Shiv, Sadashiv and Sadanand are Partners in a firm sharing Profit and Losses equally

Question

(When all partners become insolvent)

Shiv, Sadashiv and Sadanand are Partners in a firm sharing Profit and Losses equally whose Balance-sheet as on 31^st December, 2011 stood as follows:

Balance Sheet as on 31^st December, 2011

Shiv, Sadashiv and Sadanand were declared bankrupt and hence the firm was dissolved as on that date:

(i) The sundry Assets realised as follows:

Building Rs 10,900, Machinery Rs 8,200, Debtors Rs 6,800.

(ii) Realisation expenses amounted to Rs 1,300.

(iii) Sadanand was unable to contribute anything

Whereas Rs 1,100 and Rs 900 were recovered from the realisation of private estate of Shiv and Sadashiv respectively.

You are required to close the books of the firm.

Answer 1

Realisation Account

Partners’ Capital Accounts

Bank Account

Sundry Creditors Account

Parvati’s Loan Account

Deficiency Account

Working Notes:

Amount Left for payment = 35800-1300 = 34500

Amount Paid to Sundry Creditors and Parvati's Loan Acount in the ratio 3 : 1 (i.e. 30000 : 10000)

Therefore, amount paid to sundry Creditors = 34500×3/4=25875

Amount Paid towards Parvati's Loan A/c =34500×1/4=8625