D. K. Goel solutions for अकाउन्टन्सी पार्ट A वॉल्यूम १ एण्ड २ [अंग्रेजी] कक्षा १२ chapter 5 - Dissolution of a Partnership Firm [Latest edition]

Manoj and Nand were partners sharing profits in the ratio of 3 : 2. Pass journal entries under following situations at the time of dissolution of firm:

1. Workmen Compensation Reserve stood at ₹ 1,00,000 and there was no liability towards Workmen Compensation.
2. Workmen Compensation Reserve stood at ₹ 1,00,000 and liability in respect of it was acertained at ₹ 75,000.
3. Workmen Compensation Reserve stood at ₹ 1,00,000 and liability in respect of it was ascertained at ₹ 1,20,000.
4. Workmen Compensation Reserve stood at ₹ 1,00,000 and liability in respect of it was ascertained at ₹ 1,00,000.

1. Expenses of realisation ₹ 8,000.
2. Expenses of realisation ₹ 10,000 were paid by a partner.
3. Realisation expenses of ₹ 12,000 were to be met by Tushar, a partner, but were paid by the firm.
4. Suresh, a partner, was paid remuneration of ₹ 10,000 and he was to meet all expenses.
5. Viru, a partner, was paid remuneration of ₹ 15,000 and he was to meet all expenses. Actual Expenses amounted to ₹ 20,000 which were paid by the firm.
6. Realisation expenses amounting to ₹ 15,000 were paid by the firm. ₹ 10,000 were to be borne by a partner and the balance by the firm.
7. Gauri, a partner, was allowed a remuneration of ₹ 25,000 and he was to meet all expenses. Firm paid an expense of ₹ 5,000.

Pass necessary Journal Entires on the dissolution of a partnership firm in the following cases:

1. L, a partner, was appointed to look after the dissolution process for which he was given a remuneration of ₹10,000.
2. Dissolution expenses ₹ 8,000 were paid by the partner, M.
3. Dissolution expenses were ₹ 5,000.
4. P, a partner, was appointed to look after the process of dissolution for which he was allowed a remuneration of ₹ 7,000. P agreed to bear the dissolution expenses. Actual dissolution expenses ₹ 4,000 were paid by P.
5. N, a partner, was appointed to look after the process of dissolution for which he was allowed a remuneration of ₹ 9,000. N agreed to bear the dissolution expenses. Actual dissolution expenses ₹ 4,000 were paid by the firm.
6. Q a partner was appointed to look after the process of dissolution for which he was allowed a remuneration of ₹ 18,000. Q agreed to take over stock worth ₹ 18,000 as his remuneration. The stock had already been transferred to Realisation Account.

The following is the Balance Sheet of A and B as at 31st March, 2023. The profit sharing ratios of the partners are 3 : 2.

The partners decided to dissolve the firm on and from the date of the Balance Sheet. Motor Vehicles and Stock were sold for cash at ₹ 16,950 and ₹ 77,600 respectively and all Debtors were realised in full. Land & Buildings were sold at ₹ 43,500. Creditors were paid off subject to discount of ₹ 1,700. Expenses of realisation were ₹ 1,250

Prepare Realisation Account, Bank Account and Partner’s Capital Accounts to close the books of the firm as a result of its dissolution.

Hint: Amount realised from Debtors ₹ 1,13,200.

A and B were partners sharing profits and losses in 2 : 1. Their Balance Sheet as at 31st March, 2024 was as follows:

Partners decide to dissolve the firm on the above date. Assets and liabilities realised as follows:

1. Plant & Machinery was taken over by A at 60% of the book value.
2. Investments were taken over by B at 120%.
3. Sundry Creditors were paid off by giving them stock at 75% of the book value and the balance in cash.
4. Debtors realised 20% less of the amount due from them.
5. A's loan was paid off with interest for six months.
6. Realisation expenses amounted to ₹ 1,000.

You are required to prepare:

1. Realisation Account
2. A’s Loan Account and B’s Loan Account
3. Partner’s Capital Accounts, and
4. Bank Account.

Hint: 1. Payment to Sundry Creditors ₹ 60,000.
          2. B's Loan 20,000 appearing on the assets side is the loan given to B. It will be recovered from him and will be recorded on the Dr. Side of Bank A/c.

A, B and C were in partnership sharing profits in the ratio of 2 : 1 : 1. Their Balance Sheet showed the following position on the date of dissolution:

1. A agreed to take over furniture at 20% less than the book value.
2. Stock was realised for ₹ 52,400.
3. Bad Debts amounted to ₹ 5,000.
4. Expenses of realisation were ₹ 3,000. Creditors were paid at a discount of 5%.
5. There was a claim of ₹ 6,400 for damages against the firm. It had to be paid.

Prepare necessary accounts.

Hints:

1. Nothing is mentioned in the question about the payment of B/P and Mrs. A’s loan. It will be assumed that these will be paid in full.
2. Nothing is mentioned in the question about the realisation of fixed assets. It will be assumed that it has realised at the book value given in the balance sheet, i.e., at ₹ 50,000.

The following was the Balance Sheet of X, Y and Z as at 28.2.2023:

The firm was dissolved on the above date on the following terms:

1. Debtors realized ₹ 29,000 and creditors and bills payable were paid at a discount of 10%.
2. Stock was taken over by X for ₹ 17,000 and furniture was sold to K for ₹ 20,000.
3. Land and Building was sold for ₹ 2,98,000.
4. G’s loan was paid by a cheque of the same amount.
5. Compensation to workmen paid by the firm amounted to ₹ 15,000.

Prepare Realisation Account, Capital Accounts and Bank Account.

Hint: Workmen Compensation Reserve credited to Realisation A/c ₹ 15,000 and to Capital Accounts ₹ 18,000.

Sonia and Rohit were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2023 their Balance Sheet was as follows:

The firm was dissolved on the above date on the following terms:

1. Machinery Realised at 80% and furniture was realised at 60% less than book value.
2. Debtors of ₹ 5,000 proved bad and remaining debtors realised 90% only.
3. Creditors took away half of the stock in full settlement of their account.
4. Remaining stock realised ₹ 72,000.
5. Realisation expenses amounting to ₹ 14,000 were paid by Rohit.

Prepare Realisation Account.

Hints:

1. Building will be realised at book value and Bank Loan will be paid at book value.
2. There will be no entry for half of stock taken away by creditors in full settlement of their claim.

Anurag and Prem were partners sharing profits and losses in 2 : 1. On 31st March, 2020 their Balance Sheet was as follows:

The firm was dissolved on the above date:

1. Anurag took over 60% of the stock at a discount of 20%; 25% of the remaining stock was sold at a profit of 40% on cost; Remaining stock was found obsolete and realised nothing.
2. Firm had to pay ₹ 90,000 as compensation to workers.
3. Sundry Creditors took over investments in full settlement.
4. Sundry Debtors realised at 75% and plant realised 20% less.
5. Prem agreed to take over the responsibility of completing dissolution work and he was given furniture as his remuneration.
6. Realisation expenses amounted to ₹ 10,000.

Prepare Realisation Account.

Hints: 

(i) Book value of remaining 25% stock: 25% of 40,000 = 10,000

Realised value of stock: `10,000xx140/100` = ₹ 14,000

(ii) 

Workmen Compensation Reserve amounting to ₹ 30,000 will be transferred to the Cr. side of Capital Accounts.

(iii) There will be no entry of sundry creditors taking over the investments.

(iv) There will be no entry of Prem taking over furniture as his remuneration.

