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Assets and liabilities are transferred to Realisation Account at their ______ value. - Book Keeping and Accountancy

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प्रश्न

Assets and liabilities are transferred to Realisation Account at their ______ value.

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उत्तर

Assets and liabilities are transferred to Realisation Account at their book value.

Explanation:

To determine the correct amount of profit or loss on the eve of dissolution of a partnership firm, all assets and liabilities are transferred to the Realisation Account at their book values.

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पाठ 6: Dissolution of Partnership Firm - Exercise 6.1 (Objective Questions) [पृष्ठ २४१]

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बालभारती Book-Keeping and Accountancy [English] Standard 12 Maharashtra State Board
पाठ 6 Dissolution of Partnership Firm
Exercise 6.1 (Objective Questions) | Q 1. A) 7) | पृष्ठ २४१
मायकल वाझ Book Keeping and Accountancy [English] 12 Standard HSC Maharashtra State Board
पाठ 6 Dissolution of Partnership Firm
Exercise 4 | Q 7 | पृष्ठ १८२

व्हिडिओ ट्यूटोरियलVIEW ALL [2]

संबंधित प्रश्‍न

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.


Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership Firm on the basis of 'Economic Relationship'.


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


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.


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.

Who is called insolvent person?


Answer in one sentence only.

In what proportion is the balance on Realisation Account transferred to Partners’ Capital / Current Accounts?


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 statements.
Credit balance in Realisation Account.


State whether the following statements is True or False.

The firm is dissolved automatically on the retirement of a partner.


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 statements is True or False.

At the time of dissolution of Partnership Firm all assets should be transferred to Realisation A/c.


In case of dissolution assets and liabilities are transferred to ______ A/c.


Select the most appropriate alternative from those given below :

Partnership is compulsorily dissolved when the partners of the firm become ____________


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.


X, Y and Z were carrying on business. They share profits and losses in the ratio of 5:3:2 respectively. Their Balance Sheet as on 31st March, 2010 was as under:

              Balance Sheet as on 31st March, 2010

Liabilities Amount (Rs) Assets Amount (Rs)
Sundry Creditors 21000 Plant and Machinery 20000
Y’s loan 5000 Investment 8000
Reserve fund 20000 Stock  
Capital Account:   Debtors 18000 17000
X 20000 Less : R.D.D 1000
Y 10000 Cash in hand 2000
Z 4000 Cash at Bank 3000
  80000   80000

On the above date the firm was dissolved and the assets realised as under:

1) Investment Rs 5,000, Stock Rs 24,000 and Debtors Rs 15,000.

2) The Plant and Machinery was taken over by Mr. ‘X’ at book value.

3) Sundry Creditors and Mr. ‘Y’ loan were paid in full.

4) Realisation expenses incurred Rs 1,000.

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


(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.


Distinguish between firm’s debts and partner’s private debts.


Ram, Laxman and Bharat were partners sharing profit and losses in the ratio of 2 : 2 : 1. Following is the Balance Sheet as on 31st March, 2016 :
                                  Balance Sheet as on 31st March, 2016

Liabilities Amount
(Rs.)
Assets Amount
(Rs.)
Capital A/c :   Machinery 2,00,000
Ram  2,40,000 Stock 80,000
Laxman 80,000 Debtors          2,20,000  
Bharat 80,000 Less : R.D.D.    (12,000) 2,08,000
       
General Reserve 24,000 Investment 96,000
Creditors 1,92,000 Profit and Loss A/c 72,000
Bills Payable 56,000 Bank balance 16,000
       
  6,72,000   6,72,000

On the above date the partners decided to dissolve the firm:
(1) Assets were realised as under -

    Machinery Rs. 1,80,000
Stock Rs. 72,000
Investments Rs. 84,000
Debtors Rs. 1,80,000

(2) Dissolution expenses were Rs. 12,000.
(3) Goodwill of the firm realised 96,000
Prepare :
(1) Realisation Account
(2) Partner's Capital Account
(3) Bank Account


State whether the following statement is True or False.

At the time of disolution of a partnership firm all assets should be transfered to realiasation account.


Manish and Co. Ltd. made an issue of 40000 equity shares of 20 each payable as follows :

Application                      ₹ 5 per share

Allotment                         ₹ 10 per share

First call                           ₹  3 per share

Second call and
final call                           ₹ 2 per share

The company received applications for 50000 share of which applications for 10000 shares were rejected and money refunded . All the shareholders paid upto second call except Sunita , the allotee of 400 shares , failed to pay the final call. the expenses of issuing amounted to ₹ 6000 .

Pass Journal entries in the books of Manish and Co . Ltd.


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


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.


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.

The firm must be dissolved on the retirement of a partner.


Insolvent Partner Capital A/c debit side total is ₹ 10,000 and the credit side total is  ₹ 6,000. Calculate deficiency.


