Advertisements
Advertisements
प्रश्न
Answer in one sentence only.
In what proportion is the balance on Realisation Account transferred to Partners’ Capital / Current Accounts?
Advertisements
उत्तर १
The balance of the Realisation Account is to be transferred to Partners’ Capital Accounts in their profit-sharing ratio. If the partnership deed is silent, then profits or losses arising from Realisation Account are to be distributed in equal proportion amongst all the partners of the firm.
उत्तर २
The balance on realisation Account is transferred to Partners’ Capital / Current Accounts in their profit sharing ratio.
APPEARS IN
संबंधित प्रश्न
State whether the following statement is True or False with reason.
The debit balance of insolvent partner’s Capital Account is known as a capital deficiency.
Mr. Aaba and Mr. Baba are equal partners whose Balance Sheet as on 31 st March, 2012 was as under:
Balance Sheet as on
31st March, 2012
| Liabilities | Amount(Rs.) | Assets | Amount(Rs.) |
| Sundry Creditors | 16000 | Cash in hand | 500 |
|
Capital A/c Aaba Baba |
2000 2000 |
Stock | 4500 |
| Debtors | 4000 | ||
| Plant and machinery | 5000 | ||
| Furniture | 2000 | ||
| Land and Building | 4000 | ||
| 20000 | 20000 |
Due to weak financial position of the partners the firm is dissolved.
Aaba and Baba are not able to contribute anything from their private estate, hence they are declared insolvent.
The assets are realised as follows :-
Stock Rs. 3,000, Plant and Machinery Rs. 3,000, Furniture Rs. 1,000, Land and Building Rs. 2,000 and Debtors Rs. 1,000 only.
Realisation expenses amounted to Rs. 500.
You are required to prepare necessary Ledger Accounts to close the books of the firm.
Distinguish between 'Dissolution of partnership' and 'Dissolution of partnership firm' on the basis of court's intervention.
K and P were partners in a firm sharing profits in the ratio of 7:5. On 31-1-2016 their firm was dissolved. After transferring assets (other than cash) and outsiders liabilities to the realization account, you are given the following information:
(a) Raman, a creditor for Rs.4, 20,000 accepted building valued at Rs.8, 00,000 and paid the balance to the firm by a cheque.
(b) Rajeev, a second creditor for Rs.1, 70,000 accepted machinery valued at Rs.1, 65,000 in full settlement of his claim.
(c) Ranjan, a third creditor for Rs.90,000 accepted investments of Rs.45,000 and a bank draft of Rs.43,000 in his favour in full settlement of his claim.
(d) P we appointed to do the work of dissolution for which he was allowed Rs.2,000. Actual expenses of dissolution Rs.2,400 were paid by P.
Pass necessary journal entries for the above transactions in the books of K and P.
Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership Firm on the basis of 'Economic Relationship'.
C and D were partners in a firm sharing profits in the ratio of 3:2. On 28-2-2016 the firm was dissolved. After transferring assets (other than cash) and outsiders' liabilities to realization account you are given the following information :
(a) A creditor for Rs 2 00,000 accepted building of Rs 2,80,000 at Rs 2,20,000 and paid the firm Rs 20,000.
(b) A second creditor for Rs 75,000 accepted furniture at Rs 60,000 in full settlement of his claim.
(c) A third creditor amounting to Rs 80,000 accepted Rs 20,000 in cash and investments of the book value of Rs 65,000 in full settlement of his claim.
(d) Loss on dissolution was Rs 7,500. Pass necessary journal entries for the above transactions in the books of the firm assuming that all payments were made by cheque.
Assets and liabilities are transferred to Realisation Account at their ______ value.
Give the word/term/phrase which can substitute the following statement.
Assets which are not recorded in the books of account.
Ashwin, Bhavin and Pravin carried on business. They share profits an losses in the ratio of 5 : 3 : 2 respectively. Their Balance Sheet as on 31st March, 2016 was as under :
Balance Sheet as on 31st March, 2016
| Liabilities | Amount | Assets | Amount |
| Sundry creditors | 42,000 | Plant and machinery | 40,000 |
| Bhavin's loan | 10,000 | Investment | 16,000 |
| Reserve fund | 40,000 | Stock | 60,000 |
| Capital accounts : | Debtors 36,000 | ||
| Ashwin | 40,000 | Less : R.D.D 2,000 | |
| Bhavin | 20,000 | Bank | 10,000 |
| Pravin | 8,000 | ||
| 1,96,000 | 1,60,000 |
On the above date, the firm was dissolved, and the assets realised were as under :
1. Investment Rs 10,000. Stock Rs 48,000, and Debtors Rs 30,000
2. Plant and machinery were taken over by Ashwin at book value.
3. Sundry creditors and Bhavin's loan were paid in full.
4. Realisation expenses incurred Rs 2,000.
Prepare :
(1) Realisation Account
(2) Partners' Capital Account
(3) Bank Account
Give the word/term/phrase which can substitute the following statement.
