NCERT Solutions for Class 12 Commerce Accountancy Chapter 7

Question 1:

Land and Building (book value) â‚¹ 1,60,000 sold for â‚¹ 3,00,000 through a broker who charged 2% commission on the deal. Journalise the transaction, at the time of dissolution of the firm.

Answer:

In the books of the firm Journal
Date	Particulars		L.F.	Debit Amount (â‚¹)	Credit Amount (â‚¹)
On the	Cash/ Bank A/c (3,00,000 – 6,000)	Dr.		2,94,000
Date of	To Realisation A/c (3,00,000 – 6,000)				2,94,000
Dissolution	(Being amount realized from land and building after providing for 2% commission to the broker)

Question 2:

Pass Journal entries in the following cases?
(a) Expenses of realisation â‚¹ 1,500.
(b) Expenses of realisation â‚¹ 600 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 â‚¹ 2,000.
(d) Motor car of book value â‚¹ 50,000 taken over by creditors of the book value of â‚¹ 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 3:

Pass Journal entries for the following:
(a) Realisation expenses of â‚¹ 15,000 were to be met by Rahul, a partner, but were paid by the firm.
(b) Ramesh, a partner, was paid remuneration of â‚¹ 25,000 and he was to meet all expenses.
(c) Anuj, a partner, was paid remuneration of â‚¹ 20,000 and he was to meet all expenses. Firm paid an expense of â‚¹ 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 4:

Pass Journal entries for the following:
(a) Realisation expenses amounted to â‚¹ 10,000 were paid by the firm on behalf of Alok, a partner, with whom it was agreed at â‚¹ 7,500.
(b) Realisation expenses amounted to â‚¹ 5,000. It was agreed that the firm will pay â‚¹ 2,000 and balance by Ravinder, a partner.
(c) Dissolution expenses amounted to â‚¹ 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 5:

Record necessary Journal entries in the following cases:
(a) Creditors worth â‚¹ 85,000 accepted â‚¹ 40,000 as cash and Investment worth â‚¹ 43,000, in full settlement of their claim.
(b) Creditors were â‚¹ 16,000. They accepted Machinery valued at â‚¹ 18,000 in settlement of their claim.
(c) Creditors were â‚¹ 90,000. They accepted Building valued at â‚¹ 1,20,000 and paid cash to the firm â‚¹ 30,000.

Answer:

Journal
	Particulars			L.F.	Amount (â‚¹)	Amount (â‚¹)
(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 6:

Pass Journal entries for the following at the time of dissolution of a firm:
(a) Sale of Assets − â‚¹ 50,000.
(b) Payment of Liabilities − â‚¹ 10,000.
(c) A commission of 5% allowed to Mr. X, a partner, on sale of assets.
(d) Realisation expenses amounted to â‚¹ 15,000. The firm had agreed with Amrit, a partner, to reimburse him up to â‚¹ 10,000.
(e) Z, an old customer, whose account for â‚¹ 6,000 was written off as bad in the previous year, paid 60% of the amount written off.
(f) Investment (Book Value â‚¹ 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 7:

Pass Journal entries for the following transactions at the time of dissolution of the firm:
(a) Loan of â‚¹ 10,000 advanced by a partner to the firm was refunded.
(b) X, a partner, takes over an unrecorded asset (Typewriter) at â‚¹ 300.
(c) Undistributed balance (Debit) of Profit and Loss Account â‚¹ 30,000. The firm has three partners X,Y and Z.
(d) Assets of the firm realised â‚¹ 1,25,000.
(e) Y who undertakes to carry out the dissolution proceedings is paid â‚¹ 2,000 for the same.
(f) Creditors are paid â‚¹ 28,000 in full settlement of their account of â‚¹ 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 8:

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 â‚¹ 12,000 was paid.
(b) Stock worth â‚¹ 16,000 was taken over by partner Q.
(c) Partner P paid a creditor â‚¹ 4,000.
(d) An asset not appearing in the books of accounts realised â‚¹ 1,200.
(e) Expenses of realisation â‚¹ 2,000 were paid by partner Q.
(f) Profit on realisation â‚¹ 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 9:

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 â‚¹ 18,000 in the firm's Profit and Loss Account.
(b) There was an unrecorded bike of â‚¹ 50,000 which was taken over by X.
(c) Creditors of â‚¹ 5,000 were paid â‚¹ 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 10:

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 â‚¹ 3,000.
(b) Ashish, an old customer whose account for â‚¹ 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 â‚¹ 30,000.
(d) There was an old typewriter which had been written off completely from the books. It was estimated to realise â‚¹ 400. It was taken by Priya at an estimated price less 25%.
(e) There were 100 shares of â‚¹ 10 each in Star Limited acquired at a cost of â‚¹ 2,000 which had been written-off completely from the books. These shares are valued @ â‚¹ 6 each and divided among the partners in their profit-sharing ratio.

Answer:

Journal
	Particulars		L.F.	Amount (â‚¹)	Amount (â‚¹)
(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 11:

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 â‚¹ 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 â‚¹ 15,000 on the date of dissolution.
(c) Harsh's loan of â‚¹ 6,000 was discharged at â‚¹ 6,200.
(d) The firm paid realisation expenses amounting to â‚¹ 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 â‚¹ 6,000, accepted stock of â‚¹ 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 12:

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 â‚¹ 6,000.
(b) Total Creditors of the firm were â‚¹ 40,000. Creditors worth â‚¹ 10,000 were given a piece of furniture costing â‚¹ 8,000 in full and final settlement. Remaining Creditors allowed a discount of 10%.
(c) Rohit had given a loan of â‚¹ 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 â‚¹ 3,000, whereas its expected value was â‚¹ 5,000.
(e) The firm had a debit balance of â‚¹ 15,000 in the Profit and Loss Account on the date of dissolution.
(f) Sarthak paid the realisation expenses of â‚¹ 16,000 out of his private funds, who was to get a remuneration of â‚¹ 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 13:

Book Value of assets (other than cash and bank) transferred to Realisation Account is â‚¹ 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 (â‚¹)	Amount (â‚¹)
	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 14:

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 â‚¹ 3,60,000 accepted machinery valued at â‚¹ 5,00,000 and paid to the firm â‚¹ 1,40,000.
(b) A second creditor for â‚¹ 50,000 accepted stock at â‚¹ 45,000 in full settlement of his claim.
(c) A third creditor amounting to â‚¹ 90,000 accepted â‚¹ 45,000 in cash and investments worth â‚¹ 43,000 in full settlement of his claim.
(d) Loss on dissolution was â‚¹ 15,000.
Pass necessary Journal entries for the above transactions in the books of firm assuming that all payments were made by cheque.

