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Sushil and Sumit Were in Partnership Sharing Profits and Losses in the Proportion of 3/5 and 2/5 Respectively.

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प्रश्न

Sushil and Sumit were in partnership sharing profits and losses in the proportion of 3/5 and 2/5 respectively. On 31st March, 2005 they decide to dissolve the firm when their Balance Sheet was as under:

Balance Sheet as on 31st March, 2005

Liabilities Amount (Rs) Assets Amount (Rs)

Sushil’s Capital

20,000 Plant and Machinery 15,000
Sumit's Capital 18,000 Stock 15,000
General Reserve 5,000

Sundry Debtors

22,000
Sumit’s Loan A/c 2,000 Bank

3,000

Sundry Creditors 10,000    
  55,000   55,000

The Assets realised as follows: Stock Rs 14,000, Plant and Machinery Rs 12,000 and Debtors Rs 20,000. The Sundry Creditors were paid Rs 9,000 in full settlement.

Prepare: Realisation Account, Partners Capital Accounts and Bank Account.

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उत्तर

Realisation Account
Dr.                                                                              Cr.

Particulars   Particulars  
Sundry Assets   Sundry Liabilities- Sundry Creditors 10000
Plant and Machinery 15000 52000 Bank A/c  
Stock 15000 Stock 14000 46000
Sundry Debtors 22000 Plant and Machinery 12000
Bank A/c (Sundry Creditors) 9000 Bank 20000
    Loan transferred to:  
  Sunil’s Capital A/c 3000 5000
  Sumit’s Capital A/c 2000
  61000   61000

Partners’ Capital Accounts
Dr.                                                                                 Cr.

Particulars Sushil Sushil Particulars Sushil Sushil
Realisation A/c (Loss) 3000 2000 Balance b/d 20000 18000
Bank A/c 20000 18000 General Reserve 3000 2000
  23000 20000   23000 20000

                            Sumit’s Loan Account
Dr.                                                                                Cr.

Particulars Amount (Rs) Particulars Amount (Rs)
Bank A/c  2000 Balance b/d 2000
  2000   2000

Cash/Bank Account
Dr.                                                                                Cr.

Particulars Amount (Rs) Particulars Amount (Rs)
Balance b/d 3000 Realisation A/c (Liabilities) 9000
Realisation A/c (Assets) 46000 Loan A/c 2000
    Capital A/c  
  Sushil 20000 38000
  Sumit 18000
  49000   49000
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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.


If an asset is taken over by partner from firm his capital account will be ___________.


Distinguish between 'Dissolution of partnership' and 'Dissolution of partnership firm' on the basis of court's intervention.


Distinguish between ‘Dissolution of partnership’ and Dissolution of partnership firm ‘on the basis of closure of Books.


G and H were partners in a firm sharing profits in the ratio of 9: 7. On 1.4.2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to realisation account you are given the following information :

(a) Mohan, a creditor of Rs 2,30,000 accepted debtors of Rs  2,00,000 at a discount of 10% and the balance was paid to him by cheque.

(b) Sohan, a second creditor for Rs 7,00,000 accepted land of the book value of Rs 10,00,000 at Rs 15,00,000 and paid the balance to the firm by cheque.

(c) Ram, a third creditor for Rs 80,000 took over stock of book value of Rs 40,000 at Rs 30,000 and investments of Rs 48,000 in full settlement of his claim.

(d) Loss on dissolution was Rs 48,000.

Pass necessary journal entries for the above transactions in the books of G and H.


R and L were partners in a firm sharing profits in the ratio of 13:7. On 4-3-2016 their firm was dissolved. After transferring assets (other than cash) and outsiders liabilities to the realization account, you are given the following information :

(a) Subh, a creditor for Rs 4,90,000 accepted building at Rs 6,50,000 and paid the balance to the firm by a cheque.

(b) Sudha, a second creditor for Rs 1, 80,000 accepted machinery of the book value of Rs 1,80,000 at Rs 1,76,000 in full settlement of his claim.