Winding up of partnership business.
Answer in one sentence only.
Who is called insolvent person?
Write the word / term / phrase, which can substitute the following statements.
An account opened to find out the Profit or Loss on Sale of Assets and Settlement of Liabilities.
State whether the following statements is True or False.
The firm is dissolved automatically on the retirement of a partner.
State whether the following statements is True or False.
A Solvent partner having debit balance to his Capital Account does not share the deficiency of Insolvent Partner’s Capital Account.
State whether the following statements is True or False.
At the time of dissolution of Partnership Firm all assets should be transferred to Realisation A/c.
State whether the following statement is True or False with reason.
Dissolution takes place when the relation among the partners comes to an end.
State whether the following statement is True or False with reason.
Realisation Loss is not transferred to the insolvent partner’s capital account.
Ganesh and Chandan were partners sharing profits and losses in the proportion of 3:2. They dissolve the partnership firm on 31st March, 2011 when their position was as follows:
Balance Sheet as on 31st March, 2011
| Liabilities | Amount (Rs) |
Assets | Amount (Rs) | |
| Sundry Creditors | 25000 | Debtors | 112500 | 100000 |
| Bank overdraft | 20000 | Less : R.D.D | 12500 | |
| Reserve Fund | 30000 | Stock | 225000 | |
| Capital Accounts: | Furniture | 50000 | ||
| Ganesh | 230000 | Motor Car | 75000 | |
| Chandan | 150000 | Cash in hand | 5000 | |
| 455000 | 455000 | |||
The Assets realised as follows: Debtors Rs 90,000, Stock Rs 2,00,000, and Goodwill Rs 25,000, Motor Car was taken over by Ganesh for Rs 70,000 and Furniture by Chandan for Rs 60,000.
The Creditors were paid Rs 22,500 in full settlement. The expenses of realisation amounted to Rs 10,000.
Pass necessary journal entries in the books of the firm.
What is a Realisation Account?
Rahul, Rohit and Ramesh were partners in a firm sharing profits and losses in the ratio of 2:2:1 respectively. The Balance Sheet as on 31.03.2013 was as follows :
Balance Sheet as on 31st Mar, 2013
| Liabilities |
Amount
(Rs.)
|
Assets |
Amount
(Rs.)
|
Amount
(Rs.)
|
| Sundry Creditors | 20,000 | Cash at Bank | 8000 | |
| Bills Payable | 5,000 |
Debtors
|
16000 | |
| General Reserve | 6,000 | Less : R.D.D. | (1000) | 15,000 |
| Rahul’s Loan A/c | 16,000 | Stock | 20,000 | |
| Capital Account | Plant and Machinery | 30,000 | ||
| Rahul | 25,000 | Furniture | 6,000 | |
| Rohit | 10,000 | Ramesh’s Capital Account | 3,000 | |
| 82000 | 82000 |
Answer the following question:
State any two situations when a partnership firm can be compulsorily dissolved.
Partnership is completely dissolved when the partners of the firm become _________.
State whether the following statement is True or False with reason.
The firm must be dissolved on the retirement of a partner.
State whether the following statement is True or False with reason.
A solvent partner having debit balance to his Capital Account does not share the deficiency of insolvent partner Capital Account.
Vinod, Vijay, and Vishal are partners in a firm, sharing profit & Losses in the ratio 3:2:1. Vishal becomes insolvent and his capital deficiency is ₹ 6,000. Distribute the capital deficiency among the solvent partners.
Creditors ₹ 30,000, Bills Payable ₹ 20,000 and Bank Loan ₹ 10,000. Available Bank Balance ₹ 40,000 what will be the amount that creditors will get in case of all partner's insolvency.
Insolvent partners capital A/c Debit side is ₹ 15,000 & insolvent partner brought cash ₹ 6,000. Calculate the amount of Insolvency Loss to be distributed among the solvent partners.
Realisation profit of a firm is ₹ 6,000, partners share Profit & Loss in the ratio of 3: 2: 1. Calculate the amount of Realisation Profit to be credited to Partners Capital A/c.