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

Ganesh and Kartik are partners sharing Profits and Losses equally. They decided to dissolve the firm on 31st March 2018. Their Balance Sheets was as under :

Balance Sheets as on 31st March 2018.
Liabilities Amount ₹ Assets Amount ₹
Creditors 18,400 Building 88,000
Bills Payable 5,600 Furniture 12,000
Reserve Fund 20,000 Debtors 32,000
Capital A/c :   Stock 24,000
Ganesh 40,000 Bills Receivable 4,000
Kartik 80,000 Cash 4,000
  1,64,000   1,64,000

Assets were realised as under :

Building ₹82,000, Debtors ₹ 22,000, Stock ₹ 20,000. Bills Receivable ₹ 3,200 and Ganesh agreed to take over Furniture for ₹10,000. Realisation Expenses amounted to ₹ 2,000.

Show Realisation A/c, Partners’ Capital A/c and Cash A/c.


Seeta and Geeta are partners in the firm sharing Profits and Losses in the ratio of 4:1. They decided to dissolve the partnership on 31st March 2020 on which date their Balance Sheet stood as follows.

Balance Sheets as on 31st March 2020
Liabilities Amount (₹) Assets Amount (₹) Amount (₹)
Capital:   Furniture   14,000
Seeta 90,000 Plant   65,000
Geeta 40,000 Trademark   8,000
Sundry Creditors 35,000 Sundry Debtors 48,000 45,000
Bank Loan 15,000 Less: R.D.D 3,000
    Stock   30,000
    Cash in hand   10,000
    Advertisement Suspense   8,000
  1,80,000     1,80,000

Additional Information:

  1. Plant and Stock taken over by Seeta ₹ 78,000, and ₹ 22,000 respectively.
  2. Debtors Realised 90% of the Book Value and Trademark at ₹ 5,000. and Goodwill was realised for ₹ 7,000.
  3. Unrecorded assets estimated ₹ 4,500 was sold for ₹ 1,500.
  4. ₹ 1,000 Discount were allowed by creditors while paying their claim.
  5. The Realisation Expenses amounted to ₹ 3,500.

You are required to prepare Realisation A/c, Cash A/c, and Partners Capital A/c.


Sangeeta, Anita, and Smita were in partnership sharing Profits and Losses in the ratio 2: 2: 1. Their Balance Sheet as on 31st March 2019 was as under:

Balance Sheets as on 31st March, 2019
Liabilities Amount (₹) Assets Amount (₹)
Capital:   Land 2,10,000
Sangeeta 60,000 Plant 20,000
Anita 40,000 Goodwill 15,000
Smita 30,000 Debtors 1,25,000
Sangeeta’s Loan A/c 1,20,000 Loans and Advances 15,000
Sundry Creditors 1,20,000 Bank 5,000
Bills Payable 20,000    
  3,90,000   3,90,000

They decided to dissolve the firm as follows:

1. Assets realised as; Land recovered ₹ 1,80,000; Goodwill for ₹ 75,000; Loans and Advances realised ₹ 12,000; 10% of the Debts proved bad;

2. Sangeeta took Plant at book value.

3. Creditors and Bills payable paid at 5% discount.

4. Sangeeta’s Loan was discharged along with ₹ 6,000 as Interest.

5. There was a contingent liability in respect of bills of ₹ 1,00,000 which was under discount. Out of them, a holder of one bill of ₹ 20,000 became insolvent

Show Realisation Account, Partners Capital Account, and Bank Account.


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?


A firm is dissolved with the consent of all the partners or in accordance with a contract between the partners is known as ______


A partnership firm is compulsorily dissolved:


What Journal Entry will be passed on dissolution of partnership firm, when creditors of ₹ 40,000 accepted investments of ₹ 50,000 (Book value)?


At the time of dissolution, all assets are transferred to Realisation Account at their ______.


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


At the time of the firm's dissolution, the balance of General Reserve shown in the Balance Sheet is credited to ______.


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.


A firm consisting of partners Mukund, Sachin and Yuvraj decided to dissolve the partnership They decided to take over certain assets and liabilities and continue the business separately. The Balance Sheet was as under.

Balance Sheet as on 31st March, 2020
Liabilities Amount
(₹)
Assets   Amount
(₹)
Capital A/c:     Furniture   2,000
 Mukund 55,000 89,000 Sundry Assets   34,000
 Sachin  20,000 Debtors 48,400 46,000
 Yuvraj 14,000 Less: RDD 2,400
Creditors   12,000 Stock   15,600
Loan   3,000 Cash   6,400
    1,04,000     1,04000

It was agreed as under:

  1. Mukund is to take Furniture at ₹ 1,600 and the Debtors amounting to ₹ 40,000 at ₹ 34,400 only. He accepted the Creditors on ₹ 12,000 at that figure.
  2. Sachin is to take over all Stock at ₹ 14,000 and Sundry Assets worth ₹ 16,000 at ₹ 14,400 only.
  3. Yuvraj is to take over the remaining Sundry Assets at ₹ 16,000 and assume the responsibility for the discharge of the loan together will accrued interest on a loan of ₹ 60. which has not been recorded in accounts.
  4. The dissolution expenses were ₹ 540.
  5. The remaining debtors realised only ₹ 4,200.
  6. The necessary adjustments were made by partners to settle their accounts.