(c) Sudhir, a third creditor for Rs 2,00,000 accepted investments of Rs 1,20,000 and a bank draft of Rs 79,000 in full settlement of his claim.

(d) Loss on dissolution was Rs 30,000. Pass necessary journal entries for the above transactions in the books of the firm


Pass necessary journal entries on the dissolution of a partnership firm in the following cases :

1) Expenses of dissolution were Rs 9,000.

2) Expenses of dissolution Rs 3,400 were paid by a partner, Vishal

3) Shiv, a partner, agreed to do the work for dissolution for a commission of Rs 4,500. He also agreed to bear the dissolution expenses. Actual dissolution expenses Rs 3,900 were paid from the firm's bank account.

4) Naveen, a partner, agreed to look after the dissolution work for which he was allowed a remuneration of Rs 3,000. Naveen also agreed to bear the dissolution expenses. Actual expenses on dissolution Rs 2,700 were paid by Naveen.

5) Vivek, a partner, was appointed to look after the dissolution work for a remuneration of Rs 7,000. He agreed to bear the dissolution expenses. Actual dissolution expenses Rs 6,500 were paid by Rishi, another partner, on behalf of Vivek.

6) Gaurav, a partner, was appointed to look after the work of dissolution for a commission of Rs 12,500. He agreed to bear the dissolution expenses. Gaurav took over furniture of Rs 12,500 as his commission. The furniture had already been transferred to realisation account.


Pass necessary journal entries on the dissolution of a partnership firm in the following cases :

1) Expenses of dissolution Rs 500 were paid by John, a partner.

2) Joney, a partner, agreed to bear the dissolution expenses for a commission of 750. Actual dissolution expenses 650 were paid by Joney

3) Bony, partner agreed to look after the dissolution work for a remuneration of Rs 3,700. He also agreed to bear the dissolution expenses. Actual dissolution expenses Rs 4,200 were paid by Bony from the firm’s cash.

4) Sony, a partner, was appointed to look after the dissolution work for a remuneration of Rs 10,000. Sony agreed to bear the dissolution expenses. Sony took away stock worth Rs 10,000 as his remuneration. The stock had already been transferred to realisation account.

5) Vikky, a partner, agreed to look after the dissolution work for a remuneration of Rs 12,000. Vikky also agreed to bear the dissolution expenses. Actual dissolution expenses Rs 12,500 were paid by another partner, Clive, on behalf of Vikky.

6) Dissolution expenses were Rs 5,000


Prachi, Ritika and Ishita were partners in a firm sharing profits and losses in the ratio of 5 : 3: 2. In spite of repeated reminders by the authorities, they kept dumping hazardous material into a nearby river. The court ordered for the dissolution of their partnership firm on 31st March 2012. Prachi was deputed to realise the assets and pay the liabilities. She was aid Rs 1,000 as the commission for her services. The financial position of the firm was as follows:

Liabilities Rs Assets Rs

Creditors

Investment Fluctuation

Fund

Capitals

Prachi

Ritika

 

 

2,00,000

30,000

30,000

40,000

Furniture

Stock

Investments

Cash

Ishita's Capital

 

37,000

5,500

15,000

9,000

18,000

 

  84,500   84,500

Expenses incurred on a dissolution of a partnership firm.

Aniket Ltd issued 40,000 equity shares of ` 100 each payable as follows :

On application Rs  20
On allotment Rs 30
On first call Rs 30
On second call Rs 20

The company received applications for 50,000 equity shares. Allotment of shares was made on pro-rata basis. Excess application money were adjusted to allotment. Share allotment and calls were made and also received, except Mr. Sanish who was holding 1,000 shares failed to pay both the calls. His shares were forfeited after the second call.
Record the above transactions in the books of Aniket Ltd


Akbar and Birbal were partners in a firm sharing profits and losses in the ratio of 3 : 2 respectively. Their balance sheet as on 31st march , 2013 was as follows :

Balance Sheet as on 31st March, 2013

Liabilities Amount Assets Amount
Capital A/c’s:   Plant and Machinery   40,000
Akbar 60,000 Furniture   12,000
Birbal 40,000 Sundry debtors     61,000 60,000
General reserve 20,000 Less: R.D.D.     1,000
Sundry creditors 39,700 Stock   28,300
    Bank   19,400
  1,59,700     1,59,700

On the above date, the firm was dissolved and the assets realised were as follows :
Plant and machinery ₹ 30,000.

