Q. Prachi, Ritika and Ishita were partners in a firm sharing profits and losses in the ratio of 5: 3 :2. Inspite of repeated reminders by the authorities, they kept dumping hazardous material into a near bv river. The court ordered for the dissolution of their partnership firm on 31st March 2012. Prachi was deputed to realize the assets and pay the liabilities. She was paid Rsl,000 as commission for her services. The financial position of the firm was as follows:
| Liabilities | Rs. | Assets | Rs. |
| Creditors | 10,000 | Furniture | 37,000 |
| Investment's Fluctuation fund | 4,500 | Stock | 5,500 |
| Capitals: Prachi |
40,000 |
Investment | 15,000 |
| Ritika | 30,000 | Cash | 9,000 |
| Ishita's Capital | 18,000 | ||
| 84,500 | 84,500 |
Following was agreed upon:
Prachi took over investments for Rs. 12,500 , stock and furniture relaie Rs. 41,500. There was old furniture which has been written off completely from the books. Ritika agreed to take away the same at the price of Rs. 3,000. Compensation paid to the employees amounted to Rs. 8,000. This liability was not provided in the above Balance Sheet. Realization expenses amounted to Rs1,000 Prepare 'Realization Account, Partners' Capital Accounts and Cash A/c to close the books of the firm. Also identify the value being conveyed in the question.
Dear Student
Note:
1. It has been assumed that realization expenses are to be borne by firm only and prachi is given Rs 1,000 commission exclusively.
2. Creditors are paid at their book value.
Values affected here:- Negligence towards the environment.
Regards
| Realisation A/c | |||||||
| Date | Particulars | Amount (in Rs) | Date | Particulars | Amount (in Rs) | ||
| Furniture | 37,000 | Creditors | 10,000 | ||||
| Stock | 5,500 | Investment Fluctuation Fund | 4,500 | ||||
| Investments | 15,000 | ||||||
| Prachi's Capital A/c (Commission) | 1,000 | Prachi's Capital A/c (Investments) | 12,500 | ||||
| Cash A/c (Compensation) | 8,000 | Cash A/c (Stock and Furniture) | 41,500 | ||||
| Cash A/c (Realisation Expenses) | 1,000 | Ritika's Capital A/c | 3,000 | ||||
| Cash A/c (Creditors) | 10,000 | ||||||
| Capital A/c (6,000 in 5:3:2) | |||||||
| Prachi | 3,000 | ||||||
| Ritika | 1,800 | ||||||
| Ishita | 1,200 | 6,000 | |||||
| 77,500 | 77,500 | ||||||
| Partner's Capital A/c | |||||||
| Particulars | Prachi | Ritika | Ishita | Particulars | Prachi | Ritika | Ishita |
| Bal B/d | 18,000 | Balance b/d | 40,000 | 30,000 | |||
| Realisation A/c | 12,500 | 3,000 | Realisation A/c | 1,000 | |||
| Realisation A/c (Loss) | 3,000 | 1,800 | 1,200 | Cash A/c | 19,200 | ||
| Cash | 25,500 | 25,200 | 0 | ||||
| 41,000 | 30,000 | 19,200 | 41,000 | 30,000 | 19,200 | ||
| Cash A/c | |||||||
| Date | Particulars | Amount (in Rs) | Date | Particulars | Amount (in Rs) | ||
| Bal B/d | 9,000 | ||||||
| Realisation A/c (Compensation) | 8,000 | ||||||
| Realisation A/c | 41,500 | Realisation A/c (Expenses) | 1,000 | ||||
| Realisation A/c (Creditors) | 10,000 | ||||||
| Ishita's Capital A/c | 19,200 | By Capital A/c's | |||||
| Prachi | 25,500 | ||||||
| Ritika | 25,200 | ||||||
| 50,700 | |||||||
| 69,700 | 69,700 | ||||||
Note:
1. It has been assumed that realization expenses are to be borne by firm only and prachi is given Rs 1,000 commission exclusively.
2. Creditors are paid at their book value.
Values affected here:- Negligence towards the environment.
Regards