Piecemeal - Extra Questions

ACCOUNTING FOR PIECEMEAL DISTRIBUTION – EXTRA QUESTIONS
Illustration 11: L, S and B were in partnership sharing profits in the ratio 1/2, 1/4, 1/4. Their Balance
Sheet as on 31st December, 2000 was as under, the date on which they decided to dissolve the firm.
Balance Sheet as on 31st December
Liabilities Rs. Assets Rs.
Creditors 15,000 Cash 9,000
Income Tax Payable 4,000 Stock-in-Trade 40,000
Loan from Bank 30,000 Debtors 60,000
(secured by pledge of Furniture 36,000
stock-in- trade) Motor Car 25,000
Loan from S 11,000
Capital:
L 40,000
S 40,000
B 30,000 1,10,000
1,70,000 1,70,000
(1) Bank could realise only Rs. 25,000 on disposal of stock-in-trade.
(2) A sum of Rs. 3,000 was spent on Furniture for getting better price.
(3) Other assets were realised as follows: In January 2001 Rs. 12,000; In February 2001 Rs. 15,000;
in March 2001: Rs. 10,000; In April, 2001 Rs. 30,000; In May 2001 Rs. 35,000.
The partners distributed the cash as and when available. Using Highest Relative Capital Method, show
the distribution of cash.
Illustration 12: North, East and West were partners till 30.6.2002 when the Balance Sheet of the firm
was as under:
Capital Accounts: Plant & Machinery 20,00,000
North 15,40,000 Stock-in-Trade 7,50,000
West 5,00,000 Debtors 12,50,000
East 5,00,000 Cash 50,000
General Reserve 1,50,000
East’s Loan 4,60,000
Bank Overdraft (pledge of stock) 7,20,000
Sundry Creditors 1,80,000
40,50,000 40,50,000
(a) Profit sharing ratio: North 1/2, West 1/3, East 1/6.
(b) Bankers could realise only Rs. 6,80,000 on sale of pledge stock in July, 2002.
(c) During August, 2002, Plant & Machinery were disposed of at Rs. 18,00,000, expenses of sale
being Rs. 51,000.
(d) During September, 2002, Debtors and balance inventories realised Rs. 7,52,000.
(e) During October, 2002, Debtors realised Rs. 1,50,000. The remaining Debtors were taken over by
West for Rs. 51,000. He contributed the said amount in cash.
(f) An amount of Rs. 25,000 was kept reserved for meeting a contingent liability against which actual
payment of Rs. 20,000 was made in full settlement on 30th September, 2002.
(g) A creditor for Rs. 80,000 agreed to forego Rs. 20,000 while a claim of an unrecorded creditor for
Rs. 10,000 had to be admitted and paid in full in September, 2002. The balance Creditors gave
discount of 10%.
(h) Interest charged by bank amounted to Rs. 30,000.
(i) Partners decided to distribute cash as and when realised.
Show statement of distribution of cash. Use Excess Capital Method.
Illustration 13: J, R and D are partners in ratio of 2:2:1. They dissolved on 31.12.2006 when Balance
Sheetextract was as under:
Assets: Cash – Rs. 5,000; Debtors – Rs. 18,000; Stock – Rs. 15,000; Fixed Assets – Rs. 79,000.
Liabilities: Creditors – Rs. 20,000; Unsecured Loan – Rs. 24,000; Secured Loan (against Fixed Assets)
– Rs. 10,000; Bank Overdraft (against Stock and Debtors) – Rs. 18,000; Capital Ratios 5 : 1 : 4.
P was appointed to look after the dissolution and was to receive 5% of the realisations from Fixed Assets
and 10% of stock and Debtors. R was declared insolvent.
Realisations were: (Figures in Rupees)
Month Stock / Debtors Fixed Assets
January, 2007 4,444 17,895
February, 2007 2,222 15,789
March, 2007 4,444 12,632
April, 2007 1,111 4,211
Prepare under Maximum Loss Method, statement of piecemeal distribution of cash.
Illustration 14: Balance Sheet of X, Y, Z on 30.6.2006 is as under:
Capital Accounts: Loss 2,00,000
X 3,00,000 Bank 1,00,000
Y 2,00,000 Other Assets 9,61,301
Z 1,00,000 6,00,000
15% Bank Overdraft (on Stock) 1,48,148
Outstanding Wages 40,000
18% Loan (on Plant) 1,73,153
Sundry Creditors 2,00,000
X’s Loan 75,000
Y’s Loan 25,000
12,61,301 12,61,301
Adjustments:
(1) PSR = 2:3:5.
(2) Z has no private assets or liabilities except in this firm.
(3) There was a contingent liability of Rs. 40,000 and a provision made for expenses Rs. 20,000, both of
which did not materialise.
(4) Realisation: I = 50,000 (Plant)
II = 1,50,000 (Stock)
III = 1,25,000 (Plant)
IV = 3,36,301 (Debtors)
V (Final) = 1,00,000 (Stock)
Prepare Statement of piecemeal distribution of cash under Maximum Loss Method.
“I have missed more than 9,000 shots in my career.

