Riddhi and Siddhi are partners sharing profits and losses in the ratio of 2:1. The following is their balance sheet as on 31st March, 2019. Balance Sheet as on 31st March, 2019 Liabilities Amount (₹) Assets Amount (₹) Capital A/c: Building 60,000 Riddhi 80,000 Furniture 24,000 Siddhi 60,000 Machinery 20,000 Reserve Fund 16,000 Debtors 17,600 16,000 Siddhi's Loan A/c 4,000 Less: RDD 1,600 Creditors 30,000 Stock 40,000 Investment 8,000 Interest Receivable 2,000 Bank 20,000 1,90,000 1,90,000 The firm was dissolved on 31st March 2019. The assets realised were: Machinery ₹ 22,000, Building ₹ 28,000, Stock ₹ 38,000 and Debtors ₹ 15,000. Riddhi took over the Investment at ₹ 10,000 and Furniture at book value. Siddhi agreed to accept ₹ 3,000 in full settlement of her Loan Account. Dissolution expenses amounted to ₹ 4,000. Interest receivable could not be recovered. Prepare Realisation Account, Partners' Capital Account, Siddhi's Loan Account and Bank Account.

Dr. In the books of FirmRealisation Account Cr. Particulars Amount (₹) Particulars Amount (₹) To Sundry Assets A/c: By Sundry Liabilities A/c: Building 60,000 1,71,600 Creditors 30,000 Furniture 24,000 RDD 1,600 Machinery 20,000 By Bank A/c: Debtors 17,600 Building 28,000 1,03,000 Stock 40,000 Debtors 15,000 Investment 8,000 Stock 38,000 Interest receivable 2000 Machinery 22,000 To Bank A/c: By Riddhi's Capital A/c: Creditors 30,000 34,000 Investment 10,000 34,000 Realisation Expense 4,000 Furniture 24,000 By Siddhi's Loan A/c 1,000 By Partner's Capital A/c: (Loss) 36,000 Riddhi 24,000 Siddhi 12,000 2,05,600 2,05,600 Dr. Partner's Capital Accounts Cr. Particulars Riddhi (₹) Siddhi (₹) Particulars Riddhi (₹) Siddhi (₹) To Realisation A/c 34,000 By Balance b/d 80,000 60,000 To Realisation A/c (Loss on Realisation) 24,000 12,000 By Reserve Fund A/c 10,667 5,333 To Bank A/c 32,667 53,533 90,667 65,333 90,667 65,333 Dr. Siddhi's Loan A/c Cr. Particulars Amount (₹) Particulars Amount (₹) To Bank A/c 3,000 By Balance b/d 4,000 To Realisation A/c 1,000 4,000 4,000 Dr. Bank Account Cr. Particulars Amount (₹) Particulars Amount (₹) To Balance b/d 20,000 By Realisation A/c 34,000 To Realisation A/c 1,03,000 By Siddhi's Loan A/c 3,000 By Riddhi's Captial A/c 32,667 By Siddhi's Capital A/c 53,333 1,23,000 1,23,000

Riddhi and Siddhi are partners sharing profits and losses in the ratio of 2:1. The following is their balance sheet as on 31st March, 2019.

Question

Riddhi and Siddhi are partners sharing profits and losses in the ratio of 2:1. The following is their balance sheet as on 31st March, 2019.

Balance Sheet as on 31st March, 2019
Liabilities	Amount (₹)	Assets		Amount (₹)
Capital A/c:		Building		60,000
Riddhi	80,000	Furniture		24,000
Siddhi	60,000	Machinery		20,000
Reserve Fund	16,000	Debtors	17,600	16,000
Siddhi's Loan A/c	4,000	Less: RDD	1,600	16,000
Creditors	30,000	Stock		40,000
		Investment		8,000
		Interest Receivable		2,000
		Bank		20,000
	1,90,000			1,90,000

The firm was dissolved on 31st March 2019.

