Ghanshyamdas Saraf College (Private Circulation Only)
11
CHAPTER – 2 Piecemeal Distribution
of Cash
1.
A, B and C dissolved their firm on 31st December, 2011 when their Balance Sheet stood as under :
Liabilities
`
Assets
`
Partners' Capital :
A
B
C
Partners' Advances :
A
B
Sundry Creditors
2.
20,000
16,000
2,64,000
1,48,000
36,000
80,000
2,64,000
2,64,000
The partners shared Profits and Losses in the proportion of 2 : 1 : 1. Show the distribution of assets
amongst the Partners as and when realised.
`
1st Realisation
50,000
2nd Realisation
98,000
3rd Realisation
80,000
A, B and C carried on business as partners, sharing Profits and Losses in the ratio of 3 : 4 : 5. They
decided to dissolve the partnership as on 1st July, 2011; and agreed that receipts from sales should be
dealt with as and when received.
The following was the Balance Sheet of the firm at the date of dissolution :
Liabilities
`
Assets
`
Sundry Creditors
Loan A/c : B
Capital A/cs :
A
B
C
3.
Sundry Assets
60,000
48,000
40,000
10,000
2,000
12,000
8,000
4,000
Sundry Assets
24,000
36,000
36,000
36,000
The net amount realised from the gradual sale of assets were as follows :
`
`
15th July, 2011
5,000
29th August, 2011
2,000
31st July, 2011
10,000
6th September, 2011
6,000
12th August, 2011
5,000
30th September, 2011
5,000
Draw up a detailed statement showing the distribution of each instalment received and the final
payments.
Silver, Tungsten and Molybdenum were in partnership till 31.3.2012; when their Balance Sheet was as
1 1
1
follows. They shared Profits & Losses as ,
& respectively :
2 3
6
Balance Sheet
Liabilities
Sundry Creditors
Bank Overdraft
(against Pledge of Stock)
Tungsten's Loan
General Reserve
With Compliments from
`
16,000
70,000
50,000
15,000
Assets
Plant & Machinery
Stock
Sundry Debtors
Cash
`
2,00,000
75,000
1,25,000
5,000
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Ghanshyamdas Saraf College (Private Circulation Only)
Capital Accounts :
Silver
Tungsten
Molybdenum
4.
1,54,000
50,000
50,000
2,54,000
4,05,000
4,05,000
Bankers could realise only ` 68,000 on sale of pledged Stock. Other Assets were realised as follows :
May 2012
Plant & Machinery realised ` 1,75,000 after meeting Brokerage ` 5,000.
June 2012
Debtors realised ` 75,000.
July 2012
Debtors realised ` 15,000.
The remaining Debtors were taken over for ` 5,000 by Molybdenum who contributed the said amount in
Cash.
A sum of ` 2,500 was kept reserved for meeting realisation expenses and actual expenses of ` 2,000
were met finally on 15th July, 2012. A Creditor for ` 8,000 agreed to forego ` 2,000 while claim of an
unrecorded Creditor for ` 1,000 had to be admitted. The partners decide to distribute Cash as and when
realised.
You are required to show the distribution of cash on the basis of "highest relative Capital". Show also
the final journal entry for closing the books of the firm. Ignore interest on Tungsten's Loan.
A, B and C were in partnership sharing Profits and Losses in proportion to their respective Capitals.
They agreed to dissolve the partnership on 30th June, 2011; at which date their Assets and Liabilities
were as under :
Liabilities
`
Assets
`
Sundry Creditors
Capital A/cs :
A
B
C
38,000
60,000
45,000
30,000
Bank
Sundry Debtors
Stock
Plant & Machinery
3,600
69,000
75,400
25,000
1,73,000
1,35,000
1,73,000
It was also agreed, that after the Sundry Creditors had been paid in full, the net proceeds of realisation
should be distributed monthly by 15th July, 2011; sufficient Assets had been realised to permit the
Sundry Creditors to be paid in full and they were, therefore, paid on that date.
The gross proceeds and expenses of realisation were :
Debtors (`)
Plant & Machinery (`)
Stock (`)
Expenses (`)
July
August
September
5.
30,000
20,000
10,000
10,000
8,500
37,000
23,000
1,000
3,000
2,000
At 30th September, the only remaining Assets were outstanding Debtors' Accounts amounting to
9,000 and it was mutually agreed that B should take them over at 50% of their book value.
