E, F and G were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On March 31, 2017, their firm was dissolved. On the date of dissolution, the Balance Sheet of the firm was as follows:
Balance Sheet
as at March 31, 2017
Liabilities | Amount (Rs.) | Assets | Amount (Rs.) |
Capitals: | G’s Capital | 500 | |
E 1,30,000 | Profit & Loss Account | 10,000 | |
F 1,00,000 | 2,30,000 | Land & Building | 1,00,000 |
Creditors | 45,000 | Furniture | 50,000 |
Outstanding Expenses | 17,000 | Machinery | 90,000 |
Debtors | 36,500 | ||
Bank | 5,000 | ||
Total | 2,92,000 | Total | 2,92,000 |
F was appointed to undertake the process of dissolution for which he was allowed a remuneration of Rs. 5,000. F agreed to bear the dissolution expenses. Assets realized as follows:
(i) The Land & Building was sold for Rs. 1,08,900.
(ii) Furniture was sold at 25% of book value.
(iii) Machinery was sold as scrap for Rs. 9,000.
(iv) All the Debtors were realized at full value.
Creditors were payable on an average of 3 months from the date of dissolution. On discharging the Creditors on the date of dissolution, they allowed a discount of 5%.
Pass necessary Journal entries for dissolution in the books of the firm.
Marks-4, CBSE:2017-18/Sample/Q-11
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