Financial Accounting Homework: Realisation and Dissolution

This financial accounting assignment solution provides a detailed breakdown of two problems related to partnership dissolution and realisation. The first section addresses the closing entries for a partnership (Tim, Rajay, and Jamie), including the transfer of assets and liabilities to a realisation account, recording cash realisations, payments, and expense, and the allocation of loss. It includes all necessary journal entries, partner capital accounts, and a cash at bank account. The second section covers a different partnership dissolution scenario (Apple, Cherry, and Plum), demonstrating the preparation of a realisation account, partner capital accounts, and a cash at bank account, and the distribution of loss. Workings are provided to explain the calculation of the loss on realisation and the distribution among partners. The solution also includes a bibliography of relevant accounting resources.

Running head: FINANCIAL ACCOUNTING
Financial Accounting
Name of the Student:
Name of the University:
Author’s Note:

1FINANCIAL ACCOUNTING
Table of Contents
Section A:...................................................................................................................................2
Answer to question 3:.............................................................................................................2
Section B:...................................................................................................................................5
Answer to question 1:.............................................................................................................5
Bibliography:..............................................................................................................................7

2FINANCIAL ACCOUNTING
Section A:
Answer to question 3:
Closing entries:
Tim, Rajay and Jamie
General Journal
Date Explanations Debit Credit
30-Sep-16 Realisation 5,75,000
Freehold property 3,00,000
Equipment 1,50,000
Inventory 80,000
Trade receivables 45,000
(To transfer all the assets except
cash to the realisation account)
30-Sep-16 Creditors 30,000
Realisation 30,000
(To transfer liabilities to the
realisation account)
30-Sep-16 Cash at bank 4,32,000
Realisation 4,32,000
(To record realisation of cash on
disposal of individual assets)
30-Sep-16 Realisation 29,000
Cash at bank 29,000
(To record payments made for
trade creditors)
30-Sep-16 Realisation 8,000
Cash at bank 8,000
(To record payment of realisation
expenses)
30-Sep-16 Tim's capital 60,000
Rajay' capital 60,000
Jamaie' capital 30,000
Realisation 1,50,000

3FINANCIAL ACCOUNTING
(To share the loss on realisation
as per the profit sharing ratio)
30-Sep-16 Tim's curren 7,000
Jamaie's current 2,000
Rajay's capital 3,000
Tim's capital 7,000
Jamaie's capital 2,000
Rajay's current 3,000
(To transfer partners' current
account balances to their
respective capital account)
30-Sep-16 Loan-Rajay 20,000
Rajay's capital 20,000
(To transfer loan from Rajay to
the respective capital account)
30-Sep-16 Tim's capital 4,000
Rajay' capital 4,000
Jamaie' capital 8,000
(To set off the debit balance in
Jamaie's capital account with the
capital account of the remaining
partners)
30-Sep-16 Tim's capital 3,33,000
Rajay' capital 83,000
Cash at bank 4,16,000
(To close the remaining partners'
capital and to pay off cash)
Workings:
Cash received or realised on disposal of assets:
Freehold property 310000
Equipment 48000
Inventory 29000
Trade receivables 45000
Total cash realised 432000

4FINANCIAL ACCOUNTING
Payments made to trade creditors:
Creditors 30,000
Less: Discount 1,000
Cash paid to creditors 29,000
Computation of loss on realisation:
Total Debit to the realisation account 6,12,000
Total Credit to the realisation account 4,62,000
Loss on realisation 1,50,000
Share of loss:
Tim (150000*2/5) 60,000
Rajay (150000*2/5) 60,000
Jamaie (150000*1/5) 30,000
Partners' Capital Account
Particulars Tim Rajay Jamaie Particulars Tim Rajay Jamaie
Loss on realisation 60,000 60,000 30,000 Beginning balance 3,90,000 1,30,000 20,000
Partner's current
account 3,000 Partners' current account 7,000 2,000
Loan-Rajay 20,000
Jamaie's capital 4,000 4,000 Tim's capital 4,000
Cash at bank 3,33,000 83,000 Rajay's capital 4,000
Total 3,97,000 1,50,000 30,000 Total 3,97,000 1,50,000 30,000
Cash at Bank
Particulars Amount Particulars Amount
Beginning balance 21,000 Payment to creditors 29,000
Realisation of assets 4,32,000 Payment for realisation expense 8,000
Tim's capital 3,33,000
Rajay's capital 83,000
Total 4,53,000 Total 4,53,000

5FINANCIAL ACCOUNTING
Section B:
Answer to question 1:
Realisation Account
Particulars Amount Amount Particulars Amount Amount
Sundry Assets: Sundry Liabilities:
Plant and machinery 1,20,000 Account payables 60,000
Furniture and fittings 50,000 Cash at Bank
Motor vehicle 50,000 Plant and machinery 90,000
Inventory 1,70,000 Furniture and fittings 25,000
Accounts receivable 60,000 4,50,000 Motor vehicle 40,000
Cash at Bank Inventory 1,55,000
Accounts payable 55,000 Accounts receivable 40,000 3,50,000
Cash at Bank Apple's capital
Dissolution expenses 10,000 Plant and machinery 25,000
Partner's capital (Loss on
realisation):
Apple 32,000
Cherry 32,000
Plum 16,000 80,000
Total 5,15,000 Total 5,15,000
Partners' Capital Account
Particulars Apple Cherry Plum Particulars Apple Cherry Plum
Partners' current account 20,000 30,000 Beginning balance 2,00,000 2,00,000 40,000
Realisation account 25,000 Partners' current account 30,000
Realisation account 32,000 32,000 16,000 Cash at bank 2,400
Plum's capital 1,800 1,800 Apple's capital 1,800
Cherry's capital 1,800
Cash at bank (final payment) 1,71,200 1,46,200
Total 2,30,000 2,00,000 46,000 Total 2,30,000 2,00,000 46,000

6FINANCIAL ACCOUNTING
Cash at Bank
Particulars Amount Particulars Amount
Beginning balance 30,000 Realisation account
Cash at Bank Accounts payable 55,000
Plant and machinery 90,000 Realisation account
Furniture and fittings 25,000 Dissolution expenses 10,000
Motor vehicle 40,000
Inventory 1,55,000 Partners' capital
Accounts receivable 40,000 Apple 1,71,200
Plum's capital 2,400 Cherry 1,46,200
Total 3,82,400 Total 3,82,400
Workings:
Share of loss on realisation:
Apple (80000*2/5) 32,000
Cherry (80000*2/5) 32,000
Plum (80000*1/5) 16,000
Debit balance in Plum's account
(46000-40000) 6,000
Cash that Plum could brought in
(6000*40%) 2,400
Balance to be shared by remaining partners
equally 3,600

7FINANCIAL ACCOUNTING
Bibliography:
Bull, R. J. (2014). Accounting in business. Butterworth-Heinemann.
Hoyle, J. B., Schaefer, T. F., & Doupnik, T. S. (2018). Fundamentals of advanced
accounting. McGraw-Hill Education.
Hoyle, J. B., Schaefer, T., & Doupnik, T. (2015). Advanced accounting. McGraw Hill.
Narayanaswamy, R. (2017). Financial accounting: a managerial perspective. PHI Learning
Pvt. Ltd..