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    Dissolution of Partnership

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    Tisha

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    © All Rights Reserved
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    ssolution of a Partnership Firm gudy ofthis Chapter would enable you to understand: syeaing of Dissolution of Partnership Firm : > iference between Dissolution of Firm and Dissolution of Partnersh > ‘yodes of Dissolution ofa Firm o ©, settlement of Accounts 5 pifference between Firm's Debts and Private Debts = accounting Entries on Dissolution of the Firm 5 pifeence between Revaluation Account and Realisation Account fpsolution of partnership means change in relationship among the partners but the firm jontinues. On the other hand, dissolution of firm means business of the firm is discontinued, i,.cosed and the firm is wound up, i.e, dissolved. As a result, economic relationship among, siners comes to an end. Agording to Section 39 of the Indian Partnership Act, 1932, “Dissolution of the firm means «olution of partnership among all the partners in the firm.” In such an event, all assets of the sare realised, i.e., sold and liabilities are paid. The balance, if any, is paid to the partners in ement of their accounts. If there is shortfall in meeting outside liabilities, it is met by the ners from their private assets. Basis Dissolution of Firm Dissolution of Partnership |, Meaning it means closure of the firm and end of |It means changein businessrelationship among ‘business relationship among all the partners. | the partners. The firm continues its business. ‘an be either voluntarily by the partners |Itis always voluntary. cor compulsorily by oder of court. 3 Business Continuation | Business of the frm comesto an end. _| Business ofthe firm continues. * Closure of Books of Account | is ak 5 Assetsand Liabilities "| Assetsof the firm are realised andiibilties ) Assets of the firm are revalued and liabilities are settled, The balance amount, f any, is are reassessed, The gain (profit) or loss due tot, | cstrbuted among athe partners is distrbuted among the partners in their old | | profit-sharing ratio, 2 Court’s intervention Books of account ofthe firm are closed. | Books ofaccount of the frm need not be closed. ‘alationship between/among the | Economic relationship between/among the Feonomic Relation Economict lationship [reromesnerd {partners changes. ae + picaution of fm ao means dsolution | Dissolution of partnership may of may not | involve dissolution of the firm. |ofparterhip Scanned with CamScanner & Lxpnsn wisawrnsrans wr a HI BY Uy Agreement and (i) Notice, (@ethi 2013 1. Land and Building (book value) 1,60,000 sold for ® 3,00,000 through a broker who charged 2% commission on the deal. Journalise the transaction, at the time of dissolution of the firm. (CBSE Sample Question Paper 2013-19) 2. Pass Journal entries in the following cases? (a) Expenses of realisation @ 1,500. (b) Expenses of realisation & 600 but paid by Mohan,a partner. (Q). Mohan, one of the partners of the firm, was asked to look into the dissolution of the firm for which he was allowed a commission of € 2,000. (d) Motor car of book value ® 50,000 taken over by creditors of the book value of € 40,000 in full settlement [Hint: (d) No entry for recorded asset taken over by creditors.) 3 Pass J tries for the following: (a) pa 2! eae 15,000 were to be met by Rahul, a partner, but were paid by the firm. (b) Ramesh, a partner, was paid remuneration of € 25,000 and he was to meet all expenses. © Anuja fe vias paid remuneration of € 20000 and he was to meet all expenses, Frm paid an expense of & 5,000. 4. llowing: Oe mary to € 10,000 were paid by the firm on behalf of Alok, a partner, with jon expen: 7,500. » oe ioe ter 05,000, It was agreed that the firm will pay € 2,000 and balance by iS) Raa aee ee penses aountedt0 «10000 were paid By Ama partner on behalf of the firm. . a SS SCO Scanned with CamScanner 7.52 Double Entry Book Keeping—CBSE XI! 2805 eatment worth € 43,000, in ful ettlemeng Record necessary Journal entries in the following 5, Record necessary Joumal entrie A Cred £85,000 accepted & 40,000 a: oftheir claim, reditors were % 16,000. They accepte Creditors were & 90,000, They accepted Bu! rs worth att 18,000 in settlement of their claim, hinery valued . on . bi ed at ® 1,20,000 and paid cash tothe firm? 30,009, ding valu FE ' lisation A/c and Cr.Cash A/c by © 40,000: Hints: (a) Dr Re (b) No Entry. (@) DrCash A/c and Cr.Realisation A/c by € 30,000 1 firm: «. Pass Journal entries for the following atthe time of dissolution ofa a) Sale of Assets—X 50,000. (b) Payment of Liabilities—€ 10,000. ) A commission of 5% allowed to Mr.X, a pal Realisation expenses amounted to X 15,000.The up to ® 10,000. : , 7Z an old customer, whose account for € 6,000 was writen off as bad in the previous year, paid 60%, rtner, on sale of assets. ‘i frm had agreed with Amrit,a partner,to reimburse| the amount written off, {#)_ Investment (Book Value € 10,000) realised at 150%. 