The assets realised were: Machinery ₹ 22,000, Building ₹ 28,000, Stock ₹ 38,000 and Debtors ₹ 15,000.
Riddhi took over the Investment at ₹ 10,000 and Furniture at book value.
Siddhi agreed to accept ₹ 3,000 in full settlement of her Loan Account.
Dissolution expenses amounted to ₹ 4,000.
Interest receivable could not be recovered.

Prepare Realisation Account, Partners' Capital Account, Siddhi's Loan Account and Bank Account.

Ledger

Solution

Dr.	In the books of Firm Realisation Account				Cr.
Particulars		Amount (₹)	Particulars		Amount (₹)
To Sundry Assets A/c:			By Sundry Liabilities A/c:
Building	60,000	1,71,600	Creditors		30,000
Furniture	24,000		RDD		1,600
Machinery	20,000		By Bank A/c:
Debtors	17,600		Building	28,000	1,03,000
Stock	40,000		Debtors	15,000
Investment	8,000		Stock	38,000
Interest receivable	2000		Machinery	22,000
To Bank A/c:			By Riddhi's Capital A/c:
Creditors	30,000	34,000	Investment	10,000	34,000
Realisation Expense	4,000	34,000	Furniture	24,000	34,000
			By Siddhi's Loan A/c		1,000
			By Partner's Capital A/c: (Loss)		36,000
			Riddhi	24,000
			Siddhi	12,000
		2,05,600			2,05,600

Dr.	Partner's Capital Accounts				Cr.
Particulars	Riddhi (₹)	Siddhi (₹)	Particulars	Riddhi (₹)	Siddhi (₹)
To Realisation A/c	34,000		By Balance b/d	80,000	60,000
To Realisation A/c (Loss on Realisation)	24,000	12,000	By Reserve Fund A/c	10,667	5,333
To Bank A/c	32,667	53,533
	90,667	65,333		90,667	65,333

Dr.	Siddhi's Loan A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Bank A/c	3,000	By Balance b/d	4,000
To Realisation A/c	1,000
	4,000		4,000

Dr.	Bank Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	20,000	By Realisation A/c	34,000
To Realisation A/c	1,03,000	By Siddhi's Loan A/c	3,000
		By Riddhi's Captial A/c	32,667
		By Siddhi's Capital A/c	53,333
	1,23,000		1,23,000

shaalaa.com

Concept of Dissolution of Partnership Firm

Is there an error in this question or solution?

Q 3.A Q 2.B Q 3.B

2025-2026 (March) Model set 2 by shaalaa.com

APPEARS IN

2025-2026 (March) Model set 2 by shaalaa.com (with solutions)

Q 3.A | 10 marks

Video TutorialsVIEW ALL [2]

view
Video Tutorials For All Subjects
Concept of Dissolution of Partnership Firm

video tutorial00:35:09
Concept of Dissolution of Partnership Firm

video tutorial00:24:23

RELATED QUESTIONS

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.

A, B, and C were partners sharing profits and losses in the proportion of 2 : 2 : 1. Following is their balance sheet as on 31st March, 2013.

Balance sheet as on 31st March, 2013

Liabilities	Amount (Rs. )	Assets	Amount (Rs.)	Amount (Rs.)
Capital Account		Machinery		25,000
A	30,000	Stock		10,000
B	10,000	Debtors	27,500
C	10,000	Less: R.D.D.	1,500	26,000
General Reserve	3,000	Investment		12,000
Creditors	20,000	Profit and Loss A/c		9,000
A’s Loan Account	4,000	Bank		2,000
Bills Payable	7,000
	84,000			84,000

On the above date, the partners decide to dissolve the firm.(1) Assets were realised as -
Machinery Rs. 22,500, Stock Rs. 9,000, Investment Rs. 10,500, Debtors Rs. 22,500
(2) Dissolution expenses were Rs. 1,500.
(3) Goodwill of the firm realised Rs. 12,000
Pass the necessary journal entries int he books of the firm.

