Double Entry Book Keeping Ts Grewal Vol I 2018 Solutions for Class 12 Commerce Accountancy Chapter 6 Dissolution Of A Partnership Firm are provided here with simple step-by-step explanations. These solutions for Dissolution Of A Partnership Firm are extremely popular among Class 12 Commerce students for Accountancy Dissolution Of A Partnership Firm Solutions come handy for quickly completing your homework and preparing for exams. All questions and answers from the Double Entry Book Keeping Ts Grewal Vol I 2018 Book of Class 12 Commerce Accountancy Chapter 6 are provided here for you for free. You will also love the ad-free experience on Meritnation’s Double Entry Book Keeping Ts Grewal Vol I 2018 Solutions. All Double Entry Book Keeping Ts Grewal Vol I 2018 Solutions for class Class 12 Commerce Accountancy are prepared by experts and are 100% accurate.
Page No 6.51:
Question 1:
Pass Journal entries in the following cases?
(a) Expenses of realisation ₹ 1,500.
(b) Expenses of realisation ₹ 600 but paid by Mohan, a partner.
(c) 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.
Answer:
Journal |
|||||
S.N. |
Particulars |
L.F. |
Debits Amount Rs |
Credit Amount Rs |
|
(a) |
Realisation A/c |
Dr. |
|
1,500 |
|
To Cash A/c |
|
|
1,500 |
||
(Realisation expenses paid) |
|
|
|
||
|
|
|
|
|
|
(b) |
Realisation A/c |
Dr. |
|
600 |
|
To Mohan’s Capital A/c |
|
|
600 |
||
(Realisation expenses paid by Mohan) |
|
|
|
||
|
|
|
|
|
|
(c) |
Realisation A/c |
Dr. |
|
2,000 |
|
To Mohan’s capital A/c |
|
|
2,000 |
||
(Commission allowed to Mohan on dissolution of the firm) |
|
|
|
||
|
|
|
|
|
|
(d) |
No entry No journal entry is passed because both motor car and creditors accounts have already been transferred to Realisation Account and nothing is recovered or paid in terms of Cash and Bank |
|
|
|
Page No 6.51:
Question 2:
Pass Journal entries for the following:
(a) Realisation expenses of ₹ 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.
(c) Anuj, a partner, was paid remuneration of ₹ 20,000 and he was to meet all expenses. Firm paid an expense of ₹ 5,000.
Answer:
Journal | |||||
S.N. |
Particulars |
L.F. |
Debits Amount Rs |
Credit Amount Rs |
|
(a) |
Rahul’s Capital A/c |
Dr. |
|
15,000 |
|
To Cash A/c |
|
|
|
||
(Realisation Expenses paid by Rahul ) |
|
|
15,000 |
||
|
|
|
|
|
|
(b) |
Realisation A/c |
Dr. |
|
25,000 |
|
To Ramesh’s Capital A/c |
|
|
25,000 |
||
(Remuneration allowed to Ramesh on account of taking responsibility of dissolution) |
|
|
|
||
|
|
|
|
|
|
(c) |
Realisation A/c |
Dr. |
|
20,000 |
|
To Anuj’s Capital A/c |
|
|
20,000 |
||
|
|
|
|
||
|
( Remuneration allowed to Anuj) |
|
|
|
|
|
|
|
|
|
|
Anuj’s Capital A/c Dr. |
|
5,000 |
|
||
To Bank A/c |
|
|
5,000 |
||
(Realisation expenses paid by the firm |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
Page No 6.51:
Question 3:
Pass Journal entries for the following:
(a) Realisation expenses amounted to ₹ 10,000 were paid by the firm on behalf of Alok, a partner, with whom it was agreed at ₹ 7,500.
(b) Realisation expenses amounted to ₹ 5,000. It was agreed that the firm will pay ₹ 2,000 and balance by Ravinder, a partner.
(c) Dissolution expenses amounted to ₹ 10,000 were paid by Amit, a partner, on behalf of the firm.
Answer:
|
Journal |
||||
S.N. |
Particulars |
L.F. |
Debits Amount Rs |
Credit Amount Rs |
|
(a) |
Realisation A/c |
Dr. |
|
7,500 |
|
To Alok’s Capital A/c |
|
|
7,500 |
||
(Remuneration allowed to Alok) |
|
|
|
||
Alok’s capital A/c |
Dr. |
|
10,000 |
|
|
To Bank A/c |
|
|
10,000 |
||
(Expenses paid by the firm on behalf of Alok) |
|
|
|
||
Alternatively, only one single entry can also be passed instead of above two entries. |
|
|
|
||
Realisation A/c |
Dr. |
|
7,500 |
|
|
Alok’s Capital A/c |
Dr. |
|
2,500 |
|
|
To Bank A/c |
|
|
10,000 |
||
(Realisation expenses paid) |
|
|
|
||
|
|
|
|
||
(b) |
Realisation A/c |
Dr. |
|
5,000 |
|
To Ravinder’s Capital A/c |
|
|
|
3,000 |
|
To Bank A/c |
|
|
2,000 |
||
(Realisation expenses paid) |
|
|
|
||
|
|
|
|
||
(c) |
Realisation A/c |
Dr. |
|
10,000 |
|
To Amit’s Capital A/c |
|
|
10,000 |
||
(Realisation expenses paid by Amit on behalf of the firm) |
|
|
|
Page No 6.52:
Question 4:
Record necessary Journal entries in the following cases:
(a) Creditors worth ₹ 85,000 accepted ₹ 40,000 as cash and Investment worth ₹ 43,000, in full settlement of their claim.