Sundry debtors ₹ 58,000.
Furniture was taken over by Akbar for ₹ 10,000 and stock by Birbal for  27,000.
Sundry creditors were paid  ₹ 38,000 in full settlement of their claim.
Realisation expenses amounted to ₹ 2,000.
Prepare :

(1) Realisation Account
(2) Partners’ Capital Accounts
(3) Bank Account


Answer in one sentence only.

What is dissolution of partnership firm?


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.


Write the word / term / phrase, which can substitute the following statement.
Debit balance of an insolvent Partner’s Capital Account.


State whether the following statement is True or False.

On dissolution Cash or Bank Account is closed automatically.


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 statement is True or False with reason.

The insolvency loss at the time of dissolution of the firm is shared by the solvent partners in their profit sharing ratio.


Deficiency of Insolvent partner will be suffered by solvent partners in their ___________ ratio.


Select the most appropriate alternative from those given below :

Realisation Account is __________on realisation of assets.


A, B and C were partners sharing profits and losses in the ratio of 3:2:1. On 31st March, 2010. Their Balance Sheet was as follows:

              Balance Sheet as on 31st March, 2010

Liabilities Amount (Rs) Assets Amount (Rs)
Sundry Creditors 15400 Cash at Bank 3500
Bills payable 3600 Stock 19800
A’s loan A/c 10000 Debtors 15000 14000
Capital Account:   Less : Provision 1000
A 20000 Join Life Policy 4000
B 16000 Plant and Machinery 43700
C 8000    
Reserve Fund 12000  
  85000   85000

The firm was dissolved on 31st March, 2010 and the assets realised as follows:

1) Join Life Policy was taken over by Mr. A at Rs 5,000.

2) Stock realised Rs 18,000, Debtors realised Rs 14,500, Plant and Machinery was sold for Rs 36,000.

3) Liabilities were paid in full. In addition one bill for Rs 700 under discount was dishonoured and had to be taken up by the firm.

4) There were no realisation expenses.

Give the Journal entries and necessary Ledger Accounts to close the books of the firm.


(When all partners become insolvent)

Shiv, Sadashiv and Sadanand are Partners in a firm sharing Profit and Losses equally whose Balance-sheet as on 31st December, 2011 stood as follows:

      Balance Sheet as on 31st December, 2011

Liabilities Amount (Rs) Assets Amount (Rs)
Capital Accounts   Sadanand’s Capital A/c 2000
Shiv 6000 Buildings 18300
Sadashiv 4000

Machinery

12700
Parvati’s Loan 10000

Debtors

9100
Sundry Creditors 30000

Bank

7900
  50000   50000

Shiv, Sadashiv and Sadanand were declared bankrupt and hence the firm was dissolved as on that date:

(i) The sundry Assets realised as follows:

     Building Rs 10,900, Machinery Rs 8,200, Debtors Rs 6,800.

(ii) Realisation expenses amounted to Rs 1,300.

(iii) Sadanand was unable to contribute anything-

Whereas Rs 1,100 and Rs 900 were recovered from the realisation of private estate of Shiv and Sadashiv respectively.

You are required to close the books of the firm.


State the difference between dissolution of partnership and dissolution of partnership firm.


Explain the process of dissolution of a partnership firm?


State whether the following statement is ‘True’ or ‘False’
On dissolution, cash or bank account is closed automatically.


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
The firm was dissolved on the above date :
(1) Assets realised as follows:
Debtors Rs.  9,000, Plant and Machinery Rs. 26,000, Stock Rs.  14,000, and Furniture Rs.  3,000.
(2) The creditors were paid Rs. 18,000, in full settlement and the bills payable were paid in full.
(3) The realisation expenses amounted to Rs. 3,000.
(4) Ramesh became insolvent and was able to bring in only Rs. 1,800 from his private estate.
Prepare :
(1) Realisation account
(2) Partner’s capital account and
(3) Bank account.