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

C and D were partners in a firm sharing profits in the ratio of 3:2. On 28-2-2016 the firm was dissolved. After transferring assets (other than cash) and outsiders' liabilities to realization account you are given the following information :

(a) A creditor for Rs 2 00,000 accepted building of Rs 2,80,000 at Rs 2,20,000 and paid the firm Rs 20,000.

(b) A second creditor for Rs 75,000 accepted furniture at Rs 60,000 in full settlement of his claim.

(c) A third creditor amounting to Rs 80,000 accepted Rs 20,000 in cash and investments of the book value of Rs 65,000 in full settlement of his claim.

(d) Loss on dissolution was Rs 7,500. Pass necessary journal entries for the above transactions in the books of the firm assuming that all payments were made by cheque.

E and F were partners in a firm sharing profits in the ratio of 7:3. On 28-2-2016 the firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to realization account you are given the following information:

(a) A creditor for Rs 3, 00,000 accepted building valued Rs 3, 75,000 and paid the firm Rs 75,000.

(b) A second creditor for Rs 93,000 accepted stock valued at Rs 90,000 in full settlement of his claim.

(c) A third creditor amounting to Rs 60,000 accepted Rs 37,000 in cash and investments of the book value of Rs 40,000 in full settlement of his claim.

(d) Loss on dissolution was Rs 7,000.

Pass necessary journal entries for the above transactions in the books of the firm assuming that all payments were made by cheque.

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.

Expenses incurred on a dissolution of a partnership firm.

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?

Answer in one sentence only.

Which account is debited on payment of dissolution expenses?

State whether the following statement is True or False.
At the time of dissolution loan from partner will be transferred to Realisation Account.

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

Dissolution takes place when the relation among the partners comes to an end.

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

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

Select the most appropriate alternative from those given below :

Realisation Account is __________on realisation of assets.

Select the most appropriate alternative from those given below :

All activities of the partnership firm cease (stop) on ____________ of firm.

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

Balance Sheet as on 31^st 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.

Anil and Sunil were partners sharing profits and losses in the ratio of 3: 2. Their Balance Sheet as on 31st March, 2009.

Balance Sheet as on 31^st March, 2009
Liabilities	Amount (Rs)	Assets	Amount (Rs)
Capital Account:		Bank	30,000
Anil	50,000	Stock	25,000
Sunil	30,000	Debtors	70,000
Current Account:		Plant	45,000
Anil	15,000	Building	35,000
Sunil	10,000
Creditors	87,000
Bills payable	13,000
	2,05,000		2,05,000

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

1) Stock Rs 20,000, Debtors Rs 60,000, Plant Rs 40,000 and Building Rs 30,000.

2) Anil agreed to pay off the bills payable.

3) Creditors were paid in full.

4) Dissolution expenses were Rs 7,000.

Prepare:
(i) Realisation Account
(ii) Bank Account
(iii) Current Account and Capital Account of the partners.

Gautam, Viral and Ashwin were Partners sharing profits and losses equally. Their Balance sheet as on 31^st December, 2011 was as follows:

Balance Sheet as on 31^st December, 2011

Liabilities	Amount (Rs)	Assets	Amount (Rs)
Capital Accounts:		Building	73,900
Gautam	75000	Furniture	44,100
Virat	45000	Stock	25,400
Reserve Fund	27,000	Debtors	33,600
Creditors	48,500	Cash	15,000
Bank Loan	11,500	Ashwin’s Capital	15,000
	207000		207000

The firm was dissolved due to insolvency of Ashwin and the following was the result.

(i) The realisation of Assets were as follows:

a) The stock was completely damaged and could realise worth Rs 16,500 only.

b) Building was sold for Rs 49,800.

c) Furniture was realised by the firm at Rs 23,100 less than the book value.

d) A Customer who owes Rs 14,400 became insolvent and nothing could be recovered from his private estate.

(ii) Creditors were paid for Rs 36,900 in full settlement and Bank Loan was discharged fully.

