,000 75,000 Net Cash realized (57,000 - 4,500) 52,500 Paid A's Loan (14,500) Balance Due Nil Nil Nil 1,05,000 45,000 75,000 Balance Cash available 38,000 Maximum Loss (1,05,000 + 45,000 + 75,000 - 38,000) 1,87,000 distributed to A, B and C in 4:3:1 (93,500) (70,125) (23,375) 11,500 (25,125) 51,625 B's deficiency transferred to A and C in their capital ratio 7:5 (14,656) 25,125 (10,469) (3,156) - 41,156 A's deficiency borne by C 3,156 (3,156) - - 38,000 Paid to A Balance due on 30-11-2025 1,05,000 45,000 37,000 Net Cash realised (68,000 - 8,000) = 60,000 Maximum Loss (1,05,000 + 45,000 + 37,000 - 60,000) = 1,27,000 allocated to partners in the Ratio of 4:3:1 (63,500) (47,625) (15,875) 41,500 (2,625) 21,125 Deficiency of B transferred to A & C in 7: 5 ratio (1,532) 2,625 (1,093) 39,968 - 20,032 Paid to A and C Balance due on 31-12-2025 65,032 45,000 16,968 Net Cash realised (1,08,000 - 10,000) = 98,000 Maximum Loss (65,032 + 45,000 + 16,968 - 98,000) = 29,000 Allocated in ratio of 4:3:1 (14,500) (10,875) (3,625) 50,532 34,125 13,343 Paid to A, B and C Balances in Capital Account left unpaid 14,500 10,875 3,625
Topics: Dissolution of Partnership Firms and LLPs
Related Questions in this Topic
- The following is the Balance Sheet of X, Y, Z on 31st December, 2025 when they decided to dissolve the partnership. They...
- 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...
- A , B and C who were sharing profits in the ratio of 3:2:1 decided to dissolve the firm on 31st March, 2025 when their B...
- A, B and C are partners sharing profits and losses in the ratio of 2:2:1 respectively. The Balance Sheet of the firm as ...
- A, B, C and D had been carrying on business in partnership sharing profits & losses in the ratio of 4:3:2:1. They decide...