Closing of books of account

 (S R Patil)

conversations of partnership firms into a limited company

Closing of books of account

As the partnership firm is dissolved the books of the firm are required to be closed. Various account in the books of the firm are closed as under

1. All assets and liabilities are transferred to a Realisation Account

2. Undistributed profit or loss items are transferred to the Capital Account of the partner.

3. Limited company A/C is closed on receipt of purchase price,  shares, debenture, cash etc.

4. Partners Capital Accounts are closed by giving items cash, shares, debenture etc.

Journal Entries

1. For transfer of assets to realisation account

          Realisation A/C.              Dr.

                     To Assets A/C

2. For transfer of liabilitys

        Liabilities A/C.                Dr.

                    To Realisation A/C

3. For purchase consideration to be received from company

        Limited CO 's A/C.          Dr.

                     To Realisation A/C

4. For sale of assets for cash

        Cash /Bank A/C.           Dr.

                    To Realisation A/C

For an asset taken over by any partner

      Partners Captain A/C.     Dr.

                     To Realisation A/C

 

 

6. For payment of liability and realisation expenses

        Realisation A/C.             Dr.

              To cash / Bank A/C

7. For a liability taken over by a partner

           Realisation A/C.          Dr.

                   To partner Capital A/C

8. For transfer of realisation profit

             Realisation A/C.         Dr.

                     To partner capital A/C

For shares, debenture, cash etc. received from Limited company

          Shares A/C.             Dr.

          Debenture A/C.      Dr.

         Cash /Bank A/C.    Dr.

                     To Limited Company A/C

10. For payment of cash and distribution of shares /Debenture to partner

         Partners Capital A/C.       Dr.

                     To Shares A/C

                     To Debenture A/C

                     To Cash A/C

Distribution of Shares / Debentures

         The shares, debenture are given to the partner in settlement of the final balance due on their capital. The shares /debenture are distributed among the partner in the ratio of final balance.