(iii) The expenses of realisation Rs 4,100

(iv) Ashwin became insolvent and the firm could recover only Rs 4,000 from his private estate.

Prepare Realisation A/c, Partner’s Capital A/c and cash A/c to close the books of the firm.

Ganga, Yamuna and Godavari are in Partnership sharing profits and losses equally. Their Balance sheet as on 31^st December, 2011 was as follows:

Balance Sheet as on 31^st December, 2011

Liabilities	Amount (Rs)	Assets	Amount (Rs)
Capital Accounts		Currnet Accounts
Ganga	25000	Yamuna	20000
Yamuna	10000	Godavari	4000
Godavari	5000	Premises	17200
Ganga’s Currnet A/c	3000	Machinery	10800
Sundry Creditors	4000	Debtors	9600
Bank loan	3000	Cash	6400
	50000		50000

Godavari was declared insolvent and hence the firm was dissolved as on that date. Premises was sold at Rs 14,800, Machinery realised Rs 6,400. Bad debts and discount allowed to Debtors amounted to Rs 1,600. Sundry creditors agreed to receive 80 paise in a rupee (Rs) in full satisfaction of their claim. Bank Loan was settled at 60% of book value. During the course of dissolution a liability under an action for damages was settled for Rs 1,400 against Rs 2,100 provided in the books of the firm. The expenses of realisation amounted to Rs 900. Goodwill contributed Rs 1,900 from her private Property.

Prepare necessary ledger accounts in the books of the firm.

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.

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)	52000
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.

Partnership is completely dissolved when the partners of the firm become _________.

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

Debit balance of Realisation account.

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

An account opened to find out the Profit or Loss on realisation of Assets and settlement of Liabilities.

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

Credit 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.

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

At the time of dissolution, a loan from the partner will be transferred to Realisation Account.

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

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.

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 31^stMarch 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	45,000
		Stock		30,000
		Cash in hand		10,000
		Advertisement Suspense		8,000
	1,80,000			1,80,000

Additional Information:

Plant and Stock taken over by Seeta ₹ 78,000, and ₹ 22,000 respectively.
Debtors Realised 90% of the Book Value and Trademark at ₹ 5,000. and Goodwill was realised for ₹ 7,000.
Unrecorded assets estimated ₹ 4,500 was sold for ₹ 1,500.
₹ 1,000 Discount were allowed by creditors while paying their claim.
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 31^stMarch 2019 was as under:

Balance Sheets as on 31^st 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.

The dissolution of partnership may take place in the following ways?

Consider the following statements

Statement 1: "The firm is dissolved automatically, on the retirement all partners."

Statement 2: A firm dissolves on the retirement of a partner.

Pick the odd one out: (In reference to Dissolution partnership firm)

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 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:

Dhwani’s Loan of ₹ 50,000 to the firm was settled by paying ₹ 42,000.
Paavni’s Loan of ₹ 40,000 was settled by giving an unrecorded asset of ₹ 45,000.
Loan to Charu of ₹ 60,000 was settled by payment to Charu’s brother loan of the same amount.
Iknoor’s Loan of ₹ 80,000 to the firm and she took over Machinery of ₹ 60,000 as part payment.

You are required to pass necessary entries for all the above-mentioned transactions.

Complete the table.

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

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.

The Assets were realised as Building ₹ 40,000, Computer ₹ 30,000, Debtors ₹ 10,000.
Realisation expenses amounted to ₹ 2,000.
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.

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 31^st 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 31^stMarch, 2019 and assets were realised as under:

Machinery realised 60% of its book value.
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.
Hema took stock at an agreed value of ₹ 50,000.
Creditors and Bills payable were paid at 10% discount.
Limsy became insolvent and nothing was recovered from her estate.

Prepare:

Realisation Account
Partners’ Capital Account
Bank Account

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:

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

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?

On the day of dissolution of the firm ‘Roop Brothers’ had partner’s capital amounting to ₹ 1,50,000 external liabilities ₹ 35,000, Cash balance ₹ 8,000 and P & L A/c (Dr.) ₹ 7,000. If Realisation expense and loss on Realisation amounted to ₹ 5,000 and ₹ 25,000 respectively, the amount realised by sale of assets is ______.