Anita and Binita are partners in a firm. Anita had taken a loan of ₹ 15,000 from the firm. How will Anita’s loan be closed in the event of dissolution of the firm?
On which of the following grounds the court may order a partnership firm to be dissolved?
Name the account opened to find out the Profit or Loss on Sale of Assets and Settlement of Liabilities?
Consider the following statements
Statement 1: "The firm is dissolved automatically, on the retirement all partners."
Statement 2: A firm dissolves on the retirement of a partner.
The account which is prepared on dissolution of a partnership firm:
At the time of dissolution, all assets are transferred to Realisation Account at their ______.
Which of the following is the characteristic of a partnership firm?
Pick the odd one out.
Asha, Usha and Nisha are partners in the firm sharing profits and losses in the ratio of 3 : 2 : 1 respectively. On 31st March, 2019 they decided to dissolve the firm when their Balance Sheet was as under:
| Balance Sheet as on 31st March, 2019 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Creditors | 28,800 | Building | 1,02,000 |
| Bills Payable | 21,600 | Machinery | 73,000 |
| Capitol Accounts: | Motor Car | 1,67,600 | |
| Asha | 2,27,160 | Goodwill | 45,600 |
| Usha | 1,44,000 | Investment | 62,400 |
| Nisha | 1,08,000 | Debtors | 30,600 |
| Stock | 45,000 | ||
| Bank | 3,360 | ||
| 5,29,560 | 5,29,560 | ||
The firm was dissolved on the above date and the assets realised as under:
- Asha agreed to take over the Building at ₹ 1,23,600
- Usha took over Goodwill Stock and Debtors at book value and agreed to pay Creditors and Bills payable.
- Motor car and Machinery realised at ₹ 1,51,080 and ₹ 31,680 respectively.
- Investment were taken by Nisha at an agreed value of ₹ 55,440.
- Realisation Expenses amounted to ₹ 6,800.
Prepare:
- Realisation Account
- Partners' Capital Account
- Bank Account
Charu, Dhwani, Iknoor and Paavni were partners in a firm. They had entered into partnership firm last year only, through a verbal agreement. They contributed Capitals in the firm and to meet other financial requirements, few partners also provided loan to the firm. Within a year, their conflicts arisen due to certain disagreements and they decided to dissolve the firm. The firm had appointed Ms. Kavya, who is a financial advisor and legal consultant, to carry on the dissolution process. In the first instance, Ms. Kavya had transferred various assets and external liabilities to Realisation A/c. Due to her busy schedule; Ms. Kavya has delegated this assignment to you, being an intern in her firm. On the date of dissolution, you have observed the following transactions:
- Dhwani’s Loan of ₹ 50,000 to the firm was settled by paying ₹ 42,000.
- Paavni’s Loan of ₹ 40,000 was settled by giving an unrecorded asset of ₹ 45,000.
- Loan to Charu of ₹ 60,000 was settled by payment to Charu’s brother loan of the same amount.
- Iknoor’s Loan of ₹ 80,000 to the firm and she took over Machinery of ₹ 60,000 as part payment.
You are required to pass necessary entries for all the above-mentioned transactions.
Hints:
- Dr. Dhwani’s Loan A/c by ₹ 50,000; Cr. Bank A/c by ₹ 42,000 and Realisation A/c by ₹ 8,000.
- Dr. Paavni’s Loan A/c and Cr. Realisation A/c by ₹ 40,000.
- Dr. Realisation A/c and Cr. Loan to Charu A/c by ₹ 60,000.
- Dr. Iknoor Loan A/c by ₹ 80,000; Cr. Realisation A/c by ₹ 60,000 and Bank A/c by ₹ 20,000.
Complete the table.
| Debit side total of Realisation A/c |
Credit side total of Realisation A/c |
Loss on Realisation |
| ₹ 20,000 | ? | ₹ 4,000 |
Complete the following table:
| Debit side total of Capital A/c |
Credit side total of Capital A/c |
Cash brought by Partner |
| ₹ 51,000 | ? | ₹ 17,000 |
Aditya, Abhinav and Ankit were partners in a firm sharing profits in the ratio of 4: 3 : 3. On 31st March, 2022, the firm was dissolved. Aditya was appointed to complete the dissolution process for which he was allowed a remuneration of ₹ 42,000. Aditya also agreed to bear dissolution expenses. Actual expenses on dissolution amounted to ₹ 33,000 which were paid by Aditya. Aditya’s Capital Account will be credited by:
On the day of dissolution of the firm ‘Roop Brothers’ had partner’s capital amounting to ₹ 1,50,000 external liabilities ₹ 35,000, Cash balance ₹ 8,000 and P & L A/c (Dr.) ₹ 7,000. If Realisation expense and loss on Realisation amounted to ₹ 5,000 and ₹ 25,000 respectively, the amount realised by sale of assets is ______.