P, Q and R were partners in a firm sharing profits in the ratio of 1 : 2 : 2. Their Balance Sheet as at 31st March 2024 was as follows:

On the above date the firm was dissolved. You are given the following information:

1. Office Equipment was accepted by a Creditor of ₹ 25,000 in full settlement.
2. Q's loan was paid alongwith unrecorded interest of ₹ 6,000.
3. Land and Building were realised at ₹ 6,00,000; stock at 80% and debtors at 90%.

Prepare Realisation Account.

Hints: Computer Software and Prepaid Exp. will be realised at nil value.

The following is the Balance Sheet of A and B as at 31st March, 2024.

Firm was dissolved on this date.

1. Half the stock was sold at 10% less than the book value and the remaining half was taken over by A at 20% more than the book value.
2. During the course of dissolution a liability under action for damages was settled at ₹ 12,000 against ₹ 10,000 included in the creditors.
3. Assets realised as follows: Plant & Machinery - ₹ 1,00,000; Truck - ₹ 1,20,000; Goodwill was sold for ₹ 25,000; Bad Debts amounted to ₹ 5,000. Half the investments were sold at book value.
4. A promised to pay off Mrs. A’s Loan and took away half the investments at 10% discount.
5. Trade Creditors and Bills Payable were due on average basis of one month after 31st March, but were paid immediately on 31st March, at 12% discount per annum.

Prepare necessary accounts.

Hints: 

1. Discount received on payment to Creditors = `20,000xx12/100xx1/12` = ₹ 200
2. Discount received on payment to B/P = `10,000xx12/100xx1/12` = ₹ 100
3. Cash balance of ₹ 4,200 has been transferred to the debit of Bank Account. 

The following is the Balance Sheet of A, B and C, as at 31st March, 2024:

The profit and loss sharing ratios of the partners are 3 : 2 : 1. At the above date, partners decide to dissolve the firm. The assets realised were as follows:

1. Bills Receivable were realised at a discount of 5%. Debtors were all good; Stock realised ₹ 32,000. Land and Buildings realised at 40% higher than the book value.
2. Furniture was sold for ₹ 6,000 by auction and auctioneer’s commission amounted to ₹ 300.
3. Typewriters were taken over by A for an agreed valuation of ₹ 5,000.
4. Investments were sold in the open market at a price of ₹ 25,000, for which a commission of 2% was paid to the broker and Accrued Income could not be realised.
5. Creditors agreed to accept 10% less. All other liabilities were paid off at their book value.
6. The firm retrenched their employees three months before the dissolution of the firm and the firm had to pay ₹ 25,000 as compensation. This liability was not appearing in the above Balance Sheet.

Close the books of the firm by preparing Realisation Account, Partner’s Capital Accounts, and Bank Account.

Hint:

1. Amount realised from Sundry Debtors: ₹ 40,000.
2. It will be assumed that accrued income has not realised.

Following is the Balance Sheet of Ramji Lal and Panna Lal as at 31st March, 2024:

They decided to dissolve the firm. Assets are realised as follows:

1. Machinery 10% less than book value; Plant ₹ 12,500 and Goodwill ₹ 2,520.
2. Ramji Lal is to take over Debtors amounting to ₹ 6,800 at ₹ 6,000, remaining Debtors were realised for 90% of the book value.
3. The bill payable of ₹ 2,600 to be assumed by Panna Lal at that figure.
4. Creditors are paid off at a discount of 10%.
5. An amount of ₹ 2,500 had to be paid for Workmen Compensation.
6. The liquidation expenses amounted to ₹ 1,000.

You are required to show the Realisation Account, Capital Accounts and Bank Account.

Hint: Entire amount of Workmen Compensation Reserve of ₹ 2,000 will be credited to Realisation Account.

Raman and Richa were partners in a firm sharing profits in the ratio of 7 : 3. On 31.03.2024 the Balance Sheet of the firm was as follows:

The firm was dissolved on 1.4.2024 and the assets and liabilities were settled as follows:

1. Land and building was taken over by Raman at a depreciation of 10% for cash;
2. Creditors of ₹ 1,25,000 took over stock and debtors in full settlement of their claim;
3. Remaining creditors were paid by Richa;
4. Furniture realised ₹ 5,000 less than the book value.
5. Expenses of realisation were ₹ 400.

Prepare Realisation Account in the books of the firm.

Hints: No entry is to be passed for creditors taking over stock and debtors. Entry for remaining creditors taken paid by Richa:

Realisation A/c   Dr. 50,000
     To Richa's Capital A/с 50,000

Sita and Gita were partners sharing profits and losses in the ratio of 4 : 5. They dissolved their partnership on 31st March, 2021, when their Balance Sheet showed the following balances:

On the date of dissolution:

1. The firm, upon realisation of assets and settlement of liabilities, made a profit of ₹ 9,000.
2. Gita paid the realisation expenses of ₹ 2,000.
3. Gita discharged the outstanding salary of the manager of the firm of ₹ 1,000 which was unrecorded in the books.

You are required to prepare the Partner’s Capital Accounts.

A, B and C are in partnership sharing in 4 : 3 : 3. They decided to dissolve the partnership firm. At the date of dissolution their creditors amounted to ₹ 16,800 and in the course of dissolution a contingent liability of ₹ 3,500 not brought into the accounts matured and had to be met. Their capitals stood at ₹ 12,000, ₹ 10,000 and ₹ 8,000 respectively. B had lent to the firm in addition to Capital ₹ 13,200. The assets realised ₹ 45,670.

Prepare the Realisation Account and partner’s Capital Accounts. Also show the Bank Account.

Ashok and Kishore were in partnership sharing profits in the ratio of 3 : 1. They agreed to dissolve the firm. The assets (other than cash of ₹ 2,000) of the firm realised ₹ 1,10,000. The liabilities and other particulars of the firm on that date were as follow:

Creditors were settled in full settlement at ₹ 38,000. Prepare Realisation and Cash Account.

X, Y and Z entered into partnership on 1st October, 2021 sharing profits and losses in the proportions of 4 : 3 : 2, respectively, and with capitals of ₹ 30,000, ₹ 20,000 and ₹ 10,000.

Their assets and liabilities on 1st October, 2022, the date on which they decided to wind up their affairs, were as follows:

Office Fixtures ₹ 1,000; Debtors ₹ 28,000; Bills Receivable ₹ 5,000; and Stock-in-trade ₹ 45,000. Sundry creditors were ₹ 30,000; Bills Payable ₹ 4,000.

X agreed to take over the Stock-in-trade at a discount of 10% and pay off the Bills Payable.

Y agreed to take over the Book Debts at a discount of 20% and pay off the Creditors.

Z took over the Bills Receivable at ₹ 4,877 and Office Fixtures at a depreciation of 10%

5% p.a. interest is to be credited to each partner on his capital.

Prepare Realisation a/c and Capital a/cs of the partners and an account showing adjustment of profits or losses in the business.

Hint: Interest on Capital will not be allowed, because there is loss in the business.

Following is the Balance Sheet of Deepak and Jyoti, who were sharing profit and losses in the ratio of 3 : 2, as at March 31, 2024:

The firm was dissolved on that date and the following arrangements were made:

1. Assets realised as follows: Debtors ₹ 18,000; Furniture ₹ 5,500; Plant ₹ 32,000.
2. Deepak agreed to take over stock in full settlement of his wife’s loan.
3. Creditors were paid at 2% discount and Bank Loan was discharged along with interest due for six months @ 10% p.a. and
4. Expenses of realisation amounted to ₹ 1,800.

