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A and B who make up their accounts annually to 31st December were in partnership sharing profits andA and B who make up their accounts annually to 31st December were in partnership sharing profits and losses in the

ratio of 2:1. No interest was charged on drawings or credited to capital.


The following was the summary of the balances as on 31.12.2014 :


For the purpose of closing of accounts on 31.12.2014, closing stock was valued at RS. 6,200 and furniture and fittings at RS. 18,000. Provision for depreciation on motor vehicle is to be made at 20% p.a. calculated on cost and for accrued general expenses RS. 1,200. In addition, one year’s interest is to be provided on A’s loan.


The partnership was dissolved on 1.1.2015, it being agreed that


(i) A should take over stock for RS. 6,000;


(ii) B should take over motor vehicle at RS. 2,700 and part of the fittings and fixtures for RS. 7,500;


(iii) Interest on A’s loan should cease w.e.f. 1.1.2015;


During January, 2015 the following transactions took place :


(a) Leasehold premises were sold, realising a net amount of RS. 60,000;


(b) RS. 1,600 was collected from debtors and the balance was taken over by A;


(c) A portion of the fittings and fixtures were auctioned and realised RS. 10,000. It was also agreed that the balance of fixtures and fittings should be taken over by B for RS. 500;


(d) Creditors and accrued general expenses were paid in full;


(e) Realisation expenses amounted to ~ 1,400;


(f) All amounts receivable and payable by A and B were settled.


You are required to prepare the following :


1. Profit and Loss Account for the year ended 31.12.2014 excluding profit or loss arising on dissolution;


2. Realisation Account;


3. Cash Account for January 2015;


4. Partners’ Accounts showing the final settlement of dissolution.



May 26, 2022
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