(b) Creditors were ₹ 16,000. They accepted Machinery valued at ₹ 18,000 in settlement of their claim.
(c) Creditors were ₹ 90,000. They accepted Building valued at ₹ 1,20,000 and paid cash to the firm ₹ 30,000.
Answer:
Journal
|
|||||||
|
Particulars
|
L.F.
|
Amount
(₹)
|
Amount
(₹)
|
|||
(a)
|
Realisation A/c
|
Dr.
|
40,000
|
||||
To Cash A/c
|
40,000
|
||||||
(Creditors worth Rs 85,000 accepted 40,000 as cash and investmentworth Rs 43,000 in full settlement)
|
|||||||
(b)
|
No Entry
|
||||||
(Creditors worth Rs 16,000 accepted Machinery worth Rs 18,000 in fullsettlement. No entry as both asset and liability arealready transferred to the Realisation Account)
|
|||||||
(c)
|
Cash A/c
|
Dr.
|
30,000
|
||||
To Realisation A/c
|
30,000
|
||||||
(Creditors worth Rs 90,000 accepted Building worth Rs 1,20,000 and paid backRs 30,000 as cash after settlement of claim to the firm)
|
Page No 6.52:
Question 5:
Pass Journal entries for the following at the time of dissolution of a firm:
(a) Sale of Assets − ₹ 50,000.
(b) Payment of Liabilities − ₹ 10,000.
(c) A commission of 5% allowed to Mr. X, a partner, on sale of assets.
(d) Realisation expenses amounted to ₹ 15,000. The firm had agreed with Amrit, a partner, to reimburse him up to ₹ 10,000.
(e) Z, an old customer, whose account for ₹ 6,000 was written off as bad in the previous year, paid 60% of the amount written off.
(f) Investment (Book Value ₹ 10,000) realised at 150%.
Answer:
Journal |
|||||
S.N. |
Particulars |
L.F. |
Debits Amount Rs |
Credit Amount Rs |
|
(a) |
Cash A/c |
Dr. |
50,000 |
||
To Realisation A/c |
50,000 |
||||
(Assets realized for cash) |
|||||
(b) |
Realisation A/c |
Dr. |
10,000 |
||
To Cash A/c |
10,000 |
||||
(Payment of liabilities made) |
|||||
(c) |
Realisation A/c |
Dr. |
2,500 |
||
To X’s Capital A/c |
2,500 |
||||
(5% commission allowed to Mr. X’s on sale of assets of Rs 50,000) |
|||||
(d) |
Realisation A/c |
Dr. |
10,000 |
||
To Amrit’s Capital A/c |
10,000 |
||||
(Amrit was allowed remuneration on account of realisation) |
|||||
Amrit’s Capital A/c |
Dr. |
15,000 |
|||
To Cash A/c |
15,000 |
||||
(Realisation expenses paid on behalf of amrit) |
|||||
Alternatively, only one single entry can also be passed instead of above two entries. |
|||||
Realisation A/c |
Dr. |
10,000 |
|||
Amrit’s Capital A/c |
Dr. |
5,000 |
|||
To Cash A/c |
15,000 |
||||
(Realisation expenses paid) |
|||||
(e) |
Cash A/c |
Dr. |
3,600 |
||
To Realisation A/c |
3,600 |
||||
(60% of the Bad debts against Z an old customer now recovered) |
|||||
(f) |
Cash A/c |
Dr. |
15,000 |
||
To Realisation A/c |
15,000 |
||||
(Investments are realised at 150%) |
Page No 6.52:
Question 6:
Pass Journal entries for the following transactions at the time of dissolution of the firm:
(a) Loan of ₹ 10,000 advanced by a partner to the firm was refunded.
(b) X, a partner, takes over an unrecorded asset (Typewriter) at ₹ 300.
(c) Undistributed balance (Debit) of Profit and Loss Account ₹ 30,000. The firm has three partners X,Y and Z.
(d) Assets of the firm realised ₹ 1,25,000.