Show the necessary ledger accounts to close the books of the firm.

Hint: There will be no entry for the payment of Mrs. Deepak’s Loan.

A, B and C sharing profits in the proportion of 3 : 2 : 1 agreed upon dissolution of their partnership firm on 31st March, 2024 at which date their balance sheet was as under:

The investments are taken over by A for ₹ 17,500. A agrees to discharge his wife’s loan. B takes over all the Stock at ₹ 7,000 and debtors amounting to ₹ 5,000 at ₹ 4,000. Machinery is sold for ₹ 67,000. The remaining debtors realise 50% of book value. The expenses of realisation amount to ₹ 600.

It is found that an investment not recorded in the books is worth ₹ 3,000 and it is taken over by one of the creditors at this value. Accrued Income could not be realised.

Show the necessary ledger accounts on completion of the dissolution of firm.

Hints: C’s Current A/c appears on the assets side, which means that it has a debit balance. As such, it will be transferred to the Debit side of C’s Capital Account.

Accured income will not be realised.

Following is the balance sheet of P, Q and R who were sharing profits and losses in the ratio of 3 : 2 : 1.

The firm was dissolved on that date and the following arrangements were made:

1. Assets realised as follows: Debtors ₹ 15,000; Plant at 30% discount.
2. Stock was valued at ₹ 36,000 and this was taken over by P and Q equally.
3. Market value of the shares of A Ltd. is ₹ 16 per share. Half the shares were sold in the market and the balance half were taken over by P and Q in their profit sharing ratio.
4. A creditor for ₹ 50,000 took over Motor Car in full settlement of his claim and the balance of creditors were paid at a discount of 2%.
5. Expenses of realisation amounted to ₹ 6,000. P agreed to discharge his wife’s Loan.

Prepare Journal entries and Ledger accounts.

A, B and C were partners in a firm sharing profits & losses in the ratio of 2 : 2 : 1. The Balance Sheet of the firm at the date of dissolution was as follows:

You are informed that:

1. They appointed B to realise the assets. He is to receive 5% of the amounts realised from Debtors, Stock and Machinery, and is to bear all expenses of realisation.
2. Bad Debts amounted to ₹ 2,000; Stock realised ₹ 36,000 and Machinery realised ₹ 46,000. There was an unrecorded asset of ₹ 10,000 which was taken over by A at ₹ 8,000.
3. Market value of Investments was ascertained to be ₹ 20,000, and one of the creditors agreed to accept the Investments at this value. Remaining creditors were paid at a discount of ₹ 6,000.
4. An office typewriter, not shown in the books of accounts, realised ₹ 20,000.
5. There were outstanding expenses amounting to ₹ 6,000. These were settled for ₹ 4,500. Expenses of realisation met by B amounted to ₹ 2,000.

Prepare necessary accounts.

Give journal entries in each of the following alternative cases on the dissolution of a firm:

1. Realisation expenses paid by X on behalf of the firm.
2. Realisation expenses paid by the firm ₹ 1,000. However, the expenses were to be borne by partner X for which he was to be given a commission of 5% on net cash realised on dissolution. Cash realised from assets was ₹ 2,00,000 and cash paid for liabilities was ₹ 40,000.
3. General Reserve appearing in the balance sheet was ₹ 20,000.
4. Sundry Creditors amounted to ₹ 15,000. These were paid at a discount of 2%.

Jain, Sharma and Verma were partners in a firm sharing profits in the ratio of 1 : 2 : 1. On 31st March, 2018 their firm was dissolved. It was agreed that Sharma will look after the dissolution work and will be paid ₹ 15,000 as remuneration. The dissolution expenses were ₹ 5,000. ₹ 2,84,000 were paid to the creditors in full settlement of their claim of ₹ 3,00,000. Dissolution of the firm resulted into a loss of ₹ 18,000.

Pass necessary journal entries for the above transactions.

P and were partners in a firm sharing profits and losses equally. On 15th March, 2023 the firm was dissolved. The dissolution resulted in a loss of ₹ 60,000. On the date the Capital Accounts of P and showed credit balances of ₹ 70,000 and ₹ 50,000 respectively. There was a bank balance of ₹ 60,000.

Pass the necessary Journal Entries for (i) the transfer of loss to the Capital accounts of the partners, and (ii) making final payments to the partners.

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 31^st 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.

Adiraj and Karan were partners in a firm sharing profits and losses in the ratio 3 : 2. On 31st March, 2018 the firm was dissolved. After the transfer of assets (other than cash in hand and at bank) and third party liabilities to the Realisation Account, the following information was provided:

1. Furniture of ₹ 70,000 was sold for ₹ 68,000 by auction and auctioneer’s commission amounted to ₹ 2,000.
2. Adiraj’s loan amounting to ₹ 35,000 was settled at ₹ 37,500.
3. Out of the stock of ₹ 80,000, Karan took over 50% of the stock at a discount of 20% while the remaining stock was sold off at a profit of 30% on cost.
4. Realization expenses amounted to ₹ 2,000 which were paid by Adiraj.

Pass the necessary journal entries for the above transactions on the dissolution of the firm.

Give the necessary journal entries for the following transactions on dissolution of the firm of Aman and Rajat on 31st March, 2024, after the transfer of various assets (other than cash) and the third party liability to Realisation Account. They shared profits and losses in the ratio of 2 : 1.

1. Creditors of ₹ 30,000 took over stock of ₹ 10,000 at 10% discount and the balance was paid to them in cash.
2. There was an old typewritter which had been written off completely. It was estimated to realize ₹ 600. It was taken away by Rajat at 25% less than the estimated price.
3. Aman agreed to take over the responsibility of completing dissolution at an agreed remuneration of ₹ 1,000 and to bear all realization expenses. Actual realisation expenses ₹ 800 were paid by the firm.

Disha, Mohit and Nandan are partners. They decide to dissolve their firm. Pass necessary Journal Entries for the following after various Assets (other than Cash and Bank) and the third party liabilities have been transferred to Realisation Account:

1. An old typewriter which was not recorded in the books was sold for ₹ 2,000 whereas its expected value was ₹ 5,000.
2. Stock of ₹ 70,000 was taken by Disha at a discount of 30%.
3. Total creditors of the firm were ₹ 20,000. A creditor for ₹ 2,000 was untraceable and other creditors accepted payment allowing 10% discount.
4. Mohit paid realisation expenses of ₹ 18,000 out of his private funds, who was to get remuneration of ₹ 13,000 for completing the dissolution process and was responsible to bear all the realisation expenses.
5. Nandan had taken a loan of ₹ 50,000 from the firm, which was paid fully by him to the firm.
6. ₹ 12,000 was recovered from a debtor which was written off as Bad debts last year.

Angad, Raman and Harshit were partners in a firm. They decided to dissolve their firm. Pass necessary journal entries for the following after various assets (other than cash and bank) and the third party liabilities have been transferred to Realisation Account:

1. There was a stock of ₹ 90,000. Raman took over 50% of the stock at 10% discount and remaining stock was sold at 40% profit on book value.
2. Profit and Loss A/c was showing a debit balance of ₹ 15,000 which was distributed among the partners.
3. A machinery which was not recorded in the books was sold for ₹ 2,000.
4. Angad was paid only ₹ 5,000 (in full settlement) for his loan to the firm which amounted to ₹ 5,500.
5. Realisation expenses amounting to ₹ 5,000 paid by Harshit.
6. There were 100 shares of ₹ 10 each in DCM Ltd. acquired at a cost of ₹ 1,200 which had been written off completely from the books. These shares are valued at ₹ 9 each and divided among the partners in their profit sharing ratio.

