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Question 2:

Orange, Apple, and Banana were in partnership, sharing profits and losses in the ratio of 3:2:1. They decided to dissolve the partnership and distribute the sale proceeds as and when realized.

The partners' capitals were as follows:
- Orange: Rs. 10,000
- Apple: Rs. 9,000
- Banana: Rs. 5,000

Apple's loan (Cr.) amounted to Rs. 3,000. Sundry creditors amounted to Rs. 6,000.

The assets were realized as under:

\begin{tabular}{|c|c|c|c|c|c|c|c|c|}
\hline & \multicolumn{2}{|c|}{Stock} & \multicolumn{2}{|c|}{Furniture} & \multicolumn{2}{|c|}{Debtors} & \multicolumn{2}{|c|}{Expenses} \\
\hline & & Rs. & & Rs. & & Rs. & & Rs. \\
\hline July & & 3,000 & & 300 & & 2,000 & & 500 \\
\hline August & & 2,000 & & 100 & & 1,500 & & 200 \\
\hline September & & 2,500 & & [tex]$\cdot$[/tex] & & 2,000 & & 300 \\
\hline October & & 3,000 & & & & 1,500 & & 200 \\
\hline
\end{tabular}

You are required to draw up a statement showing the distribution of cash and the relative surplus capital method. (10 Marks)



Answer :

GinnyAnswer
Certainly! Let's solve the problem step-by-step.

### Initial Setup:
Capital Contributions:
- Orange: Rs. 10,000
- Apple: Rs. 9,000
- Banana: Rs. 5,000
- Apple's loan: Rs. 3,000
- Creditors: Rs. 6,000

Profit and Loss Sharing Ratio:
- Orange: 3
- Apple: 2
- Banana: 1

### Assets Realisation:

Stock Realisation:
- July: Rs. 3,000
- August: Rs. 2,000
- September: Rs. 2,500
- October: Rs. 3,000
- Total Stock: Rs. 3,000 + Rs. 2,000 + Rs. 2,500 + Rs. 3,000 = Rs. 10,500

Furniture Realisation:
- July: Rs. 300
- August: Rs. 100
- September: Rs. 0
- October: Rs. 0
- Total Furniture: Rs. 300 + Rs. 100 = Rs. 400

Debtors Realisation:
- July: Rs. 2,000
- August: Rs. 1,500
- September: Rs. 2,000
- October: Rs. 1,500
- Total Debtors: Rs. 2,000 + Rs. 1,500 + Rs. 2,000 + Rs. 1,500 = Rs. 7,000

Expenses:
- July: Rs. 500
- August: Rs. 200
- September: Rs. 300
- October: Rs. 200
- Total Expenses: Rs. 500 + Rs. 200 + Rs. 300 + Rs. 200 = Rs. 1,200

### Total Realised Amount:
Total realised from Stock, Furniture and Debtors:
[tex]\[ 10,500 + 400 + 7,000 = Rs. 17,900 \][/tex]

### Net Cash Available for Distribution:
Subtracting expenses and creditors from the total realised amount:
[tex]\[ 17,900 - 1,200 - 6,000 = Rs. 10,700 \][/tex]

### Distribution Based on Profit and Loss Ratio (3:2:1):
First, we need to determine the total profit distribution:
- Ratio Sum: [tex]\( 3 + 2 + 1 = 6 \)[/tex]

Surplus for Each Partner:
- For Orange: [tex]\( \frac{10,700 \times 3}{6} = Rs. 5,350 \)[/tex]
- For Apple: [tex]\( \frac{10,700 \times 2}{6} = Rs. 3,566.67 \)[/tex]
- For Banana: [tex]\( \frac{10,700 \times 1}{6} = Rs. 1,783.33 \)[/tex]

### Capital at the End of Liquidation:

Orange's End Capital:
[tex]\[ 10,000 + 5,350 = Rs. 15,350 \][/tex]

Apple's End Capital (including loan):
[tex]\[ 9,000 + 3,000 + 3,566.67 = Rs. 15,566.67 \][/tex]

Banana's End Capital:
[tex]\[ 5,000 + 1,783.33 = Rs. 6,783.33 \][/tex]

### Summary Statement:

| | Stock | Furniture | Debtors | Expenses | Total |
|----------------|-------|-----------|---------|----------|--------|
| July | 3,000 | 300 | 2,000 | 500 | 4,800 |
| August | 2,000 | 100 | 1,500 | 200 | 3,400 |
| September | 2,500 | 0 | 2,000 | 300 | 4,200 |
| October | 3,000 | 0 | 1,500 | 200 | 4,300 |
| Total Realised | 10,500 | 400 | 7,000 | 1,200 | 17,900 |

| | Amount |
|----------------|---------|
| Total Realised | 17,900 |
| Creditors | 6,000 |
| Expenses | 1,200 |
| Net Cash | 10,700 |

| Partner | Capital Before | Surplus | Capital After |
|---------|----------------|-----------|-------------------|
| Orange | Rs. 10,000 | Rs. 5,350 | Rs. 15,350 |
| Apple | Rs. 9,000 + Apple'8,000 | Rs. 3,566.67 | Rs. 15,566.67 |
| Banana | Rs. 5,000 | Rs. 1,783.33 | Rs. 6,783.33 |

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