(e) Y who 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.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
|
|
|
|
a. |
Partner’s Loan A/c |
Dr. |
|
10,000 |
|
|
To Bank A/c |
|
|
|
10,000 |
|
(Loan refunded) |
|
|
|
|
|
|
|
|
|
|
b. |
X’s Capital A/c |
Dr. |
|
300 |
|
|
To Realisation A/c |
|
|
|
300 |
|
(Unrecorded assets took over ) |
|
|
|
|
|
|
|
|
|
|
c. |
X’s Capital A/c |
Dr. |
|
10,000 |
|
|
Y’s Capital A/c |
Dr. |
|
10,000 |
|
|
Z’s Capital A/c |
Dr. |
|
10,000 |
|
|
To Profit & Loss A/c |
|
|
|
30,000 |
|
(Loss distributed) |
|
|
|
|
|
|
|
|
|
|
d. |
Bank A/c |
Dr. |
|
1,25,000 |
|
|
To Realisation A/c |
|
|
|
1,25,000 |
|
(Assets realized) |
|
|
|
|
|
|
|
|
|
|
e. |
Realisation A/c |
Dr. |
|
2,000 |
|
|
To Y’s Capital A/c |
|
|
|
2,000 |
|
(Amount given for dissolution proceedings) |
|
|
|
|
|
|
|
|
|
|
f. |
Realisation A/c |
Dr. |
|
28,000 |
|
|
To Bank A/c |
|
|
|
28,000 |
|
(Creditors paid) |
|
|
|
|
|
|
|
|
|
Page No 6.52:
Question 7:
Pass necessary Journal entries for the following transactions on the dissolution of the firm 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.
(b) Stock worth ₹ 16,000 was taken over by partner Q.
(c) Partner P paid a creditor ₹ 4,000.
(d) An asset not appearing in the books of accounts realised ₹ 1,200.
(e) Expenses of realisation ₹ 2,000 were paid by partner Q.
(f) Profit on realisation ₹ 36,000 was distributed between P and Q in 5 : 4 ratio.
Answer:
|
Journal |
||||
S.N. |
Particulars |
L.F. |
Debits Amount Rs |
Credit Amount Rs |
|
(a) |
Realisation A/c |
Dr. |
|
12,000 |
|
To Bank A/c |
|
|
12,000 |
||
(Bank loan paid at the time of dissolution) |
|
|
|
||
|
|
|
|
||
(b) |
Q’s Capital A/c |
Dr. |
|
16,000 |
|
To Realisation A/c |
|
|
16,000 |
||
(Stock taken over by Q) |
|
|
|
||
|
|
|
|
||
(c) |
Realisation A/c |
Dr. |
|
4,000 |
|
To P’s Capital A/c |
|
|
4,000 |
||
(Creditors paid by P) |
|
|
|
||
|
|
|
|
||
(d) |
Bank A/c |
Dr. |
|
1,200 |
|
To Realisation A/c |
|
|
1,200 |
||
(Unrecorded assets realised) |
|
|
|
||
|
|
|
|
||
(e) |
Realisation A/c |
Dr. |
|
2,000 |
|
To Q’s Capital A/c |
|
|
2,000 |
||
(Realisation expenses paid by Q) |
|
|
|
||
|
|
|
|
||
(f) |
Realisation A/c |
Dr. |
|
36,000 |
|
To P’s Capital A/c |
|
|
20,000 |
||
To Q’s Capital A/c |
|
|
16,000 |
||
(Realisation Profit distributed ) |
|
|
|
Page No 6.52:
Question 8:
X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1 respectively. The firm was dissolved on 1st March, 2013. After transferring assets (other than cash) and third party liabilities to the 'Realisation Account' you are provided with the following information:
(a) 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.
(c) Creditors of ₹ 5,000 were paid ₹ 4,000 in full settlement of accounts.
Pass necessary Journal entries for the above at the time of dissolution of firm.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
|
|
|
|
1. |
Profit and Loss A/c* |
Dr. |
|
18,000 |
|
|
To X’s Capital A/c |
|
|
|
9,000 |
|
To Y’s Capital A/c |
|
|
|
6,000 |
|
To Z’s Capital A/c |
|
|
|
3,000 |
|
(Balance in P&L A/c divided among Partners in the ratio of 3:2:1) |
|
|
|
|
|
|
|
|
|
|
2. |
X’s Capital A/c |
Dr. |
|
50,000 |
|
|
To Realisation A/c |
|
|
|
50,000 |
|
(An unrecorded asset taken over by X) |
|
|
|
|
|
|
|
|
|
|
3. |
Realisation A/c |
Dr. |
|
4,000 |
|
|
To Bank A/c |
|
|
|
4,000 |
|
(Creditors were paid Rs 4,000 in full settlement |
|
|
|
|
|
of their claim of Rs 5,000) |
|
|
|
|
|
|
|
|
|
|
*Balance in Profit and Loss A/c always mean positive balance i.e. credit balance.
Page No 6.52:
Question 9:
Pass necessary Journal entries to record the following unrecorded assets and liabilities in the books of Paras and Priya:
(a) There was an old furniture in the firm which had been written off completely in the books. This was sold for ₹ 3,000.
(b) Ashish, an old customer whose account for ₹ 1,000 was written off as bad in the previous year, paid 60%, of the amount.
(c) Paras agreed to takeover the firm's goodwill (not recorded in the books of the firm), at a valuation of ₹ 30,000.
(d) There was an old typewriter which had been written off completely from the books. It was estimated to realise ₹ 400. It was taken by Priya at an estimated price less 25%.
(e) There were 100 shares of ₹ 10 each in Star Limited acquired at a cost of ₹ 2,000 which had been written-off completely from the books. These shares are valued @ ₹ 6 each and divided among the partners in their profit-sharing ratio.