Answer:

â€‹

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 15:

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 â‚¹ 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 â‚¹ 2,25,000. Provision for Doubtful Debts â‚¹ 25,000. â‚¹ 20,000 of the book debts proved bad.
(c) Land and Building (Book value â‚¹ 12,50,000) sold for â‚¹ 15,00,000 through a broker who charged 2% commission.
(d) Machinery (Book value â‚¹ 6,00,000) was handed over to a creditor at a discount of 10%.
(e) Investment (Book value â‚¹ 60,000) realised at 125%.
(f) Goodwill of â‚¹ 75,000 and prepaid fire insurance of â‚¹ 10,000.
(g) There was an old furniture in the firm which had been written off completely in the books. This was sold for â‚¹ 10,000.
(h) 'Z' an old customer whose account for â‚¹ 20,000 was written off as bad in the previous year, paid 60%.
(i) 'P' undertook to pay Mrs. P's loan of â‚¹ 50,000.
(j) Trade creditors â‚¹ 1,60,000. Half of the trade creditors accepted Plant and Machinery at an agreed valuation of â‚¹ 54,000 and cash in full settlement of their claims after allowing a discount of â‚¹ 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 16:

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 â‚¹ 18,500. An acceptor of one bill of â‚¹ 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 â‚¹ 75,000, such liability was settled for â‚¹ 50,000 and paid by the partner A.
(c) Firm will have to pay â‚¹ 10,000 as compensation to an injured employee, which was a contingent liability not accepted by the firm.
(d) â‚¹ 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 17:

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 â‚¹ 12,000 and he had to bear the dissolution expenses. Dissolution expenses â‚¹ 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 â‚¹ 15,000. Jay agreed to bear dissolution expenses. Actual dissolution expenses â‚¹ 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 â‚¹ 7,000. Deepa agreed to bear dissolution expenses. Actual dissolution expenses â‚¹ 6,000 were paid from the firm's bank account.
(d) Dev, a partner, agreed to do the work of dissolution for â‚¹ 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 â‚¹ 10,000. He agreed to bear the dissolution expenses. Actual dissolution expenses paid by Jeev were â‚¹ 12,000. These expenses were paid by Jeev by drawing cash from the firm.
(f) A debtor of â‚¹ 8,000 already transferred to Realisation Account agreed to pay the realisation expenses of â‚¹ 7,800 in full settlement of his account.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount (â‚¹)	Credit Amount (â‚¹)
(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 18:

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 (â‚¹)	Assets	Amount (â‚¹)
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 â‚¹ 10,000 less than book value. The remaining stock was sold at a loss of â‚¹ 15,000. Debtors were realised at a discount of 5%.
(b) Furniture was taken over by Umesh for â‚¹ 50,000 and machinery was sold for â‚¹ 4,50,000.
(c) Creditors were paid in full.
(d) There was an unrecorded bill for repairs for â‚¹ 1,60,000 which was settled at â‚¹ 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 19:

Pradeep and Rajesh were partners in a firm sharing profits and losses in the ratio of 3 : 2. They decided to dissolve their partnership firm on 31st March, 2018. Pradeep was deputed to realise the assets and to pay off the liabilities. He was paid â‚¹ 1,000 as commission for his services. The financial position of the firm on 31st March, 2018 was as follows:

BALANCE SHEET *as at 31st March, 2018*
Liabilities		Amount (â‚¹)	Assets		Amount (â‚¹)
Creditors		80,000	Building		1,20,000
Mrs. Pradeep's Loan		40,000	Investment		30,600
Rajesh's Loan		24,000	Debtors	34,000
Investment Fluctuation Fund		8,000	Less: Provision for Doubtful Debts	4,000	30,000
Capital A/cs:			Bills Receivable		37,400
Pradeep	42,000		Bank		6,000
Rajesh	42,000	84,000	Profit and Loss A/c		8,000
			Goodwill		4,000
		2,36,000			2,36,000

Following terms and conditions were agreed upon:
(a) Pradeep agreed to pay off his wife's loan.
(b) Half of the debtors realised â‚¹ 12,000 and remaining debtors were used to pay off 25% of the creditors.
(c) Investment sold to Rajesh for â‚¹ 27,000.
(d) Building realised â‚¹ 1,52,000.
(e) 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 â‚¹ 1,400.
(g) Realisation expenses amounted to â‚¹ 2,500.
â€‹Prepare Realisation Account.

