The three partners of a dissolving firm shared profits in ratios of 5:2:3. On dissolution, assets were realized for Rs. 1,25,000 but realization expenses were Rs. 2,400. After paying creditors of Rs. 38,000 and distributing the partner's capital amounts, the remaining cash was distributed to the partners. An overall loss was incurred due to the dissolution.

1. DISSOLUTION OF THE FIRM
Kuhu, Jigyasa and Sheeba are three partners sharing profits and losses in the ratio of
5:2:3 respectively. On 1st April,2018 the total capital of the firm and the balance of
General Reserve are Rs. 2,00,000 and Rs. 50,000 respectively. During the year 2018-
19 the firm made a profit of Rs. 48,000 before charging interest on capital @6%. The
drawings of the partners are Kuhu Rs.10,000 , Jigyasa Rs. 6,000 and Sheeba Rs.8,000.
On 31st March,2019 their liabilities were Rs.38,000.
On this date, they decided to dissolve the firm. The assets realized Rs.1,25,000 and
realization expenses amounted Rs. 2,400.
SOLUTION:
REALISATION ACCOUNT
PARTICULARS AMOUNT(Rs.) PARTICULARS AMOUNT(Rs.)
To sundry Assets
To cash
Creditors 38,000
Expenses 2,400
3,12,000
40,400
By creditors
By Cash a/c (Assets
Realised)
By Loss Transferred:
Kuhu Cap 94,700
Jigyasa Cap 37,880
Sheeba Cap 56,820
38,000
1,25,000
1,89,400
3,52,400 3,52,400

2. PARTNER’S CAPITAL ACCOUNT
PARTICULARS KUHU JIGYASA SHEEBA PARTICULARS KUHU JIGYASA SHEEBA
To Drawings
To Realisation
(Loss)
To Cash
10,000
94,700
44,900
6,000
37,880
14,760
8,000
56,820
24,940
By Balance b/d
By Interest on
Capital
By P/L
Appropriation
By General
Reserve
1,00,000
6,000
18,600
25,000
40,000
1,200
7,440
10,000
60,000
3,600
11,160
15,000
1,49,600 58,640 89,760 1,49,600 58,640 89,760
CASH ACCOUNT
PARTICULARS AMOUNT(Rs.) PARTICULARS AMOUNT(Rs.)
To Realisation A/c 1,25,000 By Realisation A/c
By Kuhu’s Cap
By Jigyasa’s Cap
By Sheeba’s Cap
40,400
44,900
14,760
24,940
1,25,000 1,25,000

3. MEMORANDUM BALANCESHEET
LIABILITIES AMOUNT(Rs.) ASSETS AMOUNT(Rs.)
Capital:
Kuhu(2,00,000 x 5/10) 1,00,000
Jigyasa(2,00,000 x 2/10) 40,000
Sheeba(2,00,000 x 3/10) 60,000
General Reserve
Profit
Creditors
2,00,000
50,000
48,000
38,000
Sundry assets(Balancing figure)
Drawings:
Kuhu 10,000
Jigyasa 6,000
Sheeba 8,000
3,12,000
24,000
3,36,000 3,36,000
PROFIT AND LOSS APPROPRIATION ACCCOUNT
PARTICULARS AMOUNT(Rs.) PARTICULARS AMOUNT(Rs.)
To Interest on Capital
Kuhu 6000
Jigyasa 1200
Sheeba 3600
To Profit Transferred to:
Kuhu’s Cap 18,600
Jigyasa’s Cap 7,440
Sheeba’s Cap 11,160
10,800
37,200
By profit and loss A/c 48,000
48,000 48,000