Preparing Memorandum Balance Sheet
When complete Balance Sheet is not given for closing the books of the firm on its dissolution, one balance sheet must be prepared on the date of dissolution. Such Balance Sheet prepared from the given information is called Memorandum Balance Sheet .It is prepared on the basis of normal Balance Sheet Equation i.e.
Capital + Liabilities = Assets
Usually, missing information is Sundry Assets (balancing figure).
If, however assets besides cash are given, then cash is the balancing figure.
If, cash is given and both the sides are not equal, then the difference is Accumulated losses or profits depending on the side of the balance sheet.
After completing the Memorandum Balance Sheet, usual procedure of preparing Realization account and other related accounts should be followed.
The most important point relating to the accounting procedure of realization is that, in the end the balance in all the ledger accounts should be nil. The final payments/receipts to/from partners should be equal to the cash available, in hand and in the bank.