Answer:

Dr.	Realisation A/c						Cr.
Particulars			Amount (â‚¹)	Particulars		Amount (â‚¹)
To Building			1,20,000	By Provision for Doubtful Debts		4,000
To Investments			30,600	By Creditors		80,000
To Debtors			34,000	By Mrs. Pradeep’s Loan		40,000
To Bills Receivable			37,400	By Investment Fluctuation Fund		8,000
To Goodwill			4,000
To Pradeep’s Capital A/c (Wife loan paid)			40,000	By Bank A/c:
To Cash A/c (Creditors Paid) (WN1)			59,000	Debtors	12,000
To Pradeep’s Capital A/c (Commission)			1,000	Building	1,52,000
To Cash A/c (Realisation Expenses)			2,500	Bills Receivable	36,000	2,00,000
To Profit transferred to:
Pradeep’s Capital A/c		18,300		By Cash A/c (Sale of Investments)		27,000
Rajesh’s Capital A/c		12,200	30,500

			3,59,000			3,59,000

Working Notes:

Remaining Creditors to be paid	=	â‚¹ (80,000 × 75/100) = â‚¹ 60,000
Discount Received on Creditors	=	â‚¹ (60,000 × 10/100 × 2/12) = â‚¹ 1,000
Amount paid to the Creditors	=	â‚¹ (60,000 – 1,000) = â‚¹ 59,000

Question 20:

Balance Sheet of a firm as at 31st March, 2019, when it was decided to dissolve the same, was:


Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
Sundry Creditors		14,000	Cash at Bank	640
General Reserve		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

â‚¹19,500 were realised from all assets except Cash at Bank. The cost of winding up came to â‚¹ 440. 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 (â‚¹)	Particulars		Amount (â‚¹)
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 (â‚¹)	Particulars	Amount (â‚¹)
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 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:


Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
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
Creditors		1,79,000	Cash at Bank	78,000
Employees' Provident Fund		21,000
		10,00,000		10,00,000

The firm was dissolved on 1st April, 2019 and the Assets and Liabilities were settled as follows:
(a) Land and Building realised â‚¹ 4,30,000.
(b) Debtors realised â‚¹ 2,25,000 (with interest) and â‚¹ 1,000 were recovered for Bad Debts written off last year.
(c) There was an Unrecorded Investment which was sold for â‚¹ 25,000.
(d) Vichal took over Machinery at â‚¹ 2,80,000 for cash.
(e) 50% of the Creditors were paid â‚¹ 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 (â‚¹)	Credit Amount (â‚¹)
2019 Apr.1	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)

Apr.1	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)

Apr.1	Bank A/c	Dr.		4,30,000
	To Realisation A/c				4,30,000
	(Being Land & Building realised)

Apr.1	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)

Apr.1	Bank A/c	Dr.		25,000
	To Realisation A/c				25,000
	(Being Unrecorded Investments sold)

Apr.1	Bank A/c	Dr.		2,80,000
	To Realisation A/c				2,80,000
	(Being Machinery took over by Vichal for Cash)

Apr.1	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)

Apr.1	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)

Apr.1	Achal’s Capital A/c	Dr.		3,16,125
	Vichal’s Capital A/c	Dr.		5,26,875
	To Bank A/c				8,43,000
	(Being Partners paid off)

Question 22:

Bale and Yale are equal partners of a firm. They decide to dissolve their partnership on 31st March, 2019 at which date their Balance Sheet stood as:


Liabilities		â‚¹	Assets	â‚¹
Capital A/cs:			Building	45,000
Bale	50,000		Machinery	15,000
Yale	40,000	90,000	Furniture	12,000
General Reserve		8,000	Debtors	8,000
Bale's Loan A/c		3,000	Stock	24,000
Creditors		14,000	Bank	11,000

		1,15,000		1,15,000

â€‹
(a) The assets realised were:
Stock â‚¹ 22,000; Debtors â‚¹ 7,500; Machinery â‚¹ 16,000; Building â‚¹ 35,000.
(b) Yale took over the Furniture at â‚¹ 9,000.
(c) Bale agreed to accept â‚¹ 2,500 in full settlement of his Loan Account.
(d) Dissolution Expenses amounted to â‚¹ 2,500.
Prepare the:
(i) Realisation Account; (ii) Capital Accounts of Partners;
(iii) Bale's Loan Account; (iv) Bank Account.

Answer:

Realisation Account
Dr.						Cr.
Particulars		Amount (â‚¹)	Particulars			Amount (â‚¹)
Building		45,000	Creditors			14,000
Machinery		15,000	Bank A/c:
Furniture		12,000	Stock	22,000
Debtors		8,000	Debtors	7,500
Stock		24,000	Machinery	16,000
			Building	35,000		80,500
Bank A/c:
Creditors	14,000		Bale’s Loan			500
Expenses	2,500	16,500	Yale’s Capital A/c (Furniture)			9,000
			Loss transferred to:
			Bale’s Capital A/c		8,250
			Yale’s Capital A/c		8,250	16,500
		1,20,500				1,20,500

Partners’ Capital Accounts
Dr.						Cr.
Particulars	Bale	Yale	Particulars	Bale	Yale
Realisation A/c (Loss)	8,250	8,250	Balance b/d	50,000	40,000
Realisation A/c	–	9,000	General Reserve (Old Ratio)	4,000	4,000
Bank A/c	45,750	26,750

	54,000	44,000		54,000	44,000

Bale’s Loan Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Bank A/c	2,500	Balance b/d	3,000
Realisation A/c	500

	3,000		3,000

Bank Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	11,000	Bale’s Loan	2,500
Realisation A/c	80,500	Realisation A/c	16,500
		Bale’s Capital A/c	45,750
		Yale’s Capital A/c	26,750

	91,500		91,500

Question 23:

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 *as at 31st March, 2019*
Liabilities		â‚¹	Assets	â‚¹
Capital A/cs:			Land	81,000
Shilpa	80,000		Stock	56,760
Meena	40,000	1,20,000	Debtors	18,600
Bank Loan		20,000	Nanda's Capital	23,000
Creditors		37,000	Cash	10,840
Provision For Doubtful Debts		1,200
General Reserve		12,000

		1,90,200		1,90,200

It is agreed as follows:
The stock of value of â‚¹ 41,660 are taken over by Shilpa for â‚¹ 35,000 and she agreed to discharge bank loan. The remaining stock was sold at â‚¹ 14,000 and debtors amounting to â‚¹ 10,000 realised â‚¹ 8,000. Land is sold for â‚¹ 1,10,000. The remaining debtors realised 50% at their book value. Cost of realisation amounted to â‚¹ 1,200. There was a typewriter not recorded in the books worth of â‚¹ 6,000 which were taken over by one of the Creditors at this value. Prepare Realisation Account, Partners' Capital Accounts, and Cash Account to Close the books of the firm.