If total assets are ₹ 12,00,000; total liabilities are ₹ 3,00,000; assets are realised at 70% and expenses on realisation are ₹ 10,000, what will be the profit or loss on realisation?

In a firm's Balance Sheet, Total Debtors were appearing at ₹ 5,00,000 and provision for doubtful debts appeared at ₹ 10,000. On dissolution, bad debts were ₹ 1,00,000 and the remaining debtors were realised at 10% discount. How much amount was realised from debtors?

X and Y are partners. They decided to dissolve their firm. Pass necessary entries assuming that various assets and external liabilities have been transferred to Realisation Account:

1. X's loan was appearing on the liabilities side of Balance Sheet at ₹ 40,000. He accepted an unrecorded asset of ₹ 60,000 in full settlement of his account.
2. Raman, a Creditor to whom ₹ 25,000 were due to be paid, accepted an unrecorded computer of ₹ 18,000 at a discount of 10% and the balance was paid to him in Cash.
3. Sudhir, an unrecorded creditor of ₹ 40,000 accepted an unrecorded vehicle of ₹ 20,000 at ₹ 25,000 and the balance was paid to him in Cash.
4. Furniture of ₹ 20,000 and goodwill of ₹ 30,000 were appearing in the Balance Sheet but no other information was provided regarding these two items.

Note: Intangible Asset i.e., Goodwill realised no value.

Michael, Jackson and John were partners in a firm sharing profits in the ratio of 3 : 1 : 1. On 31st March, 2017, they decided to dissolve their firm. On that date their Balance Sheet was as follows:

It was agreed that:

1. Michael was to take over Furniture at ₹ 2,600 and Debtors amounting to ₹ 40,000 at ₹ 34,400 and the Creditors of ₹ 10,000 were to be paid by him at this figure.
2. Jackson was to take over all the stock in trade at ₹ 14,000 and some of the other Sundry Assets at ₹ 28,800 (being 10% less than book value).
3. John was to take over the remaining Sundry Assets at 90% of the book value and assumed the responsibility for the discharge of the loan.
4. The remaining debtors were sold to a debt collecting agency for 50% of the book value. The expenses of dissolution ₹ 600 were paid by John.

Prepare Realisation Account, Bank Account and Partner's Capital Accounts.

Srijan, Raman and Manan were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. On 31st March, 2017 their Balance Sheet was as follows:

On the above date they decided to dissolve the firm.

1. Srijan was appointed to realise the assets and discharge the liabilities. Srijan was to receive 5% commission on sale of assets (except cash) and was to bear all expenses of realisation.
2. Assets were realised as follows:
   

   	(₹)
   Plant	85,000
   Stock	33,000
   Debtors	47,000

3. Investments were realised at 95% of the book value and Accrued Interest Nil.
4. The firm had to pay ₹ 22,500 for an outstanding repair bill not provided for earlier.
5. Expenses of realisation amounting to ₹ 3,000 were paid by Srijan.

Prepare Realisation Account, Partner’s Capital Accounts and Bank Account.

Hint: No amount will be realised from accured interest and prepaid expenses.

The following is the Balance Sheet of X and Y as at 30th June, 2022.

The firm was dissolved on 30th June, 2022 and the following arrangements were decided upon:

1. X agreed to pay off his brother’s loan;
2. Debtors realised ₹ 12,000;
3. Y took over all the investments at ₹ 12,000.
4. Other assets realised as follows:
   Plant - ₹ 20,000, Building - ₹ 50,000, Goodwill - ₹ 6,000
5. Sundry Creditors and bills payable were settled at 5% discount, Y accepted Stock at ₹ 8,000 and X took over Bills Receivable at 20% discount.
6. Realisation Expenses amounted to ₹ 2,000.

You are required to pass Journal Entries.

A, B and C were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 1.4.2022 they decided to dissolve the firm. On that date A's Capital was ₹ 2,00,000, B's Capital was 10,000 (Dr.) and C's Capital was ₹ 25,000 (Dr.) The Creditors amounted to ₹ 80,000 and Cash balance was ₹ 12,000. The assets realised ₹ 2,00,000 Creditors were paid at a discount of 10% and the expenses of dissolution were ₹ 1,240. All partners were solvent. Prepare realisation account, partner's capital accounts and the cash account.

The partnership between X and Y was dissolved on March 31, 2022. On that date their respective credits to the Capitals were ₹ 1,50,000 and ₹ 10,000. ₹ 1,20,000 were due to creditors. ₹ 60,000 were due for Bank Loan and Reserve has been maintained for 20,000. X and Y shared profits in the ratio of 4 : 1. Cash balance of ₹ 18,000 was also kept in the firm. Assets realised ₹ 3,02,000. Prepare Memorandum Balance Sheet, Realisation Account; Partners' Capital Accounts and Cash Account.

A and B dissolve their partnership. Their position as at 31st March, 2024 was as follow:

The balance of A's Loan Account to the firm stood at ₹ 20,000. The realisation expenses amounted to ₹ 800. Stock realised ₹ ₹ 40,000 and Debtors ₹ 30,000. B took a machine at the agreed valuation of ₹ 20,000. Other fixed assets realised ₹ 60,000.

Prepare necessary accounts.

Sanjay and Sameer were partners in a firm sharing profits in the ratio of 2 : 3. On 31.3.2024 their Balance Sheet was as follows:

The firm was dissolved on 1.4.2024 and the assets and liabilities were settled as follows:

1. Sanjay agreed to take over land and building at ₹ 3,50,000 by paying cash;
2. Stock was sold for ₹ 90,000;
3. Creditors accepted Debtors in full settlement of their claim.

Pass necessary journal entries for dissolution of the firm.

Hints:

1. Prepare Realisation A/c in working notes. Loss on Realisation will be ₹ 5,000.
2. Workmen Compensation Reserve will be credited to Partner’s Capital Accounts.
3. There will be no entry for Creditors taking over Debtors in full settlement.

Arun, Tarun and Varun shared profits in the ratio of 2 : 2 : 1. On 31.12.2023 their Balance Sheet was as follows:

On this date the firm was dissolved. Arun was appointed to realise the assets. Arun was to receive 5% commission on the sale of assets (except cash) and was to bear all expenses of realisation.

Arun realised the assets as follows:

Stock ₹ 36,000, Debtors ₹ 45,000, Investments 80% of the book value, Plant ₹ 65,500. Expenses of realisation amounted to ₹ 5,500. Commission received in advance was returned to the customers after deducting ₹ 4,000. Firm had to pay ₹ 8,000 for outstanding wages. This liability was not provided for in the above Balance Sheet. ₹ 20,000 had to be paid for provident fund.

Prepare Realisation Account, Capital Accounts and Cash Account.

Hint: There will be no entry for the expenses of realisation, as these will be met by Arun personally.

A, B and C sharing profits and losses in the ratio of 3 : 2 : 1 agreed to dissolve their partnership firm on 31st March, 2024. A was asked to realise the assets and pay off liabilities. He had to bear the realisation expenses for which he was promised a lump sum amount of ₹ 3,000. Their financial position as at that date was as follows:

Informations:

1. Stock was valued at ₹ 40,000 and this was taken over by A and B equally. Lease realised ₹ 1,10,000; Equipments at ₹ 18,000; and Accounts Receivable at ₹ 20,000 and other assets proved valueless.
2. Actual realisation expenses paid by A amounted to ₹ 1,800.
3. There was an unrecorded asset of 10,000 which was taken over by A at ₹ 12,000.
4. A bill of ₹ 3,200 due for sales tax was received during the course of realisation and this was also paid.
5. Sunil, an old customer whose account was written off as bad in the previous year, paid ₹ 2,500 which is not included in the above stated accounts receivable.
6. Market value of the Shares in X Ltd. is ₹ 100 per share. Half the shares were sold in the market subject to a commission of 2% and the balance half were divided by all the partners in their profit sharing ratio.

