Give the necessary journal entries for the following transactions on dissolution of the firm of Aman and Rajat on 31 st

March, 2016, after the transfer of various assets (other than cash) and the third party liabilities to Realisation Account.
They shared profits and losses in the ratio of 2 : 1.
(а) There was a bill of exchange of ₹ 10,000 under discount. The bill was received from Derek who became
insolvent.
(b) Bills payable of ₹ 30,000 falling due on 30th April, 2016 were discharged at ₹ 29,550.
(c) Creditors of ₹ 30,000 took over stock of ₹ 10,000 at 10% discount and the balance was paid to them in cash.
(d) There was an old typewriter which had been written off completely. It was estimated to realize ₹ 600. It was taken
away by Rajat at 25% less than the estimated price.
(e) Aman agreed to take over the responsibility of completing dissolution at an agreed remuneration of ₹ 1,000 and to
bear all realization expenses. Actual realisation expenses ₹ 800 were paid by the firm.
(f) Loss on realization was ₹ 54,000. 6

1) Calculation of Normal Profit

= 

=  = Rs. 15,000
(2) Calculation of Super Profit:
Goodwill = Super profit   No. of years’ of purchase
Rs. 24,000 = Super profit  4

Super profit =  = Rs. 6,000

(3) Calculation of Average Profit:
Super Profit = Average profit – Normal profit
Rs. 6,000 = Average Profit – Rs. 15,000
Average Profit Rs. 6,000, Rs. 15,000, Rs. 21,000
(B) Capitalisation of super profit method: Under this method, goodwill is calculated by capitalizing the super profit on the
basis of Normal Rate of Return.

Goodwill = 

Profit and Loss Appropriation Account

as on March 31 2016
Dr.
Cr
Particulars
Amount
₹
Particulars
Amount
₹
Profit Transferred:
By Profit and Loss A/c
40,000
To Abhay’s Capital A/c
20,000
To Siddharth’s Capital A/c
Share in Profit
12,000
Share in Deficiency
(2,000)
10,000
To Kusum’s Capital A/c
Share in Profit
8,000
Deficiency Received
From Siddharth
2,000
10,000
40,000
40,000
Profit and Loss Appropriation Account
Advertisementsas on March 31, 2017
Dr.
Cr
Particulars
Amount
₹
Particulars
Amount
₹
Profit Transferred:
By Profit and Loss Account A/c
60,000
To Abhay’s Capital A/c
30,000
To Siddharth’s Capital A/c
18,000
To Kusum’s Capital A/c
12,000
60,000
60,000
Working Notes:
As Kusum is guaranteed a minimum profit of ₹ 10,000, any deficiency in Kusum’s profit should be born by Siddharth.
The share of profit as per the profit sharing ration 5:3:2 will be as follows:
Note that, in the year ending March 31, 2017, Kusum got more than ₹ 10,000 as her profit share. So, there is no deficiency.
Profits
(For the year ending March 31, 2016)
Net Profit
= ₹ 40,000
Abhay’s Share
{= ₹~40,000 × \dfrac{5}{10}}=₹ 40,000×105
= ₹ 20,000
Siddharth’s Share
{= ₹~40,000 × \dfrac{3}{10}}=₹ 40,000×103
= ₹ 12,000
Kusum’s Share
{= ₹~40,000 × \dfrac{2}{10}}=₹ 40,000×102
= ₹ 8,000
Guaranteed Profit to Kusum
= ₹ 10,000
Deficiency in Kusum’s profit
= ₹ 10,000 – ₹ 8,000
= ₹ 2,000
Siddharth’s Share in Deficiency
= ₹ 2,000
Profits
(For the year ending March 31, 2017)
Net Profit
= ₹ 60,000
Abhay’s Share
{= ₹~60,000 × \dfrac{5}{10}}=₹ 60,000×105
= ₹ 30,000
Siddharth’s Share
{= ₹~60,000 × \dfrac{3}{10}}=₹ 60,000×103
= ₹ 18,000
Kusum’s Share
{= ₹~60,000 × \dfrac{2}{10}}=₹ 60,000×102
= ₹ 12,000