Answer:

Realisation Account
Dr.						Cr.
Particulars		Amount (â‚¹)	Particulars		Amount (â‚¹)
Land		81,000	Bank Loan		20,000
Stock		56,760	Creditors		37000
Debtors		18,600	Provision for doubtful debts		1,200
Shilpa’s Capital A/c		20,000	Shilpa’s Capital A/c (Stock)		35,000
Cash:			Cash:
Creditors	31000		Stock	14000
Realisation Expenses	1,200	32200	Debtors	12300
Realisation Profit			Land	1,10,000	1,36,300
Shilpa’s Capital A/c	10,470
Meena’s Capital A/c	6,980
Nanda’s Capital A/c	3,490	20,940
		2,29,500			2,29,500

Partners’ Capital Account
Dr.						Cr.
Particulars	Shilpa	Meena	Nanda	Particulars	Shilpa	Meena	Nanda
Balance b/d	–	–	23,000	Balance b/d	80,000	40,000	–
Realisation	35,000			General Reserve	6,000	4,000	2,000
(Stock)				Realisation	20,000
Cash	81,470	50,980		(Bank Loan)
				Realisation (Profit)	10,470	6,980	3,490
				Cash			17,510
	1,16,470	50,980	23,000		1,16,470	50,980	23,000

Cash Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	10,840	Realisation (Expenses)	32,200
Realisation (Assets)	1,36,300	Shilpa’s Capital A/c	81,470
Nanda’s Capital A/c	17,510	Meena’s Capital A/c	50,980

	1,64,650		1,64,650

Question 24:

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2019, their Balance Sheet was as follows:

BALANCE SHEET as at 31st March, 2019
Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
Creditors		38,000	Cash at Bank	11,500
Mrs. A's Loan		10,000	Stock	6,000
B's Loan		15,000	Debtors	19,000
Reserve		5,000	Furniture	4,000
A's Capital	10,000		Plant	28,000
B's Capital	8,000	18,000	Investments	10,000
			Profit and LossA/C	7,500



		86,000		86,000

The firm was dissolved on 31st March, 2019 and both the partners agreed to the following:
(a) A took Investments at an agreed value of â‚¹ 8,000. He also agreed to settle Mrs. A's Loan.
(b) Other assets realised as: Stock − â‚¹ 5,000; Debtors − â‚¹ 18,500; Furniture − â‚¹ 4,500; Plant − â‚¹ 25,000.
(c) Expenses of realisation came to â‚¹ 1,600.
(d) Creditors agreed to accept â‚¹ 37,000 in full settlement of their claims.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.						Cr.
Particulars		Amount (â‚¹)	Particulars		Amount (â‚¹)
Stock		6,000	Creditors		38,000
Debtors		19,000	Mrs. A’s Loan		10,000
Furniture		4,000
Plant		28,000	A’s Capital A/c (Investments)		8,000
Investments		10,000	Bank A/c:
A’s Capital A/c (Mrs. A’s loan)		10,000	Stock	5,000
Bank A/c :			Debtors	18,500
Expenses	1,600		Furniture	4,500
Creditors	37,000	38,600	Plant	25,000	53,000
			Loss transferred to:
			A’s Capital A/c	3,960
			B’s Capital A/c	2,640	6,600
		1,15,600			1,15,600

Partners’ Capital Accounts
Dr.						Cr.
Particulars	A	B	Particulars	A	B
Realisation (loss)	3,960	2,640	Balance b/d	10,000	8,000
Realisation A/c	8,000	–	Reserve A/c	3,000	2,000
Profit and Loss A/c	4,500	3,000	Realisation A/c	10,000	–
Bank A/c	6,540	4,360
	23,000	10,000		23,000	10,000

B’s Loan Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
		Balance b/d	15,000
Bank A/c	15,000
	15,000		15,000

Bank Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	11,500	Realisation A/c	38,600
Realisation A/c	53,000	A’s Capital A/c	6,540
		B’s Capital A/c	4,360
		B’s Loan A/c	15,000
	64,500		64,500

Question 25:

Balance Sheet of P, Q and R as at 31st March, 2019, who were sharing profits in the ratio of 5 : 3 : 1, was:

Liabilities		Amount (â‚¹)	Assets		Amount (â‚¹)
Bills Payable		40,000	Cash at Bank		40,000
Loan from Bank		30,000	Stock		19,000
General Reserve		9,000	Sundry Debtors	42,000
Capital A/cs:			Less: Provision for Doubtful Debts	2,000	40,000
P	44,000
Q	36,000		Building		40,000
R	20,000	1,00,000	Plant and Machinery		40,000

		1,79,000			1,79,000

The partners dissolved the business. Assets realised − Stock â‚¹ 23,400; Debtors 50%; Fixed Assets 10% less than their book value. Bills Payable were settled for â‚¹ 32,000. There was an Outstanding Bill of Electricity â‚¹ 800 which was paid off. Realisation expenses â‚¹ 1,250 were also paid.
Prepare Realisation Account, Partner's Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.					Cr.
Particulars		Amount (â‚¹)	Particulars			Amount (â‚¹)
Building		40,000	Provision for Doubtful Debts			2,000
Plant and machinery		40,000	Bills Payable			40,000
Stock		19,000	Loan from Bank			30,000
Sundry Debtors		42,000
Bank A/c:			Bank A/c:
Bills Payable	32,000		Stock	23,400
Outstanding Bill	800		Debtors	21,000
Expenses	1,250		Building	36,000
Loan from Bank	30,000	64,050	Plant and Machinery	36,000		1,16,400
			Loss transferred to:
			P’s Capital A/c	9,250
			Q’s Capital A/c	5,550
			RCapital A/c	1,850		16,650
		2,05,050				2,05,050