Prepare necessary accounts.

Hints:

(1) 

(2) No entry need to be passed for realisation expenses off ₹ 1,800 paid by A.

Only the following entry may be passed for ₹ 3,000 promised to be paid to A:

(3) Accounts Payable, Mortgage Loan, Advance from B and Employees’ Saving Bank will be paid in full.

X, Y and Z decided to dissolve their partnership firm. The position as at 31st December, 2023, the date of dissolution was as follows:

They shared profits in the ratio of X : `1/2, "Y" : 3/10  "and"  "Z" : 1/5`.

X agreed to bear all realisation expenses. For this service X is paid ₹ 2,000. Actual expenses amounted to ₹ 3,200 which was withdrawn by him from the firm.

Other informations are:

1. Assets, with the exception of investments and Cash, are sold for ₹ 1,25,100. 75% of the investments are taken over by X at 75% of their book value. He also agrees to discharge the Bank Loan. The remaining investments were taken over by Y at the market value of 120%.
2. There were outstanding expenses amounting to ₹ 5,000. These were settled for ₹ 2,000.
3. Commission received in advance was returned to the Customers after deducting 60% for work done.

You are required to prepare the necessary accounts.

Hints: 

1.

A and B shared profits in the ratio of 7 : 3. They dissolved the firm and appointed A to realise the assets. A is to receive 6% commission on the amount realised from Stock, Debtors, B/R and Shares. 

The position of the firm was as follows:

Informations:

1. A realised the assets as follows: Full amount from Sundry Debtors and B/R except from one for ₹ 2,000 being insolvent. Stock realised ₹ 52,000; Shares in D.C.M. were sold for ₹ 60 each.
2. Half the trade creditors accepted plant and machinery at an agreed valuation of 10% less than the book value and cash of ₹ 7,000 in full settlement of their claims.
3. Remaining creditors were paid off at a discount of 10%. Expenses of realisation amounted to ₹ 700.
4. One quarter’s tax amounting to ₹ 1,500 was due and had to be paid.
5. There was a contingent liability amounting to ₹ 13,000. It was settled for ₹ 6,000.
6. Bank Loan was discharged along with interest due for two months @ 18% p.a.

Prepare necessary accounts.

Hints:

1. Creditors for ₹ 30,000 accept Plant and Machinery at ₹ 18,000 and Cash ₹ 7,000. The balance of ₹ 5,000 will be treated as discount. Remaining Creditors of ₹ 30,000 are paid ₹ 27,000 in full settlement. Hence, the total Cash paid to Creditors = ₹ 7,000 + ₹ 27,000 = ₹ 34,000
2. Commission paid to A (For sale of assets) 6% on ₹ 1,00,000 = ₹ 6,000.
3. Repairs and Renewals Reserve will be transferred to the Credit side of Capital A/cs.

A, B and C shared profits in the ratio if 1: 2 : 2. Following is their Balance Sheet on the date of dissolution:

Informations:

1. Land & Buildings were sold at 80% of the book value.
2. Stock was given to bills payable in full settlement.
3. Sundry creditors accepted machinery and paid ₹ 10,000 to the firm.
4. Debtors were all good.
5. An unrecorded assets estimated at ₹ 60,000 was taken over by partner B at ₹ 50,000.
6. Firm had to pay ₹ 40,000 as Workmen Compensation.
7. A's Loan was settled by giving him an unrecorded asset of ₹ 75,000 at ₹ 60,000 and the balance in cash.
8. Partner A is to be paid remuneration of ₹ 20,000 for dissolution work. Realisation expenses of ₹ 15,000 were paid by the firm.

Prepare necessary accounts.

Hint: Entry for settlement of A's Loan:

A's Loan A/c   Dr. 1,00,000
     To Bank A/c 40,000
     To Realisation A/с 60,000

Pass necessary Journal entries for the following transactions, at the time of dissolution of the firm:

1. Realisation Expenses ₹ 3,000 paid.
2. Realisation Expenses paid by the firm ₹ 2,000; Mr. X one of partners has to bear these expenses.
3. Y, one of the partners, took over a machine for ₹ 20,000
4. Z, one of the partners agreed to take over the creditors of ₹ 30,000 for ₹ 20,000.
5. A, one of the partners has given loan to the firm of ₹ 10,000. It was paid back to him at the time of dissolution.
6. Profit and Loss Account balance of ₹ 50,000 appeared on the assets side of the Balance Sheet.

Ravi and Mukesh were partners in a firm sharing profit and losses equally. On 31st March, 2019 their firm was dissolved. On the date of dissolution their Balance Sheet showed stock of ₹ 60,000 and creditors of ₹ 70,000. After transferring stock and creditors to realisation account the following transactions took place:

1. Ravi took over 40% of total stock at 20% discount.
2. 30% of total stock was taken over by creditors of ₹ 20,000 in full settlement.
3. Remaining stock was sold for cash at a profit of 25%.
4. Remaining creditors were paid in cash at a discount of 10%.

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

Vasudha and Dewan were partners in a firm sharing profits and losses in the ratio of 2 : 3. The firm was dissolved on 31st March, 2019. After transfer of assets (Other than cash) and external liabilities to Realization Account, the following transactions took place:

1. Investments of the face value of ₹ 60,000 were sold in the open market for ₹ 63,000 for which a commission of ₹ 700 was paid to the broker.
2. Creditors worth ₹ 65,000 were settled by handing over the entire stock to them along with a payment of ₹ 23,000 by cheque.
3. There was old furniture which had been completely written off from the books of the firm. It was taken over by Vasudha at ₹ 2,000.
4. Dewan undertook to pay Ms. Dewan's loan of ₹ 45,000.
5. Dewan was appointed to look after the process of dissolution for which he was allowed a remuneration of ₹ 7,000. He agreed to bear the dissolution expenses. Actual expenses incurred by Dewan were ₹ 11,000, which were paid by the firm.
6. Loss on realisation amounted to ₹ 9,000.

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

Pass the necessary journal entries for the following transactions on the dissolution of the partnership firm of Tony and Rony after the various assets (other than cash) and external liabilities have been transferred to Realization Account:

1. An unrecorded asset of ₹ 2,000 and cash ₹ 3,000 was paid for liability of ₹ 6,000 in full settlement.
2. 100 shares of ₹ 10 each have been taken over by partners at market value of ₹ 20 per share in their profit sharing ratio, which is 3 : 2.
3. Stock of ₹ 30,000 was taken over by a creditor of ₹ 40,000 at a discount of 30% in full settlement.
4. Expenses of realisation ₹ 4,000 were to be borne by Rony. Rony used the firm’s cash for paying these expenses.

Pass necessary journal entries in the following cases on the dissolution of a partnership firm of partners X, Y, A and B:

1. Realization expenses of ₹ 5,000 were to borne by X, a partner. However, it was paid by Y.
2. Investments costing ₹ 25,000 (comprising ₹ 1,000 shares), had been written off from the books completely. These shares are valued at ₹ 20 each and were divided amongst the partners.
3. Y's loan of ₹ 50,000 settled at ₹ 48,000.
4. Machinery (book value ₹ 6,00,000) was given to a creditor at a discount of 20%.