You are required to set out Realisation Account, the relevant part of Cash Book showing distribution to
Partner's and Partner's Capital Accounts upto the close of the business.
The Balance Sheet of the firm of A, B and C as on 30th June, 2011 was as under :
Liabilities
`
Assets
`
Creditors
Capital Accounts :
A
B
C
17,000
67,000
45,000
31,500
1,60,500
Cash at Bank
Debtors
Stock
Plant & Equipment
Loan A
Loan B
6,000
22,000
14,000
99,000
12,000
7,500
1,60,500
i) The partners share profits & losses in the ratio of 5 : 3 : 2.
ii) Cash is distributed among the partners at the end of each month.
iii) Liquidation transactions :
July 2011 :
` 16,500
Collected from debtors, balance is collectable.
` 10,000
Received from sale of entire stock.
` 1,000
Liquidation expenses paid.
` 8,000
Cash retained in the business at the end of the month.
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13
August 2011 :
` 1,500
Liquidation expenses paid.
As part of payment of his capital, C accepted a piece of equipment for 10,000
(B.V. ` 4,000).
` 2,500
Cash retained in the business at the end of the month.
September 2011 :
` 75,000
Received on sale of remaining plant and equipment.
` 1,000
Liquidation expenses paid. No cash is retained in the business.
Prepare a statement of piecemeal distribution of cash.
6.
The following is the Balance Sheet of A, B and C (who share Profits and Losses in the ratio of 4:3:1) on
31st March, 2012; on which date they dissolve partnership.
Their Capitals are to be repaid as and when the Assets realised.
Balance Sheet as at 31st March, 2012
`
Liabilities
Sundry Creditors
Bank Overdraft
Capital Accounts :
A
B
C
26,250
8,750
70,000
30,000
50,000
Assets
Buildings
Machinery
Stock
Sundry Debtors
1,50,000
1,85,000
`
50,000
55,000
20,000
60,000
1,85,000
Bank Overdraft is secured against stock.
The Assets realised the following amounts which were immediately distributed :
May 31
:
Debtors
` 20,000
July 31
:
Stock
` 15,000
September 30 :
Debtors
` 25,000
October 31
:
Machinery
` 40,000
December 31 :
Buildings
` 65,000
No further sums could be realised. Prepare a statement showing the distribution.
7.
A, B, and C trade in partnership sharing Profits and Losses in the proportion of 3 : 2 : 1. They decide to
dissolve the firm with effect from 1st January, when the firm's Balance Sheet stood as follows :
Liabilities
`
Assets
`
Capital Accounts :
A
B
C
Sundry Creditors
Bank Overdraft
(unsecured)
60,000
40,000
25,000
1,25,000
90,000
30,000
2,45,000
Land & Building
Furniture & Fittings
Plant & Machinery
Stock in trade
Sundry Debtors
Investments
Cash and Bank Balance
80,000
12,000
30,000
18,000
60,000
35,000
10,000
2,45,000
The Assets are being realised gradually. After meeting the expenses of realisation, the first instalment
of realisation (including Cash and Bank balances) fetches ` 75,000; the second – ` 32,000;
he third – ` 62,000; the fourth – ` 43,000 and the fifth and last – ` 21,000.
If distribution amongst the partners is to be made after each instalment of realisation show the statement
of distribution to partners at each instalment.
8.
1 1
1
,
and
2 3
6
respectively. Their firm was dissolved as on 31st December, 2011 on which date the Balance Sheet of
the firm was as under :
Lata, Usha and Meena were in partnership, sharing profits and losses in the ratio of
Balance Sheet as at 31st December, 2011
Liabilities
Capitals :
Lata
Usha
Meena
With Compliments from
`
17,000
8,000
1,000
Assets
Cash
Debtors
Stock
`
4,000
42,000
16,000
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Ghanshyamdas Saraf College (Private Circulation Only)
General Reserve
Loans :
Lata
Usha
Creditors
6,000
6,000
4,000
20,000
62,000
62,000
It was agreed that the net realization should be distributed in their due order at the end of each fortnight.
The realisations and expenses were as under :
Debtors
Stock
Expenses
`
`
`
4,500
500
8,500
500
3,050
1,000
500
1,000
400
600
15th January, 2012
31st January, 2012
15th February, 2012
28th February, 2012
15th March, 2012
7,500
10,500
8,500
10,500
2,050
Stock was completely disposed of and the remaining debtors were to be taken over by Meena at an
agreed amount of 600.