Partners’ Capital Accounts
Dr.								Cr.
Particulars	P	Q	R	Particulars	P	Q	R
Realisation A/c (Loss)	9,250	5,550	1,850	Balance b/d	44,000	36,000	20,000
				Reserve Fund	5,000	3,000	1,000
Bank A/c	39,750	33,450	19,150
	49,000	39,000	21,000		49,000	39,000	21,000

Bank Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	40,000	Realisation A/c	64,050
Realisation A/c	1,16,400	P’s Capital A/c	39,750
		Q’s Capital A/c	33,450
		R’s Capital A/c	19,150
	1,56,400		1,56,400

Question 26:

Vinod, Vijay and Venkat are partners sharing profits and losses in the ratio of 3 : 2 : 1. They decided to dissolve their firm on 31st March, 2019, the date on which their Balance Sheet stood as:

Liabilities		Amount (â‚¹)	Assets		Amount (â‚¹)
Creditors		17,000	Bank		3,500
Bills Payable		12,000	Stock		19,800
Vinod's Loan		5,300	Debtors	15,000
General Reserve		6,000	Less: Provision for Doubtful Debts	1,000	14,000
Capital A/cs:			Investments		4,000
Vinod	25,000		Furniture		10,000
Vijay	11,000		Machinery		33,000
Venkat	8,000	44,000

		84,300			84,300

The following additional information is given:
(a) The Investments are taken by Vinod for â‚¹ 5,000 in settlement of his loan
(b)

Assets realised as follows:	â‚¹
Stock	17,500
Debtors	14,500
Furniture	6,800
Machinery	30,300

(c) Expenses on realisation amounted to â‚¹ 2,000.
Close the books of the firm giving relevant Ledger Accounts.

Answer:

Realisation Account
Dr.		Cr.
Particulars	Amount (â‚¹)	Particulars		Amount (â‚¹)
Stock	19,800	Provision for Doubtful Debts		1,000
Debtors	15,000	Creditors		17,000
Investments	4,000	Bills Payable		12,000
Furniture	10,000	Vinod's Loan (Investments taken over)		5,300
Machinery	33,000	Bank A/c:
Bank (Expenses)	2,000	Stock	17,500
Bank (Creditors)	17,000	Debtors	14,500
Bank (Bills Payable)	12,000	Furniture	6,800
		Machinery	30,300	69,100
		Loss on Realisation transferred to:
		Vinod	4,200
		Vijay	2,800
		Venkat	1,400	8,400
	1,12,800			1,12,800

Partners’ Capital Account
Dr.				Cr.
Particulars	Vinod	Vijay	Venkat	Particulars	Vinod	Vijay	Venkat
				Balance b/d	25,000	11,000	8,000
Realisation A/c (Loss)	4,200	2,800	1,400	General Reserve	3,000	2,000	1,000
Bank A/c	23,800	10,200	7,600
	28,000	13,000	9,000		28,000	13,000	9,000

Vinod’s Loan A/c
Dr.		Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Realisation A/c	5,300	Balance b/d	5,300
	5,300		5,300

Bank A/c
Dr.		Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	3,500	Realisation A/c (Expenses)	2,000
Realisation A/c (Assets realised)	69,100	Realisation A/c (Creditors) Realisation A/c (Bills Payable)	17,000 12,000
		Vinod's Capital A/c	23,800
		Vijay’s Capital A/c	10,200
		Venkat’s Capital A/c	7,600
	72,600		72,600

Question 27:

P, Q and R were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. They agreed to dissolve their partnership firm on 31st March, 2019. P was deputed to realise the assets and pay the liabilities. He was paid â‚¹ 1,000 as commission for his services. The financial position of the firm was:

	Balance Sheet as at 31st March, 2019
Liabilities			Amount (â‚¹)	Assets		Amount (â‚¹)
Creditors			10,000	Stock		5,500
Bills Payable			3,700	Investments		15,000
Investments Fluctuation Reserve			4,500	Debtors	7,100
Capital A/cs:				Less: Provision for Doubtful Debtors	450	6,650
P		37,550		Cash		5,600
Q		15,000	52,550	R's Capital A/c		8,000
				Plant and Machinery		30,000

			70,750			70,750

P took over Investments for â‚¹ 12,500. Stock and Debtors realised â‚¹ 11,500. Plant and Machinery were sold to Q for â‚¹ 22,500 for cash. Unrecorded assets realised â‚¹ 1,500. Realisation expenses paid amounted to â‚¹ 900.
Prepare necessary Ledger Accounts to close the books of the firm.

Answer:

Realisation Account
Dr.					Cr.
Particulars		Amount (â‚¹)	Particulars			Amount (â‚¹)
Plant and Machinery		30,000	Creditors			10,000
Stock		5,500	Bills Payable			3,700
Investments		15,000	Investments Fluctuation Reserve			4,500
Debtors		7,100	Provision for Doubtful Debts			450
Cash A/c:			P’s Capital A/c (Investments)			12,500
Creditors	10,000		Cash A/c:
Bills Payable	3,700		Stock and Debtors	11,500
Expenses	900	14,600	Plant and Machinery	22,500
P’s Capital A/c		1,000	Unrecorded Assets	1,500		35,500
			Loss transferred to:
			P’s Capital A/c	3,275
			Q’s Capital A/c	1,965
			R’s Capital A/c	1,310		6,550
		73,200				73,200