T, U and V were partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2. Their firm was incurring huge losses thus it had to be closed. After transferring assets (other than cash in hand and bank) and third party liabilities to Realization Account the following transactions took place:

1. T took away 50% of the stock at book value less 10% for ₹ 90,000, and the remaining stock was sold for ₹ 40,000.
2. Creditors of ₹ 85,000 took over machinery of ₹ 1,00,000 in full settlement of their claim which was purchased on 1st January 2021 and was depreciated at 20% p.a. on written down value method.
3. ₹ 5,000 debtors previously written off were recovered.
4. Mrs. V's loan of ₹ 72,000 was paid by the firm.
5. T' was to get a remuneration of ₹ 10,000 for completing the dissolution process. Expenses incurred by him were ₹ 4,000.

Pass necessary journal entries for the above transactions in the book of T, U and V.

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:

1. Dhwani’s Loan of ₹ 50,000 to the firm was settled by paying ₹ 42,000.
2. Paavni’s Loan of ₹ 40,000 was settled by giving an unrecorded asset of ₹ 45,000.
3. Loan to Charu of ₹ 60,000 was settled by payment to Charu’s brother loan of the same amount.
4. 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:

1. Dr. Dhwani’s Loan A/c by ₹ 50,000; Cr. Bank A/c by ₹ 42,000 and Realisation A/c by ₹ 8,000.
2. Dr. Paavni’s Loan A/c and Cr. Realisation A/c by ₹ 40,000.
3. Dr. Realisation A/c and Cr. Loan to Charu A/c by ₹ 60,000.
4. Dr. Iknoor Loan A/c by ₹ 80,000; Cr. Realisation A/c by ₹ 60,000 and Bank A/c by ₹ 20,000.

State the following statement is true:

There is no difference between the dissolution of partnership and dissolution of firm.

State the following statement is true:

Loan from the wife of a partner is treated just like a loan from the partner himself.

State the following statement is true:

Whenever the partnership changes, the old firm stands dissolved and a new firm comes into existence.

State the following statement is true:

Partner’s personal assets can also be used for payment of firm’s liabilities.

State the following statement is true:

The firm will be necessarily dissolved, even if a single partner becomes insolvent.

State Whether the following Statement is True or False:

Goodwill appearing in the books of the firm will be transferred to Realisation Account on its dissolution.

State Whether the following Statement is True or False:

On dissolution of a firm, Partner's loans have to be paid before any payment is made to any of the partners as capital.

State the following statement is true:

A ‘Revaluation Account’ is opened on the dissolution of a firm.

State the following statement is true:

On the dissolution of a firm, goodwill will be sold like any other asset.

State the following statement is true:

On the dissolution of a firm, the realisation account is debited with all the liabilities of the firm.

State the following statement is true:

On the dissolution of a firm, cash-in-hand is transferrred to the ‘Realisation Account’.

State Whether the following Statement is True or False:

Profit of realisation on the dissolution of a firm is divided in the capital ratio.

State the following statement is true:

Dissolution of partnership automatically results in the dissolution of the firm.

State Whether the following Statement is True or False:

Partner's Loan is transferred to the Realisation Account with the liabilities of the firm.

State Whether the following Statement is True or False:

There is no difference between Revaluation Account and Realisation Account.

State Whether the following Statement is True or False:

Total of debit side of Cash Account is equal to its credit side after the dissolution of the firm.

State Whether the following Statement is True or False:

There is no balance left in any account after the closing of books in case of dissolution of a firm.

State Whether the following Statement is True or False:

Even if nothing is stated in the question, outside liabilities have to be paid in full on the dissolution of the firm.

Dissolution of Partnership may or may not involve ______ of the firm.

Realisation Account is ______ in nature.

When realisation expenses are paid by a partner on behalf of the firm, ______ A/c will be debited and ______ A/c will be credited.

Firm's Property is applied first for settling ______.

In case of dissolution of partnership ______ relationship between the partners does not come to an end.

Books of accounts need not be closed in case of dissolution of ______.

For firm's debts, all partners are liable ______ and severally.

On dissolution of firm, fictitious assets are transferred to ______.

On dissolution, Partner's Loan is to be paid ______ payment of outside liabilities but ______ payment of partners' capitals.

On dissolution, if Workmen Compensation Reserve is ₹ 50,000 and liability for claim is ₹ 40,000 then ₹ 40,000 will be credited to ______ A/c and ₹ 10,000 will be credited to ______.

An unrecorded liability of ₹ 10,000 was settled for ₹ 7,500 on dissolution. On payment, it will be debited to ______ Account with ₹ ______.

On dissolution of the firm, the partner's personal assets are first used for payment of ______.

On dissolution, goodwill appearing in balance sheet is transferred to ______ Account.

On dissolution, losses are first of all met out of ______.

In the Balance Sheet Total Debtors appear at ₹ 1,00,000 and Provision for Doubtful Debts appear at ₹ 8,500. If bad debts amount to ₹ 20,000 and remaining debtors are realised at a discount of 10%, the amount realised from debtors will be ______.

Rashmi, a partner, is to bear all expenses of realisation for which she is to be paid ₹ 10,000. Rashmi had to pay realisation expenses of ₹ 15,000. Amount debited to Realisation Account will be ______.

A, B and C are partners in a firm in the ratio of 1 : 2 : 3. On firm's dissolution, firm's total assets are ₹ 1,00,000 and creditors are ₹ 20,000. Realisation expenses are ₹ 3,000. Assets realised 25% less than the bookvalue. Creditors were settled at 95%. For profit/loss on realisation, A's capital account will be ______ with ₹ ______.

On dissolution of a firm, firm's Balance Sheet total is ₹ 1,00,000. On the assets side of the Balance Sheet items were shown Advertisement expenses ₹ 5,000; Profit & Loss Account (Debit) Balance ₹ 8,000 and Cash Balance ₹ 4,000. Loss on realisation was ₹ 10,000. Total assets (including cash balance) realised will be ______.

Creditors of ₹ 30,000 and Bills Payable of ₹ 10,000 were due on an average basis of one month after 31st March, 2022 but they were paid immediately on 31st March, 2022 @ 6% discount p.a., the amount debited to Realisation Account will be ______.

On dissolution, if investments are not given in balance sheet and only Investment Fluctuation Reserve is given on the liabilities side, it is transferred to ______.

On dissolution, cash in hand is transferred to ______ Account.

When the business of the firm becomes illegal, the way of dissolution of the firm is ______.

Matching Question:

On dissolution of a partnership firm:

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In case of dissolution:

Matching Question:

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On dissolution of a partnership firm:

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On dissolution of a partnership firm:

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On dissolution of a partnership firm:

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On dissolution of a partnership firm:

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On dissolution of a partnership firm:

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At the time of dissolution of a partnership firm:

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On dissolution of a partnership firm:

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At the time of dissolution of a partnership firm:

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At the time of dissolution of a partnership firm:

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On dissolution of a partnership firm:

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At the time of dissolution of a partnership firm:

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On dissolution of a partnership firm:

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On dissolution of a partnership firm:

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On dissolution of a partnership firm:

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On dissolution of a partnership firm:

Matching Question:

On dissolution of a partnership firm:

In which condition a partnership firm is deemed to be dissolved?

The court can make an order to dissolve the firm when ______.

On dissolution of a firm, realisation account is debited with ______.

On dissolution of a firm, out of the proceeds received from the sale of assets ______ will be paid first of all.