7. Pass Journal entries fr the following transactions atthe time of dissolution of the firm: (e) Loan of 10,000 advanced by a partner to the firm was refunded, (b) Xa partner takes over an unrecorded asset (Typewriter) at € 300. (o) Undistributed balance (Debit) of Profit and Loss Account & 30,000. The firm has three partners X,Yand (@) Assets ofthe firm realised & 1,25,000, : (e) Ywho undertakes to carry out the dissolution proceedings is paid ® 2,000 for the same. (f), Creditors are paid € 28,000 in full settlement of their account of € 30,000. (Delhi, A Foreign 2 8. Pass necessary Journal entries for the following transactions on the dissolution of the firm of P and Q after the various assets (other than cash) and outside liabilities have been transferred to Realisation Account: (a) Bank Loan & 12,000 was paid. j (b) Stock worth ® 16,000 was taken over by partner Q, (0) Partner paid a creditor 4,000. (4) An asset not appearing in the books of accounts realised & 1,200, (e) Expenses of realisation ® 2,000 were paid by partner Q. (A) Profit on realisation % 36,000 was distributed between Pand Qin 5 :4 ratio. (ethiz011) 9. XYand Zare partners in a firm sharing profits in the ratio of 3:2: 1 respectively. The firm was disso ‘on Ist March, 2013, After transferring assets (other than cash) and third party liabil R a P liabilities to ee Account’ you are provided with the following information: Pe me (2) There was a balance of € 18,000 in the firm's Profit and Loss Account. (b) There was an unrecorded bike of € 50,000 which was taken over by X, (0) Creditors of 5,000 were paid & 4,000 in full settlement of accounts. 3 Pass necessary Journal entries for the above at the time of dissolution of firm. (Delhi 2013.9 "0. Pass necessary Journal entries to record the following unrecorded assets and liabilities in the books of (b) Ashishan ae orate aman some! whose account for 1,000 was written off as bad in the previous year pald Scanned with CamScanner Or.Cash/Bank A/c and Ct. Realisation Ave by ® 3,000, Or. Cash/Bank A/c and Cr Realisation A/e by ® 600, (@) Or. Paras's Capital A/c and Cr. Realisation A/c by ® 30,000, (d)_Or.Priyals Capital A/c and Cr. Realisation A/e by ® 360, (e) Or Paras's Capital A/c and Priya's Capital A/c by ® 300 each, Cr. Realisation A/c by % 600) ‘Aman and Harsh were partners in a firm. They decided to dissolve thelr firm. Pass necessary Journal entries for the following after various assets (other than Cash and Bank) and third party liabilities have beer rransferred to Realisation Account: {a) There was furniture worth 50,000, Aman took over 50% of the furniture at 10% discount and the remaining furniture was sold at 30% profit on book value. {p) Profitand Loss Account was showing a credit balance of 15,000 on the date of dissolution. {o. Harsh’s loan of & 6,000 was discharged at & 6,200, (6) Thefirmpaidrealisation expenses amounting to 5,000 on behalf of Harsh who had to bear these expenses. {@) There was a bill for 1,200 under discount. The bill was received from Soham who proved insolvent anc a first and final dividend of 25% was received from his estate. {f) Creditors,to whom the firm owed ® 6,000, accepted stock of? 5,000 at a discount of 3% and the balance ‘incash. Rohit, Kunal and Sarthak are 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 ability have been transferred to Realisation Account: (a) Kunal agreed to pay off his wife's loan of € 6,000, {) Total Creditors ofthe firm were ® 40,000.Creditors worth ¥ 10,000 were given a piece of furniture costing 78,000 in full and final settlement. Remaining Creditors allowed a discount of 10%, {@) Rohit had given a loan of & 70,000 to the firm which was duly paid, (@) Amachine which was not recorded in the books was taken over by Kunal at & 3,000, whereas its expected value was 5,000, (©) The firm had a debit balance of € 15,000 in the Profit and Loss Account on the date of dissolution, ff) Sarthak paid the realisation expenses of € 16,000 out of his private funds, who was to get a remuneration of 715,000 for completing dissolution process and was responsible to bear all the realisation expenses. F (Deini 2012 Ihints: (b) Dr. Realisation A/c and Cr. Bank A/c by ® 27/000, e (f) Dr Realisation A/c and Cr Sarthak’s Capital A/c by € 15,000.) Bok Value of assets (other than cash and bank) transferred to Realisation Account js € 1,00,000. 