Jay , Ajay and Vijay were partners sharing profits and losses in the proportion of 2 : 2 : 1 . Following is their balance sheet as on 31.03.2013.

Balance sheet as on 31st March 2013

Liabilities Amount (₹) Assets Amount (₹)
Capital A/c   Machinery 50000
Jay 60000 Stock 20000
Ajay 20000 Debtors 55000 52000
Vijay 20000 Less : R.D.D. (3000)
General Reserve 6000 Investments 24000
Creditors 40000 Profit and loss A/c 18000
Jay's Loan A/c 8000 Bank 4000
Bills Payable 14000    
  168000   168000

On the above date the partners decided to dissolve the firm.

(1) Assets were realised as :

Machinery ₹45000 ; Stock ₹ 18000;

Investment ₹ 21000 ; Debtors ₹ 45000

(2) Dissolution expenses were ₹ 3000.

(3) Goodwill of the firm realised ₹ 24000.

Prepare : (1) Realisation Account (2) Partner's Capital Account (3) Bank Account.


Answer the following question:
State any two situations when a partnership firm can be compulsorily dissolved.


Gaurav, Saurabh, and Vaibhav were partners in firm sharing profits and losses in the ratio of 2 : 2 : 1. They decided to dissolve the firm on 31st March 2018. After transferring Sundry assets (other than cash in hand and cash at Bank) and third-party liabilities to realisation account, the assets were realized and liabilities were paid off as follows:

  1. A machinery with a book value of ₹ 6,00,000 was taken over by Gaurav at 50% and stock worth ₹ 5,000 was taken over by a creditor of ₹ 9,000 in full settlement of his claim.
  2. Land and building (book value ₹ 3,00,000) were sold for ₹ 4,00,000 through a broker who charged 2% commission.
  3. The remaining creditors were paid ₹ 76,000 in full settlement of their claim and the remaining assets were taken over by Vaibhav for ₹ 17,000.
  4. Bank loan of ₹ 3,00,000 was paid along with interest of ₹ 21,000.

Pass necessary journal entries for the above transactions in the books of the firm.


Realisation account is __________ on realisation of assets.


Give the word/term/phrase which can substitute the following statement.

Debit balance of Realisation account.


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.


State whether the following statement is True or False with reason.

At the time of the dissolution of partnership, all assets should be transferred to Realisation Account.


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.


Complete the table.

1) Debit side total of Realisaton A/c Credit side total of Realisation A/c Loss on Realisations
₹ 20,000 ? ₹ 4,000
2) Creditors Bills Payable Third-Party Liabilities
₹16,000 ₹12,000 ?
3) Credit side total Profit ion of Realisaton A/c Debit side total of Realisation A/c Profit of realisation
₹ 21,000 ₹16,000 ?
4) Debit side total of Capital A/c Credit side total of Capital A/c Cash brought by partner
₹ 51,000 ? ₹ 17,000
5) capital deficiency Cash brought by Insolvent Partner Insolvent loss
? ₹ 7,000 ₹ 21,000

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?


On the basis of the following data, final payment to a partner on the firm's dissolution will be: Credit balance of the capital account of the partner was ₹ 50,000. Share of loss on realisation was ₹ 10,000. The firm’s liability taken over by him was for ₹ 8,000.


The account which is prepared on dissolution of a partnership firm:


In the event of dissolution of the firm, the partner’s assets are first used for payment of the following:


Mandar and Prasad are partners in a firm sharing profit & losses in the ratio of 3 : 2. The following is their balance sheet as on 31st March, 2019.

