Question

ASR Motor LLC is running a partnership business last 20 years. ASR good reputation in sultanate of Oman. ASR dealing auto parts, mobile oil and auto repair and maintenance. Last few years overall economic growth and oil prices continue decreasing and due to that reason firm continue running losses. A long discussion the partners decided to dissolve the firm. The partners are Akbar, Iqbal, Samar, and Rahil sharing profit and losses in the ratio of 3:2:2:3.
The closing balances of assets, liabilities and capitals as on 31st December,2019 was given below.

Name of Accounts	OMR	Name of Accounts	OMR
Cash at Bank	197,325	Profit & Loss A/c	312,000
Accounts Receivable	702,280	Abdullah, Capital	2,815,000
Inventory	373,520	Ahmed, Capital	2,815,000
Furniture	1,053,590	Samar, Capital	1,920,000
Plant and Machinery	1,769,060	Rahil , Capital	2,500,000
Notes Payable	321,600	General Reserve A/c	758,000
Sundry Creditors	183,125	Building	1,077,000
Land	4,000,000	Workshop Equipment	1,050,200
Outstanding Salary	208,250

They decided to dissolve the firms. The following term amounts were realized:
Plant and Machinery are realized 15% less of total cost, Accounts Receivable realized OMR650,000,Inventory were sold OMR325,000.Sundry Creditors paid at 5% discounts, Land to be appreciated by 15%,Furniture are realized OMR900,000,Rahil are agreeing to take Building and Workshop equipment OMR1,000,000 and OMR 850,000, respectively and Note payable are paid 5% less of the value and Outstanding salary were paid full amount.
You are required
a. To pass necessary Journal entries.
b. To prepare Realization Account, Bank Accounts and Partner’s Capital Account.

Answer 1

The question seems to be not correct. While solving the question the following discrepancies have been noticed:

1. Firstly the names of the partners mentioned while providing the profit sharing ratio and the names of the capitals accounts mentioned in the balace sheet are different.

2. The assets and liabilities have not been mentioned in a proper manner. There is mixing of the assets and liabilities.

3. The question says "Rahil are agreeing to take Building and Workshop equipment OMR1,000,000 and OMR 850,000, respectively" Here, a name seems to be missing. Two partners have taken over two different assets. Therefore it says "respectively"

I have solved the question with information that seemed to be correct.

The answer might not be accurate as the data provided is not accurate.

P & L A/c	Dr	312,000
General reserve A/c	Dr	758,000
O/s salary A/c	Dr	208,250
Sundry Creditors A/c	Dr	183,125
Notes Payable A/c	Dr	321,600
To Realisation A/c			1,782,975

Realisation A/c	Dr	10,025,650
To Accounts receivable A/c			702,280
To Inventory A/c			373,520
To Furniture A/c			1,053,590
To Plant & M/c A/c			1,769,060
To Land A/c			4,000,000
To Building A/c			1,077,000
To Workshop Equipment A/c			1,050,200

Realisation A/c
Particulars	Amt	Particulars	Amt
To Accounts receivable A/c	702,280	By O/s salary A/c	208,250
To Inventory A/c	373,520	By Sundry Creditors A/c	183,125
To Furniture A/c	1,053,590	By Notes Payable A/c	321,600
To Plant & M/c A/c	1,769,060
To Land A/c	4,000,000
To Building A/c	1,077,000	By Bank A/c (assets realized)
To Workshop Equipment A/c	1,050,200	Plant & M/c	1,503,701
		Accounts receivable	650,000
		Inventory	325,000
To Bank A/c (liabilities paid)		Furniture	900,000
Sundry Creditors	173,969
Note payable	305,520	By Rahil's Capital A/c	850,000
O/s Salary	208,250
	10,713,389		10,713,389

Bank A/c
Particulars	Amt	Particulars	Amt
To balance b/d	197,325	By realisation A/c	687,739
To realisation A/c	3,378,701
	3,576,026		3,576,026

Abdullah's Capital A/c
Particulars	Amt	Particulars	Amt
		By balance b/d	2,815,000
		By P & L A/c	93,600
		By General Reserve A/c	227,400
	3,136,000		3,136,000

Ahmed's Capital A/c
Particulars	Amt	Particulars	Amt
		By balance b/d	2,815,000
		By P & L A/c	62,400
		By General Reserve A/c	151,600
	3,029,000		3,029,000

Samar's Capital A/c
Particulars	Amt	Particulars	Amt
		By balance b/d	1,920,000
		By P & L A/c	62,400
		By General Reserve A/c	151,600
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