Fred & George have been in partnership for many years. The partners who share pr

Question

Fred & George have been in partnership for many years. The partners who share profits and losses on a 60:40 basis respectively wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be 10,000. At the date the partnership ceases operations the balance sheets is a follows

Cash 100,000. Liabilities. 80,000

Noncash assets. 200,000. Fred, capital. 100,0000

Total assets. 300,000. George capital. 120,000

Total liabilities 300,000

In advance accounting 12edition problem #21

Explanation / Answer

Realisation Account Particulars Amount Particulars Amount To Assets 200000 By other Liabilities 80000 To cash A/c 80000 By cash a/c 200000 To cash A/c(liquidation expense) 10000 By P& L a/c 10000 290000 290000 Cash Account Particulars Amount Particulars Amount Opening Cash 100000 By realisation A/c 80000 To realization account 200000 By realisation A/c 10000 (liquidation expenses) Closing Balance 210000 300000 300000 P&L Account Particulars Amount Particulars Amount To realisation A/c 10000 By fred capital a/c 6000 By george capital a/c 4000 10000 10000 Partner's Account Particulars Fred George Particulars Fred George To P&l A/c 6000 4000 Capital Account 100000 120000 Cash Balance 126000 84000 Closing Capital 220000 200000 226000 204000 226000 204000

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