Liabilities Amount (₹) Assets   Amount (₹)
Capital A/c:   Building   72,000
Mandar 95,000 Plant & Machinery   60,000
Prasad 1,00,000 Furniture   10,000
Creditors 4,000 Debtors 42,000 40,000
Bills Payable 3,000 Less: RDD  2,000
    Bank   20000
  2,02,000     2,02,000

On 1st April, 2019 Shubham is admitted for 1/2 share on the following terms:

  1. He paid ₹ 1,00,000 as Capital ₹ 40,000 as his shares of goodwill by RTGS.
  2. Plant & Machinery revalued at ₹ 48,000.
  3. Building is taken over by Mandar at ₹ 100,000.
  4. Reserve for Doubtful Debts (RDD) to be increased upto ₹ 4,000.
  5. The old partners decided to retain half of the amount of goodwill in the business.
  6. The old partners decided to sacrifice equally.

Prepare Partners' Capital Account Only and show your working clearly.


Hema, Manisha and Limsy were in partnership firm sharing profits and losses in the ratio of 5:3:2. They decided to dissolve their partnership firm on 31st March 2019 and their Balance sheet as on that date stood as:

Balance sheet as on 31st March,2019
Liabilities Amount ₹ Assets Amount ₹
Capital Account:   Machinery 1,00,000
Hema 1,50,000 Debtors 50,000
Manisha 80,000 Stock 70,000
Reserve Fund 10,000 Cash at Bank 30,000
Sundry Creditors 20,000 Limsy Capital A/c 20,000
Bills payable 10,000    
  2,70,000   2,70,000

The firm was dissolved on 31st March, 2019 and assets were realised as under:

  1. Machinery realised 60% of its book value.
  2. Out of debtors, Mr. Jagdish, our customer for ₹ 20,000 was declared insolvent and nothing could be recovered from him. Other debtors are good and recovered and realised.
  3. Hema took stock at an agreed value of ₹ 50,000.
  4. Creditors and Bills payable were paid at 10% discount.
  5. Limsy became insolvent and nothing was recovered from her estate.

Prepare:

  1. Realisation Account
  2. Partners’ Capital Account
  3. Bank Account

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:

  1. 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.
  2. Deferred Advertisement Expenditure A/c appeared in the books at ₹ 28,000.
  3. 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.
  4. 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.


Lal, Bal and Pal were partners sharing profits and losses in the ratio of 2 : 2 : 1. The following is the Balance Sheet as on 31st March, 2020.

Balance sheet as on 31st March 2020
Liabilities Amount (₹) Assets Amount (₹)
Capital A/c   Machinery 50,000
Lal 60,000 Investments 24,000
Bal 20,000 Debtors 55,000 52,000
Pal 20,000 Less: R.D.D. (3,000)
General Reserve 6,000 Stock 20,000
Creditors 48,000 Profit and loss A/c 18,000
Bills Payable 14,000 Bank 4,000
  168000   168000

On the above date the partners decided to dissolve the firm.

(1) Assets were realised as:

Machinery ₹ 45000
Stock ₹ 18000
Investment ₹ 21000
Debtors ₹ 45000

(2) Dissolution expenses were ₹ 3000.

(3) Goodwill of the firm realised ₹ 24000.

Prepare:

  1. Realisation Account
  2. Partner's Capital Account
  3. Bank Account.

Read the following hypothetical situation and answer question on the basis of the same.

Nitya, Shreya and Ishita are partners in a firm. They share profit in the ratio of 5 : 3 : 2. Their fixed capital 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:


Read the following hypothetical situation and answer question on the basis of the same.

Nitya, Shreya and Ishita are partners in a firm. They share profit in the ratio of 5 : 3 : 2. Their fixed capital 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 partnership deed provide that interest on capital will be allowed @10% p.a. The amount of interest on Ishita's capital will be:


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:


A firm having a debtor of ₹ 30,000 from whom the amount was due on 30th June, 2023, gets dissolved on 31st March, 2023. The debtor cleared his dues on the date of dissolution of the firm at a discount of 4% per annum.

Give the journal entry passed by the firm to realise the payment from the debtor.


Mention the liability of a partnership firm which is not shown in its balance sheet but is paid off at the time of the dissolution of the firm.


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