At the time of dissolution of the firm, “Loan of partners” (Loans given by partners to the firm) is paid out of the amount realised on the sale of assets:

At the time of dissolution of the firm, at which stage the balance of the partner’s capital accounts is paid?

On firm’s dissolution, which one of the following account should be prepared at the last?

In the event of dissolution of a partnership firm, the provision for doubtful debts is transferred to ______.

Unrecorded liability, when paid on dissolution of a firm is debited to ______.

On dissolution of a partnership firm, profit or loss on realisation is distributed among the partners ______.

On dissolution of the firm, the amount received from the sale of the unrecorded asset is credited to ______.

Realisation A/c is a ______.

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

A partnership firm is compulsorily dissolved:

On dissolution, goodwill account is transferred to ______.

At the time of dissolution of partnership firm, fictitious assets are transferred to ______.

At the time of dissolution of partnership firm, the amount of ‘Bills Payable’ shown in the Liabilities Side of the Balance Sheet is transferred to ______.

On dissolution, the final balance of the partner’s capital account are transferred to ______.

Change in the existing agreement between the partners is called ______.

On dissolution of a firm, a partner paid ₹ 700 for the firm’s realisation expenses. Which account will be debited?

On taking responsibility for payment of realisation expenses by a partner, the account credited will be ______.

On dissolution of the firm, loss calculated in realisation account is debited/credited to which account?

Which of the following is transferred to realisation account:

Which of the following is not transferred to Realisation Account:

On taking responsibility for payment of a liability of ₹ 50,000 by a partner, the account credited will be ______.

Cash balance shown in the balance sheet is shown on dissolution of firm in ______.

On firm’s dissolution, on realisation of goodwill (which was shown in balance sheet) will be credited to ______.

On dissolution of a firm, its Balance Sheet revealed total creditors ₹ 50,000; Total Capital ₹ 48,000; Cash Balance ₹ 3,000. Its assets were realised at 12% less. Loss on realisation will be ______.

On firm’s dissolution, when a partner voluntarily gives his personal asset to firm’s creditor as payment, the account credited will be:

On dissolution, when a partner takes over an unrecorded asset ______ is credited. 

On dissolution, when a partner takes over an asset ______ is debited.

In case of dissolution, assets are transferred to Realisation Account:

On dissolution, the balance of a partner’s capital account appearing on the assets side of a balance sheet is transferred to ______.

On dissolution of a firm, there was an Unrecorded asset of ₹ 15,000 which was taken over by a partner at ₹ 13,000. Partner's Capital Account will be debited by ______.

On dissolution of a firm, an unrecorded furniture of the value of ₹ 5,000 was taken up by a partner for ₹ 4,300. Which account will be credited and by how much amount?

On the basis of following data, final payment to a partner on firm’s dissolution will be made:

Debit balance of Capital Account ₹ 14,000; Share of his profit on realisation ₹ 43,000; Firm’s asset taken over by him for ₹ 17,000.

When a partnership firm dissolves, its losses including deficiencies of capital are to be paid first out of ______.

______ is prepared at the time of dissolution.

While transferring assets to realisation account ______ is omitted to be transferred.

On the date of dissolution, the firm had debtors amounting to ₹ 3,00,000 and provision for doubtful debts of ₹ 30,000. Debtors for ₹ 20,000 proved bad and the remaining debtors realised 90%. Amount realised from the debtors will be: 

P, a partner, is to bear all expenses of realisation for which he is to be paid ₹ 2,000. P had to pay realisation expenses of ₹ 2,500. How much amount will be debited to Realisation Account?

Investments valued ₹ 2,00,000 were not shown in the books. One of the creditors took over these investments in full satisfaction of his debt of ₹ 2,20,000. How much amount will be deducted from creditors?

If creditors are ₹ 25,000, capital is ₹ 1,50,000 and cash balance is ₹ 10,000, what will be the amount of sundry assets?

If opening capitals of partners are A ₹ 3,00,000, B ₹ 2,00,000 and C ₹ 1,00,000 and their drawings during the year are A ₹ 50,000, B ₹ 40,000 and C ₹ 30,000 and creditors are ₹ 60,000, what will be the amount of assets of the firm?

If total assets of a firm are ₹ 12,00,000 and total liabilities are ₹ 2,40,000, what will be the capitals of P, Q and R if they share profits in the ratio of their capitals and profit sharing ratio is 1 : 2 : 3:

On dissolution of a firm, a partner’s capital account has a credit balance of ₹ 42,000. His share of profit in realisation account is ₹ 9,000. He has paid firm’s realisation expenses 3,000. He will finally get a payment of:

On dissolution of firm, which item is debited to the realisation account?

At the time of dissolution of a firm, Creditors are ₹ 70,000; Partner’s capital is ₹ 1,20,000; Cash Balance is ₹ 10,000. Other assets realised ₹ 1,50,000. Profit/Loss in the realisation account will be:

On dissolution of a firm, debtors ₹ 17,000 were shown in the Balance Sheet. Out of this ₹ 2,000 became bad. One debtor became insolvent. 70% were recovered from him out of ₹ 5,000. Full amount was recovered from the balance debtors. On account of this item, loss in realisation account will be:

X; Y and Z are partners in a firm in the ratio of 4 : 3 : 2. On firm’s dissolution, firm’s total assets are ₹ 70,000, creditors are ₹ 15,000. Realisation expenses are ₹ 2,100. Assets realised 15% more than the book-value. Creditors were paid 2% more. For profit/loss on realisation, Y’s capital account will be debited/credited with:

On dissolution of a firm, firm’s Balance Sheet total is ₹ 77,000. On the assets side of the Balance Sheet items were shown preliminary expenses ₹ 2,000; Profit & Loss Account (Debit) Balance ₹ 4,000 and Cash Balance ₹ 1,800. Loss on realisation was ₹ 6,300. Total assets (including cash balance) realised will be:

On dissolution of a firm, partner’s capital accounts balance was ₹ 63,000; creditors balance was ₹ 12,000 and profit & loss account debit balance was ₹ 6,000. Profit on realisation of assets was ₹ 7,800. Total amount realised from assets was:

Which of the following is not transferred to Realisation Account?

Which of the following does not result into reconstitution of a partnership firm?

Rohan, Mohan and Sohan were partners sharing profits equally. At the time of dissolution of the partnership firm, Rohan’s loan to the firm will be:

In which condition a partnership is considered to be dissolved:

At the time of Dissolution of a partnership firm, if a partner’s loan to the firm is discharged by giving an unrecorded asset, which of the following entries will be passed?

At the time of Dissolution of a partnership firm, if the Realization expenses are supposed to be borne by a partner ‘A’ but are paid by another partner ‘B’. Which of the following entries will be passed?

At the time of dissolution of a firm, Creditors are ₹ 70,000; Firm’s Capital is ₹ 1,20,000; Cash Balance is ₹ 10,000. Other assets realised ₹ 1,50,000. Gain/Loss in the realisation account will be:

Mita and Rita decided to dissolve their partnership firm. Their books showed Goodwill of ₹ 5,000.

How will the Goodwill Account be closed on the dissolution of the firm?

Which of the following will be transferred to Realisation Account at the time of dissolution of firm?

