In: Accounting
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.
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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