Question

S & Y are partners with profit sharing ratio as 2:1. The position of the firm 31^st December 2004 when they decided to dissolve the business was as follows:

Liabilities	Rs.	Assets	Rs.
Sundry Creditor	1,50,000	Plant & Machinery	2,50,000
General Reserve	1,00,000	Furniture	40,000
Capital Accounts:		Stock	1,00,000
S quad2,20,000		Debtors	2,00,000
Y quad2,20,000	4,40,000	Cash at bank	1,00,000
Total	6,90,000	Total	6,90,000

The details or realization was as follows:
   1. S took over plant & machinery and furniture at book value less 10%
   2. Y took over the stock at Rs. 1,75,000
   3. Debtors realized Rs. 1,85,000
   4. Sundry creditors were settled at a discount of 5%

Required: Prepare necessary journal entries and ledger accounts to close the books of the firm.

Answer 1