1. Provision for Doubtful Debts
2. Partner’s Loan
3. General Reserve
4. Goodwill

Mehak and Ravish were partners in a firm. On dissolution of the firm, the loan given by Mehak to the firm was ₹ 30,000, by Ravish was ₹ 15,000, and by Mrs. Ravish was ₹ 10,000. The first payment will be made for:

On dissolution of the firm of Ramesh, Suresh and Naresh, Naresh had agreed to bear all realisation expenses for which he was to be paid ₹ 14,500. Actual expenses on realisation amounted to ₹ 11,000 which were paid by Naresh. The amount to be credited to Naresh’s capital account will be:

On dissolution of a partnership firm, furniture appearing in the Balance Sheet was ₹ 2,00,000. 50% of the furniture was taken over by a partner at ₹ 65,000 and balance 50% was sold at 20% less than the book value. The amount debited to bank account was:

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 ______.

On the dissolution of the firm, Partner Rex agreed to take over the responsibility of completing the dissolution work at an agreed remuneration of ₹ 1000 and to bear all realisation expenses. The actual realisation expenses amounted to ₹ 1,300 which were paid by the firm on Rex’s behalf.

What amount will be debited by the firm to the Realisation Account?

At the time of dissolution, Harry, a creditor of the firm agreed to take over the furniture of the book value of ₹ 1,00,000 at ₹ 89,000 and the balance in cash in full settlement of his account of ₹ 1,10,000.

Which journal entry will be passed for the balance to be paid in cash?

At the time of dissolution of a firm, the total assets were ₹ 6,00,000 and outside liabilities were ₹ 2,40,000. If assets realised ₹ 7,20,000 and realisation expenses of ₹ 8,000 were paid, the profit or loss on realisation will be:

At the time of dissolution Machinery appears at ₹ 10,00,000 and accumulated depreciation for the machinery appears at ₹ 6,00,000 in the balance sheet of a firm. This machine is taken over by a creditor of ₹ 5,40,000 at 5% below the net value. The balance amount of the creditor was paid through bank. By what amount should the bank account be credited for this transaction?

Rama, a partner, took over Machinery of ₹ 50,000 in full settlement of her Loan of ₹ 60,000. Machinery was already transferred to Realisation Account. How it will effect the Realisation Account?

Dada, Yuvi and Viru were partners, sharing profits and losses in the ratio 3 : 2 : 1. Their books showed a Workmen Compensation Reserve of ₹ 1,00,000. Workmen’s claim amounted to ₹ 60,000. How will it affect the books of accounts at the time of the dissolution of the firm?

In the event of dissolution of a partnership firm, the order of payment of losses, including deficiencies of capital shall be:

Arun, Basu and Tarun were partners sharing Profit & Loss in the ratio 5 : 3 : 2. Their firm was dissolved on March 31, 2025. On this date following assets and liabilities were appearing in their books of accounts.

Building ₹ 2,00,000; Furniture ₹ 80,000; Stock ₹ 70,000; Goodwill ₹ 10,000; Debtors ₹ 40,000; Cash ₹ 20,000; Creditors ₹ 50,000; Arun’s Loan ₹ 60,000; Tarun’s Brother Loan ₹ 30,000. Assets realised at for ₹ 3,40,000. Determine the amount of Realisation Gain/Loss.

Which of the following will not result in compulsory dissolution of a partnership firm.

Which of the following statement is Incorrect in the context of the dissolution of a partnership firm?

Amit, Ronald and Charan dissolved their partnership firm. Dissolution expenses were ₹ 10,000; out of the said expenses, ₹ 4,000 were to be borne by Ronald and the balance was to be paid by the firm. ₹ 8,000 was paid by Ronald and the balance by the firm.

What is the entry to record the above transaction?

Assertion (A): Dissolution of partnership refers to a change in the existing agreement among the partners.

Reason (R): In case of dissolution of partnership the firm continues its business and books of accounts need not be closed.

In the context of the above two statements, which of the following is correct?

Assertion (A): On dissolution of a partnership firm, bank overdraft is first transferred to the credit side of realisation account and then paid off.

Reason (R): Bank Overdraft is a third party liability and hence transferred to Realisation Account.

In the context of the above two statements, which of the following is correct?

Assertion (A): Loan from a partner is not transferred to Realisation Account.

Reason (R): Loan from a partner is not an outside liability. It is repaid prior to repayment of Capitals of partners.

In the context of the above two statements, which of the following is correct:

Assertion (A): Assets are revalued and liabilities are reassessed in case of dissolution of partnership.

Reason (R): A Revaluation Account is prepared on dissolution of partnership and gain or loss on revaluation is distributed between the partners.

In the context of the above two statements, which of the following is correct?

Assertion (A): On dissolution, if a partner is appointed to realise the assets and he gets a commission on realisation of assets, he will be liable to bear the realisation expenses also.

Reason (R): In the absence of specific agreement, partner doing the dissolution work and getting commission is not liable to bear the realisation expenses.

In the context of the above two statements, which of the following is correct?

Assertion (A): Dissolution of partnership firm refers to the dissolution of the partnership among all the partners of the firm.

Reason (R): Dissolution of partnership firm results into closure of business and hence dissolution of partnership also.

In the context of the above two statements, which of the following is correct?

Assertion (A): On dissolution, ‘Loan by firm to a Partner’ is not transferred to Partner’s Capital Account but is recovered from him.

Reason (R): Such a loan is an asset of the firm and hence this amount is recovered from the partner so that it is utilised to make payment of third party liabilities of the firm.

In the context of the above two statements, which of the following is correct?

Assertion (A): Partner’s private property can be used in paying off the firm’s debts. 

Reason (R): In case of partnership firm, partner’s liability is unlimited.

In the context of the above two statements, which of the following is correct?

Assertion (A): Loan from the wife of a partner is treated just like loan from the partner himself.

Reason (R): It is not transferred to Realisation Account.

In the context of the above two statements, which of the following is correct?

Assertion (A): On dissolution of a firm, advertisement suspense account appearing on the assets side of the balance sheet will not be transferred to Realisation Account. 

Reason (R): Advertisement Suspense Account is a fictitious asset and hence will be transferred to the debit side of partner’s capital accounts. 

In the context of the above two statements, which of the following is correct?

Assertion (A): On dissolution, there will be no entry if creditors for ₹ 50,000 are given stock worth ₹ 60,000 in full settlement of their debt.

Reason (R): On dissolution, there will be no entry if Partner’s Loan to the firm amounting to ₹ 50,000 is settled by giving him stock worth ₹ 60,000.

In the context of the above two statements, which of the following is correct?

Manav and Daksh were partners sharing profits and losses in the ratio of 5 : 3. Their firm was dissolved on March 31, 2023. On the date of dissolution, Daksh’s Loan to the firm amounted to ₹ 80,000 and was settled at ₹ 75,000.

Assertion (A): Daksh’s Loan will be debited by ₹ 75,000 only.

Reason (R): Daksh’s Loan to be closed only by the amount paid to him.

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?

Pass necessary journal entries for the following transactions on dissolution of the partnership firm of Preeti, Varsha and Kamala after various assets (Other than cash and third party liabilities have been transferred to Realisation Account:

1. There were 100 shares of ₹ 10 each in Star Ltd. acquired at a cost of ₹ 2,00,000 which had been written off completely from the books. These shares were valued at ₹ 2,400 each and divided among the partners in their profit sharing ratio.
2. Land and Building of the book value of ₹ 40,00,000 was sold for ₹ 60,00,000 through a broker who charged 5% commission.
3. The firm had stock of ₹ 2,00,000. 40% of this stock was taken over by a creditor of ₹ 1,00,000 in full settlement of his claim. The remaining stock was sold at a loss of 10%.
4. Debtors of ₹ 3,50,000 were sold to a debt collection agency who charged a commission of ₹ 25,000.