Surplus distribution
Sakthivel Rajagopal (38 Points)
14 November 2020
what to do with the SURPLUS available in a private limited company with three directors, after dissolution.
Sakthivel Rajagopal (38 Points)
14 November 2020
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 14 November 2020
The usual procedure is realisation accounting. The surplus is transferred to partners capital account
Profit and loss dr
Reserves and surplus dr
To Partners capital/ Current accounts.
Assets are transferred to realisation account. When a partner takes over the assets
Partners capital ac dr
to realisation account
similarly after outside liabilities are met by partners or company, relevant adjustments to realisation accounts. Finally, all expenses, liabilities cleared off either by partners or company, profit is realised into partners capital account.
If it is profit realised after settlement
realisation account dr,
Partners capital Cr
if it is a loss realised after settlements
Partners capital dr
Realisation account Cr.
(I concised all the entries in the end)
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 14 November 2020
I forgot to mention clearly, create three partners accounts and transfer amounts equivalent to their profit sharing ratios.
CAclubindia