Prepare Realisation Account, Partners Capital Account, and Cash Account, after giving effect to the above adjustments.


Complete the table.

Creditors Bills Payable Third-Party
Liabilities
₹ 16,000 ₹ 12,000 ?

Complete the table.

Debit side total of
Realisation A/c
Credit side total of
Realisation A/c
Loss on
Realisation
 ₹ 20,000 ₹ 4,000

Dino, Manu and Ramu are Partners Sharing Profits and Losses in the Ratio 2 : 2 : 1. They decided to dissolved the firm on 31st March, 2020. When their position was as under.

Balance Sheet as on 31st March, 2020
Liabilities Amount
(₹)
Assets Amount
(₹)
Capital A/c:     Building 78,000
 Dino 26,000 66,000 Computer 45,000
 Manu  22,000 Debtors 20,000 
 Ramu 18,000 Goodwill 35,000
Creditors   80,000 Bank 8,000
Bill Payable   40,000    
    1,86,000   1,86,000

The firm was dissolved on above date and the following is the result of realisation.

  1. The Assets were realised as Building ₹ 40,000, Computer ₹ 30,000, Debtors ₹ 10,000.
  2. Realisation expenses amounted to ₹ 2,000.
  3. All partners were insolvent The following amount was recovered from them Dino ₹ 2,000 and Manu ₹ 2,000.

Prepare Necessary ledger account to close the books of the firm.


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

Total assets of a partnership firm, which was dissolved were ₹ 30,00,000 and its total liabilities were ₹ 6,00,000. Assets were realised at 80% and liabilities were settled at 5% less. If dissolution expenses were ₹ 30,000 the profit or loss on dissolution was ______.


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

  1. Creditors of ₹ 60,000 accepted stock valued at ₹ 59,000 in full settlement of their claim.
  2. Tanay agreed to pay off his wife's loan of ₹ 12,000.
  3. The firm had a debit balance of ₹ 18,000 in the profit and loss account on the date of dissolution. 
  4. An unrecorded liability of ₹ 20,000 was paid by partner, Mehak, at a discount of 10%.
  5. Tanay's loan of ₹ 4,000 was paid through a cheque.
  6. Expenses on dissolution amounted to ₹ 11,000 which were paid by Mehak. 

Pass necessary Journal Entries for the following transactions on the dissolution of a partnership firm of Mita and Sonu on 31st March, 2022 after the various assets other than cash and third party liabilities have been transferred to the Realisation Account.

  1. Creditors of ₹ 90,000 took over Land and Building of ₹ 2,00,000 in full settlement of their claim.
  2. Sonu took over debtors amounting to ₹ 50,000 at ₹ 40,000.
  3. Realisation expenses ₹ 1,800 were paid by Sonu.
  4. A machine which was not recorded in the books was taken over by Mita at ₹ 11,000 while its expected market value was ₹ 15,000.
  5.  Sortu agreed to pay off his wife's loan of ₹ 20,000.
  6. Profit on dissolution amounted at ₹ 50,000.

A, B and C are in partnership business. A used ₹ 2,00,000 belonging to the firm without the information to other partners and made a profit of ₹ 35,000 by using this amount. Which decision should be taken by the firm to rectify this situation?


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.


______ means winding-up of partnership firm.


Mita and Sita, sharing profits in, the ratio 2 : 1, decided to dissolve their partnership firm on 31st March, 2022, on which date their Balance Sheet was as under:

Balance Sheet of Mita and Sita
as on 31st March, 2022
Liabilities   (₹) Assets   (₹)
Sundry Creditors   40,000 Land & Building   29,000
Sita's Son's Loan   2,000 Plant & Machinery   20,000
Bank Overdraft   8,000 Stock   3,000
Capital Accounts:     Debtors 26,400 26,000
Mita  20,000 30,000 Less: Provision for
Doubtful Debts
400
Sita 10,000 Bank   2,000
    80,000     80,000

The partnership firm was dissolved on the date of the Balance Sheet subject to the following adjustments:

  1. Trade creditors accepted plant and machinery at an agreed valuation of 10% less than the book value and the balance in cash in full settlement of their claims.
  2. Debtors of ₹ 1,000 proved bad.
  3. Sita took over the stock at a discount of 20%.
  4. Realisation expenses of ₹ 1,100 were paid by the firm.

You are required to prepare the Realisation 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 partnership deed provide that interest on capital will be allowed @10% p.a. The amount of interest on Ishita's capital will be:


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