I have lost almost 300 games.
26 times I have been trusted to take the game winning shot and missed.
I have failed over and over and over again in my life, and that is why I
succeed.”
- Michael Jordan
Illustration 15: Given below is the Balance Sheet of A, B and C as on 31st March, 2001 on which date,
they dissolved their partnership. They shared profits and losses in the ratio 4:3:3. They decided to
distribute amounts as and when feasible and to appoint C for the purpose who was to get as his
remuneration 1% of the value of the assets realised other than cash at Bank and 10% of the amount
distributed to the partners.
Capital Accounts: Cash at Bank 275
A 15,000 Sundry Assets 53,725
B 7,500
C 15,000 37,500
Sundry Creditors 16,500
54,000 54,000
The assets realised as under:
First Instalment: Rs. 16,250; Second Instalment: Rs. 12,750;
Third Instalment: Rs. 10,000; Last Instalment: Rs. 7,500.
Required: Prepare a statement showing distribution of cash according to Maximum Loss Method.
Illustration 16: Anand Associates is a reputed firm. On account of certain misunderstandings
between the partners, it was decided to dissolve the firm on 31st December, 2001. Their Balance Sheet
as on 31stDecember, 2001 was as follows:
Capitals: Land & Building 7,00,000
A 3,00,000 Other Fixed Assets 3,00,000
B 2,00,000 Stock in Trade 2,00,000
C (Minor) 1,00,000 Debtors 4,00,000
Mortgage Loans 3,00,000 Bills Receivable 1,50,000
Bank Overdraft 3,00,000 Goodwill 30,000
Other Loans 2,00,000 Cash 20,000
Creditors 2,00,000
Loans from C 2,00,000
18,00,000 18,00,000
It was decided that Mr. A shall be in charge of realisation. He shall set apart Rs. 10,000 towards expenses,
he shall be paid a remuneration of 5% on the amounts distributed to partners towards their contribution
other than loans. Assets realised as under:
1st January: Debtors 87.5%;
15th January: Fixed Assets Rs. 4,00,000;
1st February: Debtors Balance;
15th February: Bills Receivable Rs. 1,40,000,
1st March: Fixed Assets Rs. 50,000,
15th March Land & Building Rs. 8,00,000.
Required: Prepare a statement showing how the amounts received on various dates will be distributed
assuming:
(a) The actual expenses of realisation amounted to Rs. 20,005 on 15th March.
(b) The firm is solvent.
(c) The profit and loss sharing ratio was as under:
Partners Profit Loss
A 2 1
B 2 1
C 1 Nil
(d) The final distribution is made on 15th March.
Illustration 17: The partners P, Q and R have called you to assist them in winding up the affairs of their
part on 31.12.2013. Their Balance Sheet as on that date is given below:
Capital Accounts: Land and Building 50,000
P 65,000 Plant and Machinery 46,000
Q 50,500 Furniture and Fixture 10,000
R 32,000 Stock 14,500
Sundry Creditors 16,000 Debtors 14,000
Cash at Bank 9,000
Loan P 13,000
Loan Q 7,000
1,63,500 1,63,500
(a) The partners share profits and losses in the ratio of 4:3:2.
(b) Cash is distributed to the partners at the end of each month.
(c) A summary of liquidation transactions are as follows:
January, 2014
 Rs. 9,000 – collected from Debtors, balance is uncollectible.
 Rs. 8,000 – received from the sale of entire furniture.
 Rs. 1,000 – Liquidation expenses paid.
 Rs. 6,000 – Cash retained in the business at the end of month.
February, 2014
 As part payment of his capital, R accepted a Machinery of Rs. 9,000 (book value Rs. 3,500).
 Rs. 2,000 – Cash retained in the business at the end of month.
March, 2014
 Rs. 38,000 – Received on the sale of remaining Plant and Machinery.
 Rs. 10,000 – Received from the sale of entire stock.
 Rs. 41,000 – Received on sale of Land and Building.
 No cash is retained in the business.
You are required to prepare Schedule of Cash Payment amongst the partners by ‘Higher Relative
Capital Method’.
Illustration 18: E, F and G were partners in a firm sharing profits and losses in the ratio of 3:2:1
respectively. Due to extreme competition, it was decided to dissolve the partnership on 31st December,
2017. The Balance Sheet on that date was as follows:
Capital Accounts: Machinery 1,54,000
E 1,13,100 Furniture and Fittings 25,800
F 35,400 Investments 5,400
G 31,500 1,80,000 Stock 97,700
Current Accounts: Debtors 56,400
E 26,400 Bank 29,700
G 6,000 32,400 Current Account: F 18,000
Reserves 1,08,000
Loan Account: G 15,000
Sundry Creditors 51,600
3,87,000 3,87,000
The realisation of assets is spread over the next few months as follows:
February: Debtors, Rs. 51,900 March: Machinery, Rs. 1,39,500 April: Furniture, etc. Rs. 18,000
May: G agreed to take over investment at Rs. 6,300. June: Stock, Rs. 96,000.
Dissolution expenses, originally provided, were Rs. 13,500, but actually amounted to Rs. 9,600 and were
paid on 30th April. The partners decided that after creditors were settled for Rs. 50,400, all cash received
should be distributed at the end of each month in the most equitable manner.
You are required to prepare a statement of actual cash distribution using “Maximum Loss Basis” method.

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ACCOUNTING FOR PIECEMEAL DISTRIBUTION – EXTRA QUESTIONS

“I have missed more than 9,000 shots in my career.

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