Answer:
Journal
|
||||||
|
Particulars
|
L.F.
|
Amount
(₹)
|
Amount
(₹)
|
||
(a)
|
Cash/Bank A/c
|
Dr.
|
3,000
|
|||
To Realisation A/c
|
3,000
|
|||||
(Old and unrecorded furniture sold)
|
||||||
|
|
|
|
|
||
(b)
|
Cash/Bank A/c
|
Dr.
|
600
|
|||
To Realisation A/c
|
600
|
|||||
(Bad debts previously written off now recovered)
|
||||||
|
|
|
|
|
||
(c)
|
Paras’s Capital A/c
|
Dr.
|
30,000
|
|||
To Realisation A/c
|
30,000
|
|||||
(Unrecorded goodwill taken over by Paras)
|
||||||
|
|
|
|
|
||
(d)
|
Priya’s Capital A/c
|
Dr.
|
300
|
|||
To Realisation A/c
|
300
|
|||||
(Unrecorded Typewriter taken over by Priya at25% less price)
|
||||||
|
|
|
|
|
||
(e)
|
Paras’s Capital A/c
|
Dr.
|
300
|
|||
Priya’s Capital A/c
|
Dr.
|
300
|
||||
To Realisation A/c
|
600
|
|||||
(100 unrecorded shares of Rs 10 each in the books taken @ Rs 6 each by Paras and Priya and divided between them inprofit sharing ratio)
|
Page No 6.53:
Question 10:
Aman and Harsh 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 third party liabilities have been transferred 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.
(b) Profit and Loss Account was showing a credit balance of ₹ 15,000 on the date of dissolution.
(c) Harsh's loan of ₹ 6,000 was discharged at ₹ 6,200.
(d) The firm paid realisation expenses amounting to ₹ 5,000 on behalf of Harsh who had to bear these expenses.
(e) There was a bill for 1,200 under discount. The bill was received from Soham who proved insolvent and 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 5% and the balance in cash.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
|
|
|
|
a. |
Aman’s Capital A/c |
Dr. |
|
22,500 |
|
|
Bank A/c |
Dr. |
|
32,500 |
|
|
To Realisation A/c |
|
|
|
55,000 |
|
(Assets realized) |
|
|
|
|
|
|
|
|
|
|
b. |
Profit & Loss A/c |
Dr. |
|
15,000 |
|
|
To Aman’s Capital A/c |
|
|
|
7,500 |
|
To Harsh’s Capital A/c |
|
|
|
7,500 |
|
(Profit distributed) |
|
|
|
|
|
|
|
|
|
|
c. |
Harsh’s Loan A/c |
Dr. |
|
6,000 |
|
|
Realisation A/c |
Dr. |
|
200 |
|
|
To Bank A/c |
|
|
|
6,200 |
|
(Loan Discharged) |
|
|
|
|
|
|
Dr. |
|
5,000 |
|
d. |
Harsh’s Capital A/c |
|
|
|
5,000 |
|
To Bank A/c |
|
|
|
|
|
(Expenses paid on behalf of partner) |
|
|
|
|
|
|
|
|
|
|
e. |
Bank A/c |
Dr. |
|
300 |
|
|
To Realisation A/c |
|
|
|
300 |
|
(Amount received) |
|
|
|
|
|
|
|
|
|
|
|
Realisation A/c |
Dr. |
|
1,200 |
|
|
To Bank A/c |
|
|
|
1,200 |
|
(Amount paid) |
|
|
|
|
|
|
|
|
|
|
f. |
Realisation A/c |
Dr. |
|
1,250 |
|
|
To Bank A/c |
|
|
|
1,250 |
|
(Creditors paid) |
|
|
|
|
|
|
|
|
|
|
g. |
Aman’s Capital A/c |
Dr. |
|
4,000 |
|
|
Harsh’s Capital A/c |
Dr. |
|
4,000 |
|
|
To Realisation A/c |
|
|
|
8,000 |
|
(Loss on dissolution transferred to Partners’ Capital A/c) |
|
|
|
|
|
|
|
|
|
Page No 6.53:
Question 11:
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 liability have been transferred to Realisation Account:
(a) Kunal agreed to pay off his wife's loan of ₹ 6,000.
(b) Total Creditors of the firm were ₹ 40,000. Creditors worth ₹ 10,000 were given a piece of furniture costing ₹ 8,000 in full and final settlement. Remaining Creditors allowed a discount of 10%.
(c) Rohit had given a loan of ₹ 70,000 to the firm which was duly paid.
(d) A machine which was not recorded in the books was taken over by Kunal at ₹ 3,000, whereas its expected value was ₹ 5,000.
(e) The firm had a debit balance of ₹ 15,000 in the Profit and Loss Account on the date of dissolution.