50% of __ the assets are taken over by a partner Atul at a discount of 20%: 40% of the remaining assets are sold at 3 Prot of 30% on cost; 59 of the balance being obsolete, realised nothing and remaining assets are handed ver to a Creditor, in full settlernent of his claim. _ You are required to record the Journal entries for realisation of assets. dian Scanned with CamScanner 7.54 Double Ent «Ave by € 1,00,000 10,000) - 20% of oxetsation Ave ana Cx Sunaty Asets NEDYY L200 esqi100 x € 10 ,! (Hints: Atul’s C2 ind Cr. Realisation at | Fo 10% of f 20,000). 50,00 . 1% of & 50,000) + 3 ‘ j Bont ic and Cr Realization Ae by & 26,000 (40% of SOOT eg remaining assets : will be passed for 5% of remaining as handed over to a creditor in full settlement} « their frm wes dlssohes ail i, 201 ; oT or pation Aecount, youare given the pal were partnersina firm sharing profits inthe ratio of 347.0 ig prvals 1g assets (other than cash) and outsider’ I : brary, 0 17 5,00,000 and paid to the frm & 1,40/000, ‘creditor of 3,60,000 accepted machinery valued at 5,00000 an PAE TE i, TE ond for € 50, ted stock at % 45,000 in ful orth © 43,000 Oe ior amounting to S070 accepted € 45,000 n cash and investmerts W 4 full settlement of his claim, é) Loss on dissolution was ® 15,000. ing that all ¢ Pass necessary Journal entries for the above transactions in the books of firm assuming th: a | ( were made by cheque. (Hints: (a) Dr. Bank A/c and Cr. Realisation A/c by & 1,40,000. (b) No entry] 4 } 15. Pass the Journal entries for the following transactions on the dissolution of the firm te and Oates various assets (other than cash) and outside liabilities have been transferred to Realisation Account: (a) Stock 2,00,000. took over 50% of stock at a discount of 10%. Remaining stock was sold at a profit of 25% on cost. (b) Debtors % 2,25,000. Provision for Doubtful Debts ® 25,000. 20,000 of the book debts proved bad. {) Land and Building (Book value 7 12,50,000) sold for % 15,00,000 through a broker who charged 2% commission. (d) Machinery (Book value ® 6,00,000) was handed over to a creditor at a discount of 10%. (e) Investment (Book value 2 60,000) realised at 125%. (f) Goodwill of € 75,000 and prepaid fire insurance of 10,000. (g)_ There was an old furniture in the firm which had been written off completely in the books.This was sold for® 10,000. (h) Z’an old customer whose account for & 20,000 was written off as bad in the previous year, paid 60%, (i) ‘P’ undertook to pay Mrs. P’s loan of 50,000. Trade creditors 1,60,000. Half ofthe trade creditors accepted Plant and Machinery at an agreed valuation’ of 54/000 and cash in full settlement of their claims after allowing a discount of & 16,000. Remaining trade creditors were paid 90% in final settlement. 4 (Hints: _(f) For Goodwill,no Journal entry assuming that goodwill has not realised anything. For prepaid fire insurance, no Journal entry because it is not realised at all, @ ( Dr.Realisation A/c and Cr. Bank A/c by % 10,000. (il) Dr-Realisation A/c and Cr. Bank A/c by % 72,000] 4 16, ve ee Beer be passed for discharge of following unrecorded liabilities on the dissolution of partners A and B: (a) There was a contingent liabili lity in respect of bills discounted but not matured of € 18,500. An acceptor of one bill of & 2,500 became insolvent and fifty paise in a Tupee was recovered. The liability of the firm F ons ‘2ccount of this bill discounted and dishonoured has not so far been recorded. 