Show the statement of distribution of cash, following Highest Relative Capitals Method.
9.
Rahim, Antony and Prasad were in partnership sharing Profits and Losses in proportion of 5:4:3.
They agreed to dissolve the firm on 1st January, 2012; on which date their Assets and Liabilities were
as under :
Balance Sheet
`
Liabilities
Sundry Creditors
Loan from Antony
Capital Accounts :
Rahim
Antony
Prasad
76,000
9,000
1,20,000
90,000
60,000
Assets
Sundry Debtors
Stock
Plant
Furniture
2,70,000
3,55,000
`
1,45,000
1,50,000
50,000
10,000
3,55,000
The Assets were realised in the following instalment and the proceeds were distributed as and
when realised :
`
1st Instalment
50,000
2nd Instalment
30,000
3rd Instalment
21,000
4th Instalment
90,000
5th Instalment
84,000
The cost of dissolution was estimated at ` 5,000 and the amount was kept as reserve before distribution
of the proceeds until the 3rd Instalment when the actual cost of ` 4,000 was met.
Prepare a statement showing the distribution of each Instalment realised and the final journal entry for
closing the books of the firm.
10.
A, B and C were partners sharing profit & losses in the ratio of 1 : 1 : 2 respectively. Their Balance
Sheet was as follows :
Balance Sheet as on 31st March, 2012
`
Liabilities
Capitals
A
B
C
A's Loan
B's Loan
Creditors
Govt. Taxes
With Compliments from
12,000
9,000
6,000
3,750
2,500
Assets
Buildings
Plant and Machinery
Stock
`
19,750
11,750
6,250
27,000
6,250
3,000
1,500
37,750
37,750
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Ghanshyamdas Saraf College (Private Circulation Only)
11.
15
A Bills payable of ` 2,000 maturing on 10th April, 2012 was dishonoured by the firm. It was mutually
agreed that the realisation of assets should be distributed at the end of each month. The monthwise
realisation and expenses was as follows :
2012
Assets Realised `
Expenses of Realisation `
30th April
7,360
360
31st May
9,100
350
30th June
7,800
300
31st July
4,780
280
All the assets were fully realised by 31st July, 2012. The Bills Payable dishonoured was duly met by the
firm on 30th April, 2012.
Prepare a statement of piecemeal distribution of cash.
4
5
1
A, B and C share profits and losses in the proportion of
,
and
. Their Balance Sheet as on
10 10
10
31st December, 2012; was as follows :
Balance Sheet
`
Liabilities
Sundry Creditors
A's Loan
B's Loan
Reserve fund
Contingency Reserve
Capital A/cs :
A
B
C
10,000
6,000
3,000
6,000
4,000
Assets
Cash in hand
Other Assets
15,000
12,000
3,000
59,000
`
3,000
56,000
59,000
The partnership is dissolved and the assets are realised as follows :
`
First Realisation
10,000
Second Realisation
20,000
Third Realisation
17,000
On the date of dissolution, there was contingent liability of ` 1,000 against the firm which was settled at
` 700 at the time of second realisation. Realisation expenses were estimated at ` 2,000 but actually
came to ` 1,500. C took stock worth ` 500 at the time of third realisation.
Prepare a statement showing how the distribution should be made by following proportionate capital
method.
12. Ajay, Vijay and Vishal were in partnership sharing profits & losses in the ratio of 5 : 3 : 2. The
partnership was dissolved on 31st March, 2012, when the position was as under :
Liabilities
`
Assets
`
Capital A/cs :
Ajay
Vijay
Ajay's Loan
Mrs. Deepika's Loan
Bank Loan
Creditors
40,000
Nil
40,000
14,000
16,000
4,000
30,000
1,04,000
Cash at Bank
Debtors
Stock
Vishal's Capital
500
44,000
49,500
10,000
1,04,000
Realisations should be distributed as safely as possible. The realisations were :
Date
Realisation
2012
15th April
19,500
31st May
10,000
30th June
30,000
31st July
20,000
31st August
6,000
30th September
8,000
Vishal brought necessary cash at the time of last realisation.
Show distribution of cash to each claimant.
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