(f) Sarthak paid the realisation expenses of ₹ 16,000 out of his private funds, who was to get a remuneration of ₹ 15,000 for completing dissolution process and was responsible to bear all the realisation expenses.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
(a) |
Realisation A/c |
Dr. |
6,000 |
||
To Kunal’s Capital A/c |
6,000 |
||||
(Being Kunal agrees to pay off his wife’s loan) |
|||||
(b) |
Realisation A/c |
Dr. |
27,000 |
||
To Cash A/c |
27,000 |
||||
(Being Creditors worth Rs 30,000 paid |
|||||
(c) |
Rohit’s Loan A/c |
Dr. |
70,000 |
||
To Cash A/c |
70,000 |
||||
(Being Loan paid by the firm) |
|||||
(d) |
Kunal’s Capital A/c |
Dr. |
3,000 |
||
To Realisation A/c |
3,000 |
||||
(Being asset taken over by Kunal) |
|||||
(e) |
Rohit’s Capital A/c |
Dr. |
5,000 |
||
Kunal’s Capital A/c |
Dr. |
5,000 |
|||
Sarthak’s Capital A/c |
Dr. |
5,000 |
|||
To Profit and Loss A/c |
15,000 |
||||
(Being Loss distributed equally) |
|||||
(f) |
Realisation A/c |
Dr. |
15,000 |
||
To Sarthak’s Capital A/c |
15,000 |
||||
(Being remuneration of Rs 15,000 paid for completion of dissolution process) |
Page No 6.53:
Question 12:
Book Value of assets (other than cash and bank) transferred to Realisation Account is ₹ 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 a profit of 30% on cost; 5% of the balance being obsolete, realised nothing and remaining assets are handed over to a Creditor, in full settlement of his claim.
You are required to record the Journal entries for realisation of assets.
Answer:
Journal
|
||||||
Date
|
Particulars
|
L.F.
|
Amount
(₹)
|
Amount
(₹)
|
||
|
Realisation A/c
|
Dr.
|
1,00,000
|
|||
|
To Sundry Assets A/c
|
1,00,000
|
||||
|
(All assets other than cash and bank transferred to Realisation Account)
|
|||||
|
||||||
|
Atul’s Capital A/c
|
Dr.
|
40,000
|
|||
|
To Realisation A/c
|
40,000
|
||||
|
(Atul took over 50% of assets worth Rs 1,00,000 at 20% discount)[1,00,000 @ 50% @ 80%]
|
|||||
|
||||||
|
Bank A/c
|
Dr.
|
26,000
|
|||
|
To Realisation A/c
|
26,000
|
||||
|
(Assets worth Rs 20,000, i.e. 40% of assets of Rs 50,000 are soldat a profit of 30%) [50,000 × (40/100) × (130/100)]
|
|||||
|
||||||
|
No entry for obsolete assets and for the assets givento the creditors in the full settlement as these are already transferred tothe Realisation Account)
|
Page No 6.54:
Question 13:
Lal and Pal were partners in a firm sharing profits in the ratio of 3 : 7. On 1st April, 2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to Realisation Account, you are given the following information:
(a) A creditor of ₹ 3,60,000 accepted machinery valued at ₹ 5,00,000 and paid to the firm ₹ 1,40,000.
(b) A second creditor for ₹ 50,000 accepted stock at ₹ 45,000 in full settlement of his claim.
(c) A third creditor amounting to ₹ 90,000 accepted ₹ 45,000 in cash and investments worth ₹ 43,000 in full settlement of his claim.
(d) Loss on dissolution was ₹ 15,000.
Pass necessary Journal entries for the above transactions in the books of firm assuming that all payments were made by cheque.
Answer:
In the books of … Journal Entry |
|||||
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
(a) |
Bank A/c |
Dr. |
|
1,40,000 |
|
|
To Realisation A/c |
|
|
1,40,000 |
|
|
(A creditor of Rs 3,60,000 accepted machinery valued at Rs 5,00,000 and paid Rs 1,40,000 to the firm) |
|
|
|
|
|
|
|
|
||
(b) |
No entry |
|
|
|
|
|
|
|
|||
(c) |
Realisation A/c |
Dr. |
|
45,000 |
|
|
To Cash A/c |
|
|
|
45,000 |
|
(A third creditor of Rs 90,000 accepted Rs 45,000 in cash and investments worth Rs 43,000 in full settlement of his claim) |
|
|
|
|
|
|
|
|
||
(d) |
Lal’s Capital A/c |
Dr. |
|
4,500 |
|
|
Pal’s Capital A/c |
Dr. |
|
10,500 |
|
|
To Realisation A/c |
|
|
|
15,000 |
|
(Loss on dissolution transferred to partners’ capital accounts) |
|
|
|
|
|
|
|
|
|
Note: No entry will be made when asset is taken over by the creditor
Page No 6.54:
Question 14:
Pass the Journal entries for the following transactions on the dissolution of the firm of P and Q after various assets (other than cash) and outside liabilities have been transferred to Realisation Account:
(a) Stock ₹ 2,00,000. 'P' 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.
(c) Land and Building (Book value ₹ 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 ₹ 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.