Partners’ Capital Accounts
Dr.								Cr.
Particulars	P	Q	R	Particulars	P	Q	R
Balance b/d	–	–	8,000	Balance b/d	37,550	15,000	–
Realisation (Loss)	3,275	1,965	1,310	Realisation A/c	1,000	–	–
Realisation A/c (Investments)	12,500
Cash A/c	22,775	13,035	–	Cash A/c	–	–	9,310
	38,500	15,000	9,310		38,550	15,000	9,310

Cash Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	5,600	Realisation A/c	14,600
Realisation A/c	35,500	P’s Capital A/c	22,775
R’s Capital A/c	9,310	Q’s Capital A/c	13,035

	50,410		50,410

Question 28:

Ashu and Harish are partners sharing profit and losses as 3 : 2 . They decided to dissolve the firm on 31st March, 2019. Their Balance Sheet on the above date was:


Liabilities		Amount (â‚¹)	Assets	Amount â€‹(â‚¹)
Capital A/cs:			Building	80,000
Ashu	1,08,000		Machinery	70,000
Harish	54,000	1,62,000	Furniture	14,000
Creditors		88,000	Stock	20,000
Bank Overdraft		50,000	Investments	60,000
			Debtors	48,000
			Cash in Hand	8,000

		3,00,000		3,00,000

Ashu is to take over the building at â‚¹ 95,000 and Machinery and Furniture is taken over by Harish at value of â‚¹ 80,000. Ashu agreed to pay Creditor and Harish agreed to meet Bank overdraft. Stock and Investments are taken by both partner in profit-sharing ratio. Debtors realised for â‚¹ 46,000, expenses of realisation amounted to â‚¹ 3,000. Prepare necessary Ledger Accounts.

Answer:

Realisation Account
Dr.					Cr.
Particulars		Amount (â‚¹)	Particulars	Amount (â‚¹)
Building		80,000	Creditors	88,000
Machinery		70,000	Bank overdraft	50,000
Furniture		14,000	Ashu’s Capital A/c (*see working note*)	1,43,000
Stock		20,000	Harish’s Capital A/c (*see working note*)	1,12,000
Investments		60,000	Cash (Debtors)	46,000
Debtors		48,000
Ashu’s Capital A/c (Creditors)		88,000
Harish’s Capital A/c (Bank Overdraft)		50,000
Cash (Expenses)		3,000
Realisation Profit
Ashu’s Capital A/c	3,600
Harish’s Capital A/c	2,400	6,000
		4,39,000		4,39,000

Partners’ Capital Account
Dr.						Cr.
Particulars	Ashu	Harish	Particulars	Ashu	Harish
Realisation (Assets taken)	1,43,000	1,12,000	Balance b/d	1,08,000	54,000
Cash	56,600		Realisation (Liabilities)	88,000	50,000
			Realisation (Profit)	3,600	2,400
			Cash		5,600
	1,99,600	1,12,000		1,99,600	1,12,000

Cash Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	8,000	Realisation (Expenses)	3,000
Realisation (Debtors)	46,000	Ashu’s Capital A/c	56,600
Harish’s Capital A/c	5,600
	59,600		59,600

Working Notes :

	Ashu	Harish
Building	95,000
Machinery and Furniture		80,000
Stock (3:2)	12,000	8,000
Investment (3:2)	36,000	24,000
	1,43,000	1,12,000

Question 29:

A, B and C were equal partners. On 31st March, 2019, their Balance Sheet stood as:


Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
Creditors		50,400	Cash	3,700
Reserve		12,000	Stock	20,100
Capital A/cs:			Debtors	62,600
A	40,000		Loan to A	10,000
B	25,000		Investments	16,000
C	15,000	80,000	Furniture	6,500
			Building	23,500
		1,42,400		1,42,400

The firm was dissolved on the above date on the following terms:
(a) For the purpose of dissolution, Investments were valued at â‚¹ 18,000 and A took over the Investments at this value.
(b) Fixed Assets realised â‚¹ 29,700 whereas Stock and Debtors realised â‚¹ 80,000.
(c) Expenses of realisation amounted to â‚¹ 1,300.
(d) Creditors allowed a discount of â‚¹ 800.
(e) One Bill receivable for â‚¹ 1,500 under discount was dishonoured as the acceptor had become insolvent and was unable to pay anything and hence the bill had to be met by the firm.
Prepare Realisation Account, Partner's Capital Accounts and Cash Account showing how the accounts would finally be settled among the partners.

Answer:

Realisation Account
Dr.					Cr.
Particulars		Amount (â‚¹)	Particulars			Amount (â‚¹)
Stock		20,100	Creditors			50,400
Debtors		62,600
Investments		16,000	A’s Capital A/c (Investments)			18,000
Furniture		6,500	Cash A/c:
Building		23,500	Furniture and Building	29,700
Cash A/c:			Stock and Debtors	80,000		1,09,700
Expenses	1,300
Creditors	49,600
Bills	1,500	52,400	Loss transferred to :
			A’s Capital A/c	1,000
			B’s Capital A/c	1,000
			C’s Capital A/c	1,000		3,000

		1,81,100				1,81,100

Partners’ Capital Accounts
Dr.								Cr.
Particulars	A	B	C	Particulars	A	B	C
Realisation A/c (Investment)	18,000	–	–	Balance b/d	40,000	25,000	15,000
Realisation A/c (Loss)	1,000	1,000	1,000	Reserve	4,000	4,000	4,000
Cash A/c	25,000	28,000	18,000
	44,000	29,000	19,000		44,000	29,000	19,000

A’s Loan A/c
Dr.		Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	10,000	Bank A/c	10,000

	10,000		10,000

Cash Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	3,700	Realisation A/c	52,400
Realisation A/c	1,09,700	A’s Capital A/c	25,000
A's Loan A/c	10,000	B’s Capital A/c	28,000
		C’s Capital A/c	18,000
	1,23,400		1,23,400

Question 30:

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 â‚¹10,000 including expenses. Balance Sheet of the firm as on that date was as follows:

Liabilities		Amount (â‚¹)	Assets		Amount (â‚¹)
Creditors		40,000	Cash/Bank		6,000
Bills Payable		40,000	Investments		30,000
Naresh's Loan		44,000	Debtors	40,000
Mrs. Yogesh's Loan		42,000	Less: Provision for Doubtful Debts	4,000	36,000
Investment Fluctuation Reserve		8,000	Bills Receivable		33,400
Capital A/cs:			Profit and Loss A/c		1,10,600
Yogesh	21,000
Naresh	21,000	42,000

		2,16,000			2,16,000

The firm was dissolved on following terms:
(a) Yogesh was to pay his wife's loan.
(b) Debtors realised â‚¹ 30,000.
(c) Naresh was to take investments at an agreed value of â‚¹ 26,000.
(d) Creditors and Bills Payable were payable after two months but were paid immediately at a discount of 15% p.a.
(e) Bills Receivable were received allowing 5% rebate.
(f) A Debtor previously written off as Bad Debt paid â‚¹ 15,000.
(g) An unrecorded asset realised â‚¹10,000.
Prepare Realisation Account, Partners' Capital Accounts, Partners' Loan Account and Cash/Bank Account.

Answer:

Dr.	Realisation A/c							Cr.
Particulars				Amount (â‚¹)	Particulars		Amount (â‚¹)
To Investments				30,000	By Investment Fluctuation Reserve		8,000
To Debtors				40,000	By Provision for Doubtful Debts		4,000
To Bills Receivable				33,400	By Creditors		40,000
					By Bills Payable		40,000
To Yogesh’s Capital A/c (Wife’s Loan)				42,000	By Mrs. Yogesh’s Loan		42,000
To Cash/Bank A/c:
Creditors [40,000 – (40,000 × 15/100 × 2/12)]		39,000			By Cash/Bank A/c:
Bills Payable [40,000 – (40,000 × 15/100 × 2/12)]		39,000		78,000	Debtors	30,000
					Bills Receivable	31,730
To Naresh’ Capital A/c (Commission)				10,000	Bad Debt Recovered	15,000
To Realisation Gain transferred to:					Unrecorded Asset	10,000	86,730
Yogesh’s Capital A/c			6,665
Naresh’s Capital A/c			6,665	13,330	By Naresh’s Capital A/c (Investment taken over)		26,000

				2,46,730			2,46,730

Dr.	Partner’s Capital A/c						Cr.
Particulars		Yogesh (â‚¹)	Naresh (â‚¹)	Particulars	Yogesh (â‚¹)	Naresh (â‚¹)
To Realisation A/ c (Asset taken over)			26,000	By balance b/d	21,000	21,000
				By Realisation A/c (Gain)	6,665	6,665
To Profit & Loss A/c		55,300	55,300	By Realisation A/c (Liability paid)	42,000
To Cash/Bank A/c		14,365	–
				By Realisation A/c (Commission)		10,000
				By Naresh’s Loan A/c		43,635

		69,665	81,300		69,665	81,300

Dr.	Naresh’s Loan A/c				Cr.
Particulars		Amount (â‚¹)	Particulars	Amount (â‚¹)
To Naresh’s Capital A/c		43,635	By balance b/d	44,000
To Cash/Bank A/c		365

		44,000		44,000

Dr.	Cash/ Bank A/c				Cr.
Particulars		Amount (â‚¹)	Particulars	Amount (â‚¹)
To balance b/d		6,000	By Yogesh’s Capital A/c	14,365
To Realisation A/c (Asset Realised)		86,730	By Naresh’s Loan A/c	365
			By Realisation A/c (Liabilities Paid)	78,000

		92,730		92,730

Question 31:

A, B and C are in partnership sharing profits and losses in the proportions of 1/2, 1/3 and 1/6 respectively. On 31st March, 2019, they decided to dissolve the partnership and the position of the firm on this date is represented by the following Balance Sheet:


Liabilities		Amount (â‚¹)	Assets	Amount â€‹(â‚¹)
Creditors		40,000	Cash at Bank	3,000
Loan A/c:			Stock	50,000
A		10,000	Sundry Debtors	50,000
Workmen Compensation Reserve		21,000	Land and Building	57,000
Capital A/cs:			Profit and Loss A/c	15,000
A	60,000		Advertisement Suspense A/c	6,000
B	40,000
C	10,000	1,10,000
		1,81,000		1,81,000

During the course of realisation, a liability under a suit for damages is settled at â‚¹ 20,000 as against â‚¹ 5,000 only provided for in the books of the firm.
Land and Building were sold for â‚¹ 40,000 and the Stock and Sundry Debtors realised â‚¹ 30,000 and â‚¹ 42,000 respectively. The expenses of realisation amounted to â‚¹ 1,200.
There was a car in the firm, which was completely written off from the books. It was taken by A for â‚¹ 20,000. He also agreed to pay Outstanding Salary of â‚¹ 20,000 not provided in books.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.