3 Fegab 2 contingent liability in respect of a claim for damages for & 75,000, such liability was settled é be aed paid by the partner A. be - (9) Firm to pay 10,000as compensation to an in i re aoe pensation to an injured employee, which was a contingent liability, (3) € 5,000 for damages claimed by a customer has been settled at 70% by 2 comes has been disputed by the firm. It was at 70% by (Hints: (@) (Dr Realisation ; “ . Gi) Drweayation Ac and Cr Bank Ac by & 2.500. and Cr. Realisation A/c by 1,250. Scanned with CamScanner OO Chapter 7. Dissolution of a Partnership FIT” 7.55 pps necessary Joural ents on the dissolution of afm inthe following cases ; FONE ee pat aah eattion expenses. Disoltion expenses € 11,000 were Pak’ by Oharar Irene ;PPOInted to look after the process of dissolution and was allowed 2TETUNEL 1'¢ 15,000. Jay agreed to bear dissolution expenses. Actual di Mow 16,000 were Pad by viay. another partner on behalf of Jay. ual dissolution expenses atiowed 4 he was Deepa, @ partner, was to look after the process of dissolution and for this work 3 fon expense remuneration of % 7,000. Deepa agree oluti Dev.a partner, agreed to do the work of dissolution for & 7,500. He took away st as his commission. The stock had already been transferred to Realisation Account Jeev, a partner, agreed to do the work of dissolution for which he was allowed 7 10.000. He agreed to bear the dissolution expenses. Actual dissolution expenses Pa! £12,000. These expenses were paid by Jeev by drawing cash from the firm. a debtor of & 8,000 already transferred to Realisation Account agreed to pay the realisatio fof 7,800 in full settlement of his account. suints: (2). Dr.Realisation A/c and Cr, Dharams Capital A/c by & 12,000. (©) (@_ Dr.Realisation A/c and Cr. Jay's Capital A/c by ® 15,000. (ii) Dr-Jay’s Capital A/c and Cr.Vijay's Capital A/c by ® 16,000. (0 (@ Dr.Realisation A/c and Cr. Deepa’s Capital A/c by ® 7,000. (ii) Dr.Deepe's Capital A/c and Cr. Bank A/c by & 6,000. (@)_() Dr-Realisation A/c and Cr. Dev's Capital A/c by & 7,500. (ii). Dr.Dev's Capital A/c and Cr. Realisation A/c by ® 7,500. Or No Entry. (e) (i) Dr-Realisation A/c and Cr.Jeev's Capital A/c by € 10,000. (ii) Dr Jeev’s Capital A/c and Cr. Cash A/c by & 12,000. (f) No Entry) Aigisation Account 18. Ramesh and Umesh were partners! ina firm shar rock of the same amount commission of jid by Jeev were expenses (Dethi 20171 1013, rng profits in the ratio oftheir capitals.On 31st March, 2 _—_their Balance Sheet was as follows: libites x Assets t Geditors 7,70,000 | Bank cad ‘Compensation Reserve le ee ral Reserve 2,00, fameshis Current Account £80,000 Jace Gopal Alcs: ichinery famesh 7,00,000 Umesh's Current Account ‘Umesh 3,00,000 | 10,00,000 is solved. On the above date the firm was dISOUE | 9 ss than book value The remaining stock was sold ata loss (2) Ramesh took over 50% of st0e! ‘od ata discount of 5% oy ee ea ream 5 000 an machney was ofr € 450.000, i (0. Creditors were paid in ull (@) There was an unrecorded bill for TF 01g Prepare Realisation Account. {Ans.: Loss on Realisation—X 8,07,000.) sna fam sharing profits and losses inthe ratio of 3:2.They decided to Pradeep and Rajesh were pares ary 2018. ade was deputed to elie the aise a0 pay Sse thr parmersiP goo connision fi his services. The financial position of the firm on ie liabilities. f 31st March, 2018 was as follows: pairs for 1,60,000 which was settled at 1 40,000, Scanned with CamScanner BALANCE SHEET as at 31st March, 2018 Uabilities zt Assets 5 180,000 | Building | 1309000 40,000 | Investment | 30600 24900 | Debtors 34,000 | 8000 | Less: Provision for Doubtful Debts _4000 | 30000 | Bills Receivable | 37400 42,000 | Bank | 60004 42.000 | 84,900 | Proftand Loss Mc 8000 | Goodwill 4000 236,000 236000 | ——__ = baaeeee Following terms and conditions were agreed upon: (2) Pradeep agreed to pay off his wifes loan, (©) Half ofthe debtors realised & 12,000 and remaining debtors were used to pay off 25% of the creditors. (6) Investment sold to Rajesh for & 27,000, (d) Building realised 1,52,000, (s)_ Remaining creditors were to be paid after two months,they were paid immediately at 10% p.a.discount. (f) Bill receivables were settled at a loss of & 1,400, (g)_ Realisation expenses amounted to & 2,500. Prepare Realisation Account. (CBSE Sample Question Paper 2018-19) [Ans.: Realisation Gain—8 30,500; Payment to Creditors—R 59,000), ion Account, Partners’ Capital Accounts and Bank/Cash Account 20. Balance Sheet of a firm as at 31st March, 2019, when it was decided to dissolve the same, was: Liabilities = | Assets Ls Sundry Creditors s) 14000 | Cash at Bank | HO General Reserve Sia | 500 | Stock Capital A/cs: Debtors x 4,000 Machinery y 3,000 | 7,000 | 21,500 © 19,500 were realised from all assets except Cash at Bank. The cost of winding up came to © 440. Xand ¥ shared profits in the ratio of 2:1 respectively. Prepare Realisation Account and Capital Accounts of Partners, {Ans.: oss on Realisation—X 