(j) Trade creditors ₹ 1,60,000. Half of the 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.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
|
|
|
|
a. |
P’s Capital A/c |
Dr. |
|
90,000 |
|
|
Bank A/c |
Dr. |
|
1,25,000 |
|
|
To Realisation A/c |
|
|
|
2,15,000 |
|
(Stock realized) |
|
|
|
|
|
|
|
|
|
|
b. |
Bank A/c |
Dr. |
|
2,05,000 |
|
|
To Realisation A/c |
|
|
|
2,05,000 |
|
(Debtors realized) |
|
|
|
|
|
|
|
|
|
|
c. |
Bank A/c |
Dr. |
|
14,70,000 |
|
|
To Realisation A/c |
|
|
|
14,70,000 |
|
(Land and Building realized) |
|
|
|
|
|
|
|
|
|
|
d. |
No Entry |
|
|
|
|
|
|
|
|
|
|
e. |
Bank A/c |
Dr. |
|
75,000 |
|
|
To Realisation A/c |
|
|
|
75,000 |
|
(Investment realized ) |
|
|
|
|
|
|
|
|
|
|
f. |
No Entry |
|
|
|
|
|
|
|
|
|
|
g. |
Bank A/c |
Dr. |
|
10,000 |
|
|
To Realisation A/c |
|
|
|
10,000 |
|
(Unrecorded furniture realized ) |
|
|
|
|
|
|
|
|
|
|
h. |
Bank A/c |
Dr. |
|
12,000 |
|
|
To Realisation A/c |
|
|
|
12,000 |
|
(Bad debts recovered ) |
|
|
|
|
|
|
|
|
|
|
i. |
Realisation A/c |
Dr. |
|
50,000 |
|
|
To P’s Capital A/c |
|
|
|
50,000 |
|
(Wife’s loan paid by partner) |
|
|
|
|
|
|
|
|
|
|
J. |
Realisation A/c |
Dr. |
|
82,000 |
|
|
To Bank A/c (10,000 + 72,000) |
|
|
|
82,000 |
|
(Creditors paid) |
|
|
|
|
|
|
|
|
|
Page No 6.54:
Question 15:
What Journal entries would be passed for discharge of following unrecorded liabilities on the dissolution of a firm of partners A and B:
(a) There was a contingent liability 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 rupee was recovered. The liability of the firm on account of this bill discounted and dishonoured has not so far been recorded.
(b) There was a contingent liability in respect of a claim for damages for ₹ 75,000, such liability was settled for ₹ 50,000 and paid by the partner A.
(c) Firm will have to pay ₹ 10,000 as compensation to an injured employee, which was a contingent liability not accepted by the firm.
(d) ₹ 5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70% by a compromise between the customer and the firm.
Answer:
Journal |
|||||
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
|
|
|
|
|
a. |
Bank A/c |
Dr. |
|
1,250 |
|
|
To Realisation A/c |
|
|
|
1,250 |
|
(Amount received) |
|
|
|
|
|
|
|
|
|
|
|
Realisation A/c |
|
|
|
|
|
To Bank A/c |
Dr. |
|
2,500 |
|
|
(Liability discharged) |
|
|
|
2,500 |
|
|
|
|
|
|
b. |
Realisation A/c |
Dr. |
|
50,000 |
|
|
To A’s Capital A/c |
|
|
|
50,000 |
|
(Liability paid by a partner) |
|
|
|
|
|
|
Dr. |
|
10,000 |
|
c. |
Realisation A/c |
|
|
|
10,000 |
|
To Bank A/c |
|
|
|
|
|
(Liability discharged) |
|
|
|
|
|
|
|
|
|
|
d. |
Realisation A/c |
Dr. |
|
3,500 |
|
|
To Bank A/c |
|
|
|
3,500 |
|
(Liability discharged) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page No 6.55:
Question 16:
Pass necessary Journal entries on the dissolution of a firm in the following cases:
(a) Dharam, a partner, was appointed to look after the process of dissolution at a remuneration of ₹ 12,000 and he had to bear the dissolution expenses. Dissolution expenses ₹ 11,000 were paid by Dharam.
(b) Jay, a partner, was appointed to look after the process of dissolution and was allowed a remuneration of ₹ 15,000. Jay agreed to bear dissolution expenses. Actual dissolution expenses ₹ 16,000 were paid by Vijay, another partner on behalf of Jay.
(c) Deepa, a partner, was to look after the process of dissolution and for this work she was allowed a remuneration of ₹ 7,000. Deepa agreed to bear dissolution expenses. Actual dissolution expenses ₹ 6,000 were paid from the firm's bank account.
(d) Dev, a partner, agreed to do the work of dissolution for ₹ 7,500. He took away stock of the same amount as his commission. The stock had already been transferred to Realisation Account.
(e) Jeev, a partner, agreed to do the work of dissolution for which he was allowed a commission of ₹ 10,000. He agreed to bear the dissolution expenses. Actual dissolution expenses paid by Jeev were ₹ 12,000. These expenses were paid by Jeev by drawing cash from the firm.
(f) A debtor of ₹ 8,000 already transferred to Realisation Account agreed to pay the realisation expenses of ₹ 7,800 in full settlement of his account.
