Neptune, Jupiter, Venus and Pluto had been carrying on business in partnership sharing profits and losses in the ratio of 3:2:1: 1. They decide to ...

Question

Neptune, Jupiter, Venus and Pluto had been carrying on business in partnership sharing profits and losses in the ratio of 3:2:1: 1. They decide to dissolve the partnership on the basis of the following Balance Sheet as on 30th April, 2024: Liabilities Amount Assets Amount Capital Account: Neptune Jupiter General Reserve Capital Reserve Sundry Creditors Mortgage Loan 1,00,000 60,000 56,000 14,000 20,000 80,000 Premises Furniture Stock Debtors Bank Capital Over drawn: Venus Pluto 1,20,000 40,000 1,00,000 40,000 8,000 10,000 12,000 3,30,000 3,30,000 (i) The assets were realised as under: Debtors 24,000 Stock 16,000 Furniture 60,000 Premises 90,000 (ii) Expenses of dissolution amounted to 34,000. (iii) Further creditors of 12,000 had to be met. (iv) General Reserve unlike Capital Reserve was built up by appropriation of profits. You are required to draw up the Realisation Account; Partners' Capital Accounts and the Bank Account assuming that Venus became insolvent and nothing was realised from his private estate. Apply the principles laid down in Garner vs Murray. [RTP Jan. 2025]

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Answer Solution: Realisation Account Particulars Amount Particulars Amount To Sundry assets A/c (transfer): Premises Furniture Stock Sundry Debtors To Bank A/c (creditors paid) To Bank A/c (Mortgage loan) To Bank A/c (expenses) To Balance b/d 1,20,000 40,000 1,00,000 40,000 32,000 80,000 4,000 8,000 By Sundry creditors A/c By Mortgage loan By Bank A/c (assets realised): Premises Furniture Stock Debtors By Loss transferred to Capital Accounts: Neptune Jupiter Venus Pluto 20,000 80,000 90,000 16,000 60,000 24,000 54,000 36,000 18,000 18,000 To Realisation A/ c (assets realised) To Capital A/c (realisation loss made good): Neptune Jupiter Pluto To Pluto's Capital A/ c 1,90,000 54,000 36,000 18,000 2,000 By Realisation A/c (creditors) By Realisation A/c (expenses) By Mortgage loan By Neptune's Capital A/c By Jupiter's Capital A/c 32,000 4,000 80,000 1,18,857 73,143 3,08,000 3,08,000 Partners' Capital Account Particulars Neptune Jupiter Venus Pluto Particulars Nep Jup Ven Plu To Bal b/d 10,000 12,000 By bal b/d 1,00, 000 60, 000 To Realization A/c (Loss) 54, 000 36, 000 18, 000 18, 000 By General Reserve 24, 000 16, 000 8, 000 8, 000 To venus's Capital A/c (Loss) (WN 1) 11,143 6,857 By Capital Reserve 6, 000 4, 000 2, 000 2, 000 To Bank A/c 1,18, 857 73, 143 By Bank A/c (realization loss) - notional entry 54, 000 36, 000 18, 000 By Neptune's Capital A/c 11, 143 By jupiter's Capital A/c 6,857 By Bank A/c 2, 000 Total 1,84, 000 1,16, 000 28, 000 30, 000 Total 1,84, 000 1,16, 000 28, 000 30, 000 W.N. 1: Statement showing distribution of Loss of Venus Particulars Neptune Jupiter Opening Capital General Reserve 1,00,000 24,000 60,000 16,000 Capital reserve Total Ratio Loss of Venus on 18,000 is to be distributed in the ratio of (13:8) 6,000 1,30,000 13 11,143 4,000 80,000 8 6,857

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