1,800; Cash paid to X and Y 3,133 and 2,567 3 Total of Bank Account—X 20,140) 21. Achal and Vichal were partners in a firm sharing profits in the ratio of 3 :5.On 31st March,2019, their Balance ‘Sheet was as follows: Labiities lon ae Assets Capital Alcs: as "| Land and Building Achal 3,00,000 Machinery Vichal % 5,00,000 | 8,00,000 | Debtors Creditors ~~) 1,79,000 | Cash at Bank tmployees'ProvidentFund 2,000 bo 10,00,000 Jomo e ‘The frm was clssolved on Tst Apri, 2019 and the Assets and Lables were settled as follows: (2) Land and Building realised €4,30,000, it . (©) Pebrors realised 2.25000 with interest) and 1,000 were recovered for Bad Debts witenoflast Scanned with CamScanner << Chapter7. Dissolution ofa Partnership Firm 7-57 [© chal took over Machine ines Sid 4 0% of the Creditors ae, ae can F © fattamoune 1000 less nfl settlement and the remaining Creditors were Paid | sary Journal e oss necessary tties for dissoluti ion of the frm, : (912012, Modified) gale and Yale are equal partners ofa fim, - ich date thelr Balance Sheet stood as. ey decide to dissolve their partnership on 31st March, 2019 at Se Assets pics a sons Building $ Machit 40,000 Heid ral Reserve cet aA RIE 8,000 | Debtors és 3,000 | Stock ors 14000 | Bank re) Fa The assets realised were: | ‘stock € 22,000; Debtors % 7,500; Machinery % 16,000; Building f 35,000. {p) Yale took over the Furiture at% 9,000, nA (@) Bale agreed to accept & 2,500 in full settlement of his Loan Account. {@) Dissolution Expenses amounted to® 2,500, Prepare the: ()) Realisation Account; (i) Capital Accounts of Partners; (il) Bale's Loan Account; (iv) Bank Account. [Ans.:.Loss on Realisation 16,500; Amount Paid to Bale—X 45,750; Yale— 26,750. Total of Bank Account—X 91,500.) 1. Shilpa, Meena and Nanda decided to dissolve their partnership on 31st March, 2019. Their profit-sharing ratio was 3 :2:1 and their Balance Sheet was as under: BALANCE SHEET OF SHILPA, MEENA AND NANDA. ‘ason 31st March 2019 t | Assets x pial aa ae 80000 Stock 56,760 1.20000 } Debtors 18,600 Risa 00000 | Nanda Capital 23,000 37000 | Cash 10840 sion for Doubtful Debts dt ral Reserve ue 190200 Itis agreed as follows: taken over by shilpa for 35,000 and she agreed to discharge bank loan The stock of value of € 41,560 6 9H rors amounting 0 10:000 realised & 6000. Land is sold The remaining stock was sold at their book value. C i realised 50% at 1¢. Cost of realisation amounted to fer 110000.The remaiping debtor® Trt in the books worth of € 6,000 which were taken over by one 200fThere was a Bae Realsation Account Partners Capital Accounts, and CasW Account to” : SE (NCERT, Modified) lose the nae . . tionX 20,940; Final Payments: Shilpa 81,470; Meena— 50,980; TAns.: Gain (Profit) Ike ‘brought in by Nanda—X 17,510, Total of Cash Account—R 164,650} Scanned with CamScanner 7.58 Double Entry Book Keeping —CBSE Xi 24. Aand Bare partners in a firm sharing profits and losses in the ratio of 3:2.0n 31st March, 2019, their Sheet wae as follows BALANCE SHEET os ot 31st Monch, 2019 Liabitines t creditors 38000 Mrs. A's Loan 10,000 Bs toan 15,000 Reserve 5000 A's Capital 10,000 B's Capital 800018000 Assets Cash at Bank Stock Debtors Furniture Plant Investments Profit arid Loss A/e Looe ‘The firm was dissolved on 31st March, 2019 and both the partners agreed to the following: 48) Atook investments at an agreed value of & 8,000. He also agreed to settle Mrs.A’s Loan. (b) Other assets realised as: Stock—t 5,000; Debtors—€ 18,500; Furniture—X 4,500; Plant—R 25,000. {Q) Expenses of realisation came to € 1,600. (d) Creditors agreed to accept € 37,000 in full settlement of their claims. Prepare Realisation Account, Partners’ Capital Accounts and Bank Account. (CERT, [Ans.: Loss on Realisation— 6,600; to be paid— 6,540; 8 to be paid—. 25. Balance Sheet of P,Q and R as at 31st March, 2019, who were sharing profits in the ratio of 5:3 : Total of Bank Account—% The partners dissolved the business. Assets realised—Stock % 23,400; Debtors 50%; Fixed Assets than their book value. Bills Payable were settled for € 32,000. There was an Outstanding Bill of Elec 7 800 which was paid off. Realisation expenses T 1,250 were also paid. Prepare Realisation Account, Partners’ Capital Accounts and Bank Account. 