Sun and Kiran are partners sharing profits and losses equally. They decided to dissolve their firm. Assets and Liabilities have been transferred to Realisation Account. Pass necessary Journal entries for the following:
- All partners are agreed that the process of realisation at the time dissolution will be accomplished by Sun for which he will be paid ₹ 10,000 along with the amount of expense which amounted to 2% of total value realised from the Assets on dissolution. Some assets were sold for Cash at a cumulative Value of ₹ 12,00,000 and the remaining were taken over by creditors at a valuation of ₹ 3,00,000.
- Deferred Advertisement Expenditure A/c appeared in the books at ₹ 28,000.
- Out of the Stock of ₹ 1,20,000; Kiran (a partner) took over 1/3 of the stock at a discount of 25% and 50% of remaining stock was took over by a Creditor of ₹ 30,000 in full settlement of his claim. Balance amount of stock realized at ₹ 25,000.
- An outstanding bill for repairs and renewal of ₹ 3,000 was settled through an unrecorded asset which was valued at ₹ 10,000. Balance being settled in Cash.
Do you agree or disagree with the following statement:
On dissolution, cash/bank account is closed automatically.
Amul and Sumul were partners sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as on 31st March, 2023 was as follows:
| Balance Sheet as on 31st March, 2023 | |||
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capital Accounts : | Building | 10,500 | |
| Amul | 15,000 | Plant | 13,500 |
| Sumul | 9,000 | Debtors | 21,000 |
| Current Accounts: | Stock | 7,500 | |
| Amul | 4,500 | Bank | 9,000 |
| Sumul | 3,000 | ||
| Creditors | 26,100 | ||
| Bills Payable | 3,900 | ||
| 61,500 | 61,500 | ||
The firm was dissolved on the above date and the assets realised as under:
(1) Plant ₹ 12,000, Building ₹ 9,000, Stock ₹ 6,000, and Debtors ₹ 18,000.
(2) Amul agreed to pay off the Bills Payable.
(3) Creditors were paid in full.
(4) Dissolution expenses were ₹ 2,100.
Prepare: Realisation A/c, Partners' Current A/cs, Partners' Capital A/cs and Bank A/c.
Complete the following table:
| Debit side total of Realisation A/c | Credit side total of Realisation A/c | Loss on Realisation |
| ₹ 30,000 | ? | ₹ 24,000 |
| ? | ₹ 10,000 | ₹ 40,000 |
Insolvent partner Capital A/c debit side total is ₹ 25,000 and credit side total is ₹ 10,000. Calculate deficiency.
Vinay, Premal and Monil were in partnership sharing profits and losses in the ratio 2 : 2 : 1. They decided to dissolve their partnership firm on 31st March, 2023 and their Balance Sheet on that date stood as:
| Balance Sheet as on 31st March, 2023 | |||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Capital : | Plant | 2,40,000 | |||
| Vinay | 1,80,000 | 3,60,000 | Debtors | 90,000 | |
| Premal | 1,20,000 | Stock | 1,50,000 | ||
| Monil | 60,000 | ||||
| Loan | 24,000 | ||||
| Sundry Creditors | 18,000 | ||||
| Bank Overdraft | 78,000 | ||||
| 4,80,000 | 4,80,000 | ||||
It was agreed that:
(1) Vinay to discharge Loan and to take Debtors at book value.
(2) Plant realised ₹ 2, 70,000.
(3) Stock realised ₹1,44,000.
( 4) Creditors were paid off at a discount of ₹ 90.
Show Realisation Account, Partner's Capital Accounts and Bank Account.
| Nitya, Shreya and Ishita are partners in a firm. They share profits in the ratio of 5 : 3 : 2. Their fixed capitals are ₹ 1,80,000; ₹ 1,60,000 and ₹ 2,00,000 respectively. For the year ending 31st March, 2022, Nitya withdrew ₹ 7,500 at the end of every quarter. |
The average number of months for which interest on drawings will be calculated, will be:
Assertion: A revaluation account is prepared at the time of dissolution of a partnership.
Reason: A revaluation account is prepared to determine the net gain/loss on realisation of assets and settlement of liabilities.
Which one of the following is correct?