Answer:
Journal
|
|||||
Date
|
Particulars
|
L.F.
|
Debit
Amount
(₹)
|
Credit
Amount
(₹)
|
|
(a)
|
Realisation A/c
|
Dr.
|
12,000
|
||
To Dharam’s Capital A/c
|
12,000
|
||||
(Remuneration paid)
|
|||||
(b)
|
Realisation A/c
|
Dr.
|
15,000
|
||
To Jay's’s Capital A/c
|
15,000
|
||||
(Remuneration paid)
|
|||||
|
|
||||
Jay's Capital A/c | Dr. |
16,000
|
|||
To Vijay's Capital A/c |
16,000
|
||||
(Expenses borne by Jay, paid by Vijay) | |||||
(c)
|
Realisation A/c
|
Dr.
|
7,000
|
||
To Deepa’s Capital A/c
|
7,000
|
||||
(Remuneration paid)
|
|||||
Deepa’s Capital A/c
|
Dr.
|
6,000
|
|||
To Bank A/c
|
6,000
|
||||
(Expenses paid by firm)
|
|||||
(d)
|
No Entry
|
|
|
|
|
(e)
|
Realisation A/c |
Dr.
|
10,000
|
||
To Jeev's Capital A/c |
10,000
|
||||
(Remuneration paid) | |||||
Jeev's Capital A/c |
Dr.
|
12,000
|
|||
To Bank A/c |
12,000
|
||||
(Expenses paid by firm) | |||||
(f)
|
No Entry |
Page No 6.55:
Question 17:
Ramesh and Umesh were partners in a firm sharing profits in the ratio of their capitals. On 31st March, 2013, their Balance Sheet was as follows:
Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
Creditors | 1,70,000 | Bank | 1,10,000 | |||||
Workmen Compensation Reserve | 2,10,000 | Debtors | 2,40,000 | |||||
General Reserve | 2,00,000 | Stock | 1,30,000 | |||||
Ramesh's Current Account | 80,000 | Furniture | 2,00,000 | |||||
Capital A/cs: | Machinery | 9,30,000 | ||||||
Ramesh | 7,00,000 | Umesh's Current Account | 50,000 | |||||
Umesh | 3,00,000 | 10,00,000 | ||||||
16,60,000 | 16,60,000 | |||||||
On the above date the firm was dissolved.
(a) Ramesh took over 50% of stock at ₹ 10,000 less than book value. The remaining stock was sold at a loss of ₹ 15,000. Debtors were realised at a discount of 5%.
(b) Furniture was taken over by Umesh for ₹ 50,000 and machinery was sold for ₹ 4,50,000.
(c) Creditors were paid in full.
(d) There was an unrecorded bill for repairs for ₹ 1,60,000 which was settled at ₹ 1,40,000.
Prepare Realisation Account.
Answer:
Realisation Account |
||||||||
Dr. |
|
Cr. |
||||||
Particulars |
Amount Rs |
Particulars |
Amount Rs |
|||||
Sundry Assets- |
|
Creditors |
1,70,000 |
|||||
Debtors |
2,40,000 |
|
Ramesh’s Current A/c (Stock) |
55,000 |
||||
Stock |
1,30,000 |
|
Cash A/c (Assets Realised) |
|
||||
Furniture |
2,00,000 |
|
Stock |
50,000 |
|
|||
Machinery |
9,30,000 |
15,00,000 |
Machinery |
4,50,000 |
|
|||
|
|
Debtors |
2,28,000 |
7,28,000 |
||||
To Cash A/c (Liabilities) |
|
Umesh’s Current A/c (Furniture) |
50,000 |
|||||
Creditors |
1,70,000 |
|
|
|
||||
Outstanding Bill |
1,40,000 |
3,10,000 |
Realisation Loss |
|
||||
|
|
Ramesh’s |
5,64,900 |
|
||||
|
|
Umesh’s Current A/c |
2,42,100 |
8,07,000 |
||||
|
18,10,000 |
|
18,10,000 |
|||||
|
|
|
|
Page No 6.56:
Question 18:
Balance Sheet of a firm as at 31st March, 2018 , when it was decided to dissolve the same , was:
|
|
|||||||
Liabilities |
₹ |
Assets |
₹ |
|||||
Sundry Creditors
|
14,000 |
Cash at Bank
|
640 | |||||
Reserve for Contingencies | 500 | Stock | 4,740 | |||||
Capital A/cs: | Debtors | 5,540 | ||||||
X
|
4,000 |
|
Machinery
|
|
10,580 | |||
Y | 3,000 | 7,000 | ||||||
|
||||||||
|
21,500 |
|
21,500 |
|||||
|
|
|
|
₹19,500 were realised from all assets except Cash at Bank . The cost of winding up came to ₹ 440. X and Y shared profits in the ratio of 2 : 1 respectively.
Prepare Realisation Account and Capital Accounts of Partners.