3 (Ans.:Loss on Realisation—X 16,650; Amount Payable to P—X 39,750;Q—% 334 26, Vinod, Vijay and Venkat are partners sharing profits and losses in the ratio of 3:2: 1. They: dissolve their firm on 31st March, 2019, the date on which their Balance Sheet stood as: f editors Bills Payable R—X 19,150; Total of Bank Account—X Scanned with CamScanner a hapter 7. Dissolution of a PartnershiP ne following additional information is g ia) The Investments are taken by re sets realised Mined fr 88,000 oo Assets rea as follows: \n settlement of his loan Stoc! 3 Debtors 17500 Fumiture ro Machinery = (@) Expenses on realisation amounted to & 2,000, jose the books of the firm giving relevant edger Ae (Ans.:Loss on pital A/S: aed eee ee 300 ’ 37,550 ps 450 e 15,000 52,550 | R's Capital Alc Plant and Machinery 70,750 Piook over Investments for & 12,500. Stock and Debtors realised & 11,500. Plant ‘and Machinery were sold to Qfor & 22,500 for cash. Unrecorded assets realised 1,500 Realisation expenses paid amounted to % 900. Prepare necessary Ledger Accounts to close the books of the firm. {Ans.:Loss on Realisation— 6,550; Cash paid to P—% 22.775 and QR 13,035; ash brought in by RX 9,310. Total ‘of Cash Account— 50,410.) 28, Ashu and Harish are partners sharing profit and losses as 3 :2. They decided to dissolve the frm on 31st March, 2019. Their Balance Sheet on the above date wa Leabilties z Assets z Building 70,000 Capital Ales: ae +,08,000 Machinery | 1462000 | Furniture | 14000 fash 54,000 ed a’ | “ga.000 | Stock 20,000 De 50,000 | Investments 60,000 Bank Overdraft ae 48000 Cashin Hand ‘00 = aachnery and Furniture shen over by Harsh a ale Ashuis to take over the Duldng are Hh agreed to meet Bank overdraft stockand investors ‘of 80,000, Ashu agreed t0 P2Y hn atrors realized for € 46,000, expense of realisation in profs te (NCERT, Modified) are taken by both partner Ledger Accounts: amounted to & 3,000Prepare ae er on nal Payment shu—X 56600 Amount bows n by {ans.: Gain (Profit 07 Harish 5,600; Total of Cash Account — 59,600) Scanned with CamScanner 7.60 Double Entry Book Keeping—CBSE XII 29. A,B and C were equal partners. On 31st March, 2019, their Balance Sheet stood as Liabilities ] z asews : oo Creditors | S000 | cash Reserve 12,000 | Stock Capital A/cs Debtors A 40000 | I Lksan toa 8 25,000 Investments c 15,000 80,000 | Furniture Building ‘The firm was dissolved on the above date on the following terms: (a) For the purpose of dissolution, Investments were valued at € 18,000 and A took over the Investments at this value, (b) Fixed! Assets realised % 29,700 whereas Stock and Debtors realised € 80,000. j (c)_ Expenses of realisation amounted to 1,300. a (d) Creditors allowed a discount of € 800. £2}. One Bill Receivable for 8 1,500 under discount was dishonoured as the acceptor had become inst and was unable to pay anything and hence the bill had to be met by the firm. Prepare Realisation Account, Partners’ Capital Accounts and Cash Account showing how the accour would finally be settled among the partners. (Ans.:Loss on Realisation — 3,000; Cash paid to A, B and CX 25,000; 28,000; 18,000 respectively. Total of Cash Account—R 1,23,400] Yogesh and Naresh were partners sharing profits equally. They dissolved the firm on 1st April, 2019. Naresh was assigned the responsibility to realise the assets and pay the liabilities at a remuneration of € 10,000 including expenses. Balance Sheet of the firm as on that date was as follows: : Liabilities z 30, _| Assets Creditors 40,000 | CashvBank Bills Payable 40,000 | investments Naresh’ Loan 44000 | Debtors 40,000 Mrs. Yogesh’s Loan 42,000 | Less: Provision for Doubtful Debts 4,000 Investment Fluctuation Reserve 8,000 | Bills Receivable Capital Alcs Profit and Loss A/c Yogesh, 21,000 Naresh 21,000 | 42,000 2,16,000 The firm was dissolved on following terms: (a) Yogesh was to pay his wife's loan, (b) Debtors realised % 30,000. (0) Naresh was to take investments at an agreed value of & 26,000, oe and Bills Payable were payable after two months but were paid immediately ata disco ol Pa, (©) Bills Receivable were received allowing 5% rebate. & Debtor previously written off as Bad Debt paid 15,000, 9) An unrecorded asset realised % 10,000. Scanned with CamScanner ak ch gard C2" ARE shatog prof BPE? Disoltion of a Partnership Firm 7.61 Don a eee een ey decide te S and losse, : 2 i Or sented bythe following Balang Alssolve the parmneane eoportions of 1/2,1/3 and 1/6 respectively 2 Sheet: iP and the position of the firm on this date 's ee Wo é : Pe Cash at Bank nen compensation Reserve Suny Debtors ec Land and Building Profit and Loss A/c Advertisement Suspense A/c 181,000 During a course of realisation, a liability