Sun and Kiran are partners sharing profits and losses equally. They decided to dissolve their firm. Assets and Liabilities have been transferred to Realisation Account. Pass necessary Journal entries for the following:

All partners are agreed that the process of realisation at the time dissolution will be accomplished by Sun for which he will be paid ₹ 10,000 along with the amount of expense which amounted to 2% of total value realised from the Assets on dissolution. Some assets were sold for Cash at a cumulative Value of ₹ 12,00,000 and the remaining were taken over by creditors at a valuation of ₹ 3,00,000.
Deferred Advertisement Expenditure A/c appeared in the books at ₹ 28,000.
Out of the Stock of ₹ 1,20,000; Kiran (a partner) took over 1/3 of the stock at a discount of 25% and 50% of remaining stock was took over by a Creditor of ₹ 30,000 in full settlement of his claim. Balance amount of stock realized at ₹ 25,000.
An outstanding bill for repairs and renewal of ₹ 3,000 was settled through an unrecorded asset which was valued at ₹ 10,000. Balance being settled in Cash.

Complete the following table:

Debit side total of Realisation A/c	Credit side total of Realisation A/c	Loss on Realisation
₹ 30,000	?	₹ 24,000
?	₹ 10,000	₹ 40,000

Amul and Anand are partners in the firm sharing profits and losses in the ratio of 4 : 1. They decided to dissolve the partnership on 31st March, 2023 on which date their Balance Sheet stood as follows:

Balance Sheet as on 31st March, 2023
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Capital:			Furniture		19,600
Amul	1,26,000	1,82,000	Plant		91,000
Anand	56,000	1,82,000	Trademark		11,200
Sundry Creditors		49,000	Sundry Debtors	67,200
Bank Loan		21 ,000	Less: R.D.D.	4,200	63,000
			Stock		42,000
			Cash in Hand		14,000
			Advertisement Suspense		11,200
		2,52,000			2,52,000

Additional Information:

(1) Plant and Stock taken over by Amul at ₹ 1,09,200 and ₹ 30,800 respectively.

(2) Debtors realised 90% of the book value and Trademark at ₹ 7,000 and Goodwill was realised for ₹ 37,800.

(3) Unrecorded assets estimated ₹ 6,300 was sold for ₹ 2,100.

( 4) ₹ 1,400 Discount were allowed by creditors while paying their claim.

(5) The Realisation expenses amounted to ₹ 4,900.

You are required to prepare Realisation A/c, Cash A/c and Partner's Capital A/cs.

Insolvent partner Capital A/c debit side total is ₹ 25,000 and credit side total is ₹ 10,000. Calculate deficiency.

Mita and Sita, sharing profits in, the ratio 2 : 1, decided to dissolve their partnership firm on 31^st 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	26,000
Sita	10,000	30,000	Bank		2,000
		80,000			80,000

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

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.
Debtors of ₹ 1,000 proved bad.
Sita took over the stock at a discount of 20%.
Realisation expenses of ₹ 1,100 were paid by the firm.

You are required to prepare the Realisation Account.

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)	52,000
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:

Realisation Account
Partner's Capital Account
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 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 30^th 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.

Riddhi and Siddhi are partners sharing profits and losses in the ratio of 2:1. The following is their balance sheet as on 31st March, 2019.

Advertisements

Advertisements

Question

Advertisements

Solution

APPEARS IN

Video TutorialsVIEW ALL [2]

RELATED QUESTIONS

Select a course

Riddhi and Siddhi are partners sharing profits and losses in the ratio of 2:1. The following is their balance sheet as on 31st March, 2019.

Advertisements

Advertisements

Question

Advertisements

SolutionShow Solution

APPEARS IN

Video TutorialsVIEW ALL [2]

RELATED QUESTIONS

Select a course

Solution