Answer:
Realisation Account |
|||||||
Dr. |
|
Cr. |
|||||
Particulars |
Amount Rs |
Particulars |
Amount Rs |
||||
Machinery |
10,580 |
Sundry Creditors |
14,000 |
||||
Stock |
4,740 |
Bank (Assets Realised) |
19,500 |
||||
Debtors |
5,540 |
|
|
||||
Bank A/c: |
|
Loss transferred to: |
|
||||
Creditors |
14,000 |
|
X’s Capital A/c |
1,200 |
|
||
Expenses |
440 |
14,440 |
Y’s Capital A/c |
600 |
1,800 |
||
|
|
|
|
||||
|
|
|
|
||||
|
35,300 |
|
35,300 |
||||
|
|
|
|
||||
Partners’ Capital Accounts |
|||||||
Dr. |
|
Cr. |
|||||
Particulars |
X |
Y |
Particulars |
X |
Y |
||
Realisation A/c (Loss) |
1,200 |
600 |
Balance b/d |
4,000 |
3,000 |
||
|
|
|
Reserve for Contingencies |
333 |
167 |
||
Bank A/c |
3,133 |
2,567 |
|
|
|
||
|
4,333 |
3,167 |
|
4,333 |
3,167 |
||
|
|
|
|
|
|
||
Bank Account |
|||||
Dr. |
|
Cr. |
|||
Particulars |
Amount Rs |
Particulars |
Amount Rs |
||
Balance b/d |
640 |
Realisation A/c |
14,440 |
||
Realisation A/c |
19,500 |
X’s Capital A/c |
3,133 |
||
|
|
Y’s Capital A/c |
2,567 |
||
|
20,140 |
|
20,140 |
||
|
|
|
|
Page No 6.56:
Question 19:
Achal and Vichal were partners in a firm sharing profits in the ratio of 3 : 5 . On 31st March, 2018 their Balance Sheet was as follows:
|
|
|||||||
Liabilities |
₹ |
Assets |
₹ |
|||||
Capital A/cs: |
Land and Building |
4,00,000 | ||||||
Achal
|
3,00,000 |
Machinery |
|
3,00,000 | ||||
Vichal | 5,00,000 | 8,00,000 | Debtors | 2,22,000 | ||||
1,79,000 | Cash at Bank | 78,000 | ||||||
21,000 | ||||||||
|
10,00,000 |
|
10,00,000 |
|||||
|
|
|
|
The firm was dissolved on 1st April,2018 and the Assets and Liabilities were settled as follows :
(a) Land and Building b realised ₹ 4,30,000.
(b) Debtors realised ₹ 2,25,000 (with interest) and ₹ 1,000 were recovered for Bad Debts written off last year .
(c) There was an Unrecorded Investment which was sold for ₹ 25,000.
(d) Vichal took over Machinery at ₹ 2,80,000 for cash.
(e) 50% of the Creditors were paid ₹ 4,000 less in full settlement and the remaining Creditors were paid full amount .
Pass necessary journal entries for dissolution of the firm.
Answer:
Journal
|
|||||
Date
|
Particulars
|
L.F.
|
Debit
Amount
Rs
|
Credit Amount
Rs
|
|
|
Realisation A/c
|
Dr.
|
|
9,22,000
|
|
|
To Land & Building A/c
|
|
|
|
4,00,000
|
|
To Machinery A/c
|
|
|
|
3,00,000
|
|
To Debtors A/c
|
|
|
|
2,22,000
|
|
(Being assets transferred)
|
|
|
|
|
|
|
|
|
|
|
|
Creditors A/c
|
Dr.
|
|
1,79,000
|
|
|
Employees’ Provident Fund A/c
|
Dr.
|
|
21,000
|
|
|
To Realisation A/c
|
|
|
|
2,00,000
|
|
(Being liabilities transferred)
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c
|
Dr.
|
|
4,30,000
|
|
|
To Realisation A/c
|
|
|
|
4,30,000
|
|
(Being Land & Building realised)
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c (2,25,000 + 1,000)
|
Dr.
|
|
2,26,000
|
|
|
To Realisation A/c
|
|
|
|
2,26,000
|
|
(Being Debtors realised along-with Bad-debts recovered)
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c
|
Dr.
|
|
25,000
|
|
|
To Realisation A/c
|
|
|
|
25,000
|
|
(Being Unrecorded Investments sold)
|
|
|
|
|
|
|
|
|
|
|
|
Bank A/c
|
Dr.
|
|
2,80,000
|
|
|
To Realisation A/c
|
|
|
|
2,80,000
|
|
(Being Machinery took over by Vichal for Cash)
|
|
|
|
|
|
|
|
|
|
|
|
Realisation A/c
|
Dr.
|
|
1,96,000
|
|
|
To Bank A/c (85,500 + 89,500 + 21,000)
|
|
|
|
1,96,000
|
|
(Being 50% Creditors of Rs 89,500 were paid at a discount of Rs 4,000 and remaining 50% were settled in full and EPF)
|
|
|
|
|
|
|
|
|
|
|
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Realisation A/c
|
Dr.
|
|
43,000
|
|
|
To Achal’s Capital A/c
|
|
|
|
16,125
|
|
To Vichal’s Capital A/c
|
|
|
|
26,875
|
|
(Being profits on realisation transferred)
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|
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|
|
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Achal’s Capital A/c
|
Dr.
|
|
3,16,125
|
|
|
Vichal’s Capital A/c
|
Dr.
|