Double Entry Book Keeping Ts Grewal Vol I 2018 for Class 12 Commerce Accountancy Chapter 1 - Accounting For Partnership Firms Fundamentals

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

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 on behalf of Anuj)

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)

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)

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
(f)	To Realisation A/c				15,000
	(Investments are realised at 150%)

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)

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 )

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.

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)

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)

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 off at a discount of 10%)

(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)

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)

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

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)

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)

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*

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 Current A/c	5,64,900
				Umesh’s Current A/c	2,42,100		8,07,000
			18,10,000				18,10,000

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

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)

	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)

Double Entry Book Keeping Ts Grewal Vol I 2018 for Class 12 Commerce Accountancy Chapter 1 - Accounting For Partnership Firms Fundamentals

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