under a suit fo i 25000 only provided for in the books of the fm.) r damages is settled at Z 20,000 as against Land and Building were sold for & 40,000 £4,000 respectively. The expenses of Mien ae ae a ro Debtors realised % 30,000 and There was a car in the firm, which was compl it * letely written off from th Heals agreed to pay Outstanding Slay of 20000notproidedinbooks, oa Prepare Realisation Account, Partners’ Capital Accounts and Bank Account in the books of the firm. [Ans.: Loss on Realisation—% 61,200; Cash paid to A—% 29,400; BR 19,600; Cash brought in by C—X 200. Total of Bank Account—¥ 1,15,200.) [Hint: Payment to creditors—¥ 55,000, ie, € 40,000 + & 15,000.) 32, Aand B are partners in a firm sharing profits and losses in the ratio of 2: 1.On 31st March, 2019, their Balance Sheet was: abies @ | Assets z dank Overdraft 30,000 | Cashin Hand | 6000 General Reserve 56,000 | BankBalance | 10,000 inestments Fluctuation Reserve 20,000 | Sundry Debtors 26,000 Asloan 34,000 | Less: Provision for Copal A/c: Doubtful Debts __2900 | 24,000 4 50,000 | Investments 40,000 Stock 10,000 Furniture | 10.000 Building | 60,000 B's Capital |__ 30.000 1,90,000 1,90,000 Saar abie the par deride to aisle he fm A took over Investments at an agreed valuation of iat date, the pal " _ 735,000. Other assets were realised as follows: os ‘indi bebrées eo mrorenegeTN arn se Value. Building was sold at & 1 Compensation to employees Paid the above Balance Sheet. lisation Ac Partners'Capital Accounts arn by preparing Realisation Account, Partners Cap You are required to close the books te Gain (Profit) on Realisation—X 43,500; Payment toA— 81,333; and Bank Account. B— 3,167; Total of Bank Account—X 1,58,500.] ‘at 1596 ess and Furniture at 20% less than the book ihe firm amounted to © 10,000. This liability was not provided for in Scanned with CamScanner 7.62 Double Entry Book Keeping—CRSE Xil 33. Ashok, Babu and Chetan are in partnership sharing profit in the proportion of 1/2,1/3, 1/6 respectively. They dissolve the partnership of the 31st March, 2019 when the Balance Sheet of the firm as under: Liabiles t Assets Sundry Creditors 20,000 | Bank Bills Payable 25,500 | Sundry Debtors Babu’ Loa 30,000 | stock Capital Aes Machinery Ashok 70,000 Investments Babu 55,000 Freehold Property Chetan 27,000 | —1,52,000 10,000 | 5,000 | | 3.000 | 18,000 245,500 The Machinery was taken over by Babu for & 45,000, Ashok took over the Investment for & 40,000 and. Freehold property took over by Chetan at 55,000. The remaining Assets realised as follows: Sundry Debtors € 56,500 and Stock & 36,500. Sundry Creditors were settled at discount of 7%. A Office computer, not shown in the books of accounts realised % 9,000, Realisation expenses amounted to % 3,000, Prepare Realisation Account, Partners’ Capital Accounts and Bank Account, (NCERT, Modified) {Ans.: Gain (Profit) on Realisation—X 2,400; Final Payments: Ashok 41,200; Babu—® 15,800, ‘Amount brought in by Chetan— 24,600; Total of Bank Account 134,100} 34. % and Z carrying on business as merchants and sharing profits and losses in the ratio of 2:2: 1, dissolved their firm as at 31st March, 2019 on which date their Balance Sheet was as follows: Liabilities ee oe Assets S Sundry Creditors 41500 | Cash at Bank 22500 Bills Payable 20,000 | Stock 80,000 ~Bank Loan 40,000 | Debtors 50,000 General Reserve 50,000 | Les: Provision for Doubtful Debts 2500 | 47500, Investments Fluctuation Reserve 40,000 | Investments 55,000 Capital Alcs: L Premises 1951500 x 75,000 # y 75,000 z 15,000| _1,65,000 z 3,56,500 336500 A bill for & 5,000 received from Mohan discounted from banks not met on maturity. The assets except Cash at Bank and Investments were sold toa ‘company which paid & 3,25,000 in cash.The Investments were sold and % 56,500 were received, Mohan proved insolvent and a dividend of 50% was _ ‘Reelved from his estate. Sundry Creditors (including Bills Payable) were paid & 57,500 in full settlement. Realisation Expenses amounted to & 15,000, Prepare Realisation Account, Partners‘ Capital Accounts ‘and Bank Account, 7 (Ans.: Gain (Profit) on Realisation—X 74,000; Final Payment: X—8 124,600; Y—X 1,24,600;2— 39,800; Total of Bank Account—X 4,06 500) Scanned with CamScanner 4s April, 2079, the Balanc a and Sobha are partners in a firm, Fancy Garments € of the firm was: Chapter 7 - Dis: lution of a Partnership F ports, sharing profits wn 7:63 and losses equally. On t Assets eR t feeatiors 750000 | Cash 6,000 al 30,000 | Bank 30,000 jloan 15,000 | Stock 75,000 24,000 |, Book Debts 66,000 Nes: Less: Provision for nm Doubtful Debts 6000 «0,000 30,000 | 1.20000 | Plant and Machinery 45,000 { Land and Building 48,000 | 2,64,000 164,000 The frm was dissolved on the date given above. The following transactions took place: {a} Fita took 25% of the Stock ata discount of 20% in settlement of her loan. Ib) Book Debts realised ® 54,000; balance of the Stock was sold ata profit of 30% on cost. J¢) Sundry Creditors were paid out at a discount of 10%. ills Payable were paid in ful. {¢) Plant and Machinery realised & 75,000, Land and Building ® 1,20,000, {e) Rita took the goodwill of the firm at a value of & 30,000“ {f) Anunrecorded asset of 6,900 was handed over to an unrecorded liability of € 6,000 in full sersiemen: {g) Realisation expenses were & 5,250. Show Realisation Account, Partners’ Capital Accounts and Bank Account in the books of the frrm [Ans.: Gain (Profit) on Realisation— 1,41,375; Amount paid fo Rita 142,688; Sobha—X 1, 12,687; Total of Bank Account—® 3,58, | 25. 1019: Following is the Balance Sheet of Arvind and Balbir as at 31st March, 2 Assets Cash Bank Stock Investments Book Debts Less: Provision for Doubtful Debts Building Plant Goodwill Profit and Loss A/c The The above date under the following arrangement: ‘a) Co aa ‘Arvind's Loan and took Stock at ® 6,000, (b) Balbir took half the investments @ 10% discount 3 £28,500. (a) Sone Re Bills Payable were due on average basis of one month after 31st March, bur were pald immediately on 818% March @ 2% cseoirn Pat {€) Plant realised & 37,500; Bullding £60,000; Goodwill ® 9,000 and remaining Investments & 6,750. .n off completely from the firm's books, now estimated to realise () An old typewriter, weitte 450. it wes taken by Balbir at this estimated Price (9) Realisation expenses were & 1,500: SB co Aca, cont agcoures of oer and BK Ascott: : tans. Gain (Profit) on Realsation—X 47,045; Total of Bank Account—X 154,500) Scanned with CamScanner 7.64 Double Entry Book Keeping—CBSE Xi cia 4 st March, 201g Me id Si partners in a firm sharing profits in the ratio of 2:2:1.0n 1 2011 37. Anju, Manju and Sanju were partners ina fin their Balance Sheet was: ae se ne Assets fae eee | 50000 | cash Creditors « Bank Loon 35000 | Debtors a Employees Provident Fund | 15000 | stock Investments Fluctuation Reserve | 10,000 | Investment 6 ‘Commission Received in Advance: 8,000 | Plant Capital A/cs; | Profit and Loss A/c Anju 5000 Manju 50,000 Sanju 30,000 1,30,000 k ‘On this date, the firm was dissolved, Anju was appointed to realise the assets. Anju was to receive commission on the sale of assets (except cash) and was to bear all expenses of realisation 4 Anju realised the assets as follows: Debtors % 60,000; Stock 35,500; Investments % 16,000; Plant 90% off book value. Expenses of Realisation amounted to & 7,500. Commission received in advance was to customers after deducting & 3,000. Firm had to pay € 8,500 for Outstanding Salary, not provided for earlier. Compensation paid to employees amounted to € 17,000. This liability was not provided for in the above Balance Sheet. € 20,000 had to be paid for Employees’ Provident Fund. Prepare Realisation Account, Capital Accounts of Partners and Cash Account. Ans. Loss on Realisation—¥ 53,825 (being Anju’s share—X 21,530; Manjuls share—% 21, and Sanju’s share— 10,765), Final Payments: Anju—X 35,095; Manju 27,2 and Sanju 18,635; Total of Cash Account 2,16; 38. 4 Band C were in partnership sharing profits in the ratio of 7:2:1 and the Balance Sheet of the firm as. 31st March, 2019 was: Liabilities T | Assets = Capital A/cs: A 12410 31, 8 8,650 : e 80,620 Creditors Reserve for Depreciation on Plant V 't was agreed to dissolve the partnership as on 31st March, 2019 and the terns dlasohsilon Wea 3 0 take over the Building at an agreed amount of 831,500, lah ie 5, who was to carry on the business, to take over the G Debtors at book cod, Stock Patents at 30.00 and Plant at 500. He was also to pay the Creditors Mere ae 4 Cto take over shares in X Ltd at €15 each, be OF The shares in Y Ltd. to be vided in the profit-sharing ratio, ow tedlger Accounts recording the dissolution in the books a on Realisation —& : eae: elle eh —£3700:A brings in" 28660;8 brngsin—¥ 47,86 Scanned with CamScanner hapter7 Dissolution of a Partnership Fir” oe 1,0n aman and Manan were a part 2 yarch, 2017 their Balance Sheet yee

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