Answer:

Realisation Account
Dr.							Cr.
Particulars		Amount (â‚¹)	Particulars			Amount (â‚¹)
Land and Building		57,000	Creditors			40,000
Stock		50,000	Bank
Sundry Debtors		50,000	Land and building		40,000
			Stock		30,000
Bank A/c:			Sundry Debtors		42,000	1,12,000
Creditors (40,000 + 15,000)	55,000
Expenses	1,200	56,200	Loss transferred to:
			A’s Capital A/c	30,600
			B’s Capital A/c	20,400
			C’s Capital A/c	10,200		61,200
		2,13,200				2,13,200

	Partners’ Capital Accounts
	Dr.								Cr.
Particulars		A	B	C	Particulars	A	B	C
Profit and Loss A/c Advertisement Suspense A/c Realisation A/c (Loss)		7,500 3,000 30,600	5,000 2,000 20,400	2,500 1,000 10,200	Balance b/d Workmen Compensation Reserve A/c â€‹ Bank A/c	60,000 10,500 ------	40,000 7,000 ------	10,000 3,500 200
Bank A/c		29,400	19,600	-------

		70,500	47,000	13,700		70,500	47,000	13,700

A’s Loan Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Bank A/c	10,000	Balance b/d	10,000


	10,000		10,000

Bank Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	3,000	A’s Loan A/c Realisation A/c	10,000 56,200
Realisation A/c	1,12,000	A’s Capital A/c	29,400
C’s Capital A/c	200	B’s Capital A/c	19,600

	1,15,200		1,15,200

Question 32:

A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. On 31st March, 2019, their Balance Sheet was:


Liabilities	Amount (â‚¹)	Assets		Amount (â‚¹)
Bank Overdraft	30,000	Cash in Hand		6,000
General Reserve	56,000	Bank Balance		10,000
Investments Fluctuation Reserve	20,000	Sundry Debtors	26,000
A's Loan	34,000	Less: Provision for Doubtful Debtors	2,000	24,000
Capital A/c:
A	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

On that date, the partners decide to dissolve the firm. A took over Investments at an agreed valuation of â‚¹ 35,000. Other assets were realised as follows:
Sundry Debtors: Full amount. The firm could realise Stock at 15% less and Furniture at 20% less than the book value. Building was sold at â‚¹ 1,00,000.
Compensation to employees paid by the firm amounted to â‚¹ 10,000. This liability was not provided for in the above Balance Sheet.
You are required to close the books of the firm by preparing Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.							Cr.
Particulars			Amount (â‚¹)	Particulars		Amount (â‚¹)
Sundry Debtors			26,000	Provision for Doubtful Debts		2,000
Investments			40,000	Bank Overdraft		30,000
Stock			10,000	Investments Fluctuation Reserve		20,000
Furniture			10,000
Building			60,000	A’s Capital A/c (Investments)		35,000
Bank A/c:				Bank A/c:
Compensation to Employees		10,000		Sundry Debtors	26,000
Bank Overdraft		30,000	40,000	Stock	8,500
Profit transferred to:				Furniture	8,000
A’s Capital A/c	29,000			Building	1,00,000	1,42,500
B’s Capital A/c	14,500		43,500
			2,29,500			2,29,500

Partners’ Capital Accounts
Dr.						Cr.
Particulars	A	B	Particulars	A	B
Balance b/d	–	30,000	Balance b/d	50,000	–
Realisation A/c (Investment)	35,000		General Reserve A/c	37,333	18,667
Bank A/c	81,333	3,167	Realisation A/c (Profit )	29,000	14,500

	1,16,333	33,167		1,16,333	33,167

A’s Loan Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
		Balance b/d	34,000
Bank A/c	34,000
	34,000		34,000

Bank Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	10,000	Realisation A/c	40,000
Cash A/c	6,000	A’s Capital A/c	81,333
Realisation A/c	1,42,500	B’s Capital A/c	3,167
		A’s Loan A/c	34,000
	1,58,500		1,58,500

Question 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:


Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
Sundry Creditors		20,000	Bank	7,500
Bills Payable		25,500	Sundry Debtors	58,000
Babu's Loan		30,000	Stock	39,500
Capital A/cs:			Machinery	48,000
Ashok	70,000		Investments	42,000
Babu	55,000		Freehold Property	50,500
Chetan	27,000	1,52,000
Current A/cs:
Ashok	10,000
Babu	5,000
Chetan	3,000	18,000


		2,45,500		2,45,500

The Machinery was taken over by Babu for â‚¹ 45,000, Ashok took over the Investments for â‚¹ 40,000 and Freehold property took over by Chetan at â‚¹ 55,000. The remaining Assets realised as follows:
Sundry Debtors â‚¹ 56,500 and Stock â‚¹ 36,500. Sundry Creditors were settled at discount of 7%. A Office computer, not shown in the books of accounts realised â‚¹ 9,000. Realisation expenses amounted to â‚¹ 3,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.						Cr.
Particulars		Amount (â‚¹)	Particulars		Amount (â‚¹)
Sundry Debtors		58,000	Sundry Creditors		20,000
Stock		39,500	Bills Payable		25,500
Machinery		48,000	Ashok’s Current A/c (Investment)		40,000
Investment		42,000	Babu’s Current A/c (Machinery)		45,000
Freehold property		50,500	Chetan’s Current A/c		55,000
Bank:			(Freehold property)
Sundry Creditors	18,600		Bank:
Bills Payable	25,500		Sundry Debtors	56,500
Expenses	3,000	47,100	Stock	36,500
Realisation Profit			Unrecorded Computer	9,000	1,02,000
Ashok’s Current A/c	1,200
Babu’s Current A/c	800
Chetan’s Current A/c	400	2,400

		2,87,500			2,87,500

Partners' Current Account
Dr.								Cr.
Particulars	Ashok	Babu	Chetan	Particulars	Ashok	Babu	Chetan
Realisation	40,000	45,000	55,000	Balance b/d	10,000	5,000	3,000
(Assets taken)				Realisation (Profit)	1,200	800	400
				Ashok's Capital A/c	28,800
				Babu's Capital A/c		39200
				Chetan's Capital A/c			51600
	40,000	45,000	55,000		40,000	45,000	55,000

Partners' Capital Account
Dr.								Cr.
Particulars	Ashok	Babu	Chetan	Particulars	Ashok	Babu	Chetan
Ashok's Current A/c	28,800			Balance b/d	70,000	55,000	27,000
Babu's Current A/c		39200		Bank A/c			24,600
Chetan's Current A/c			51600
Bank A/c	41,200	15,800

	70,000	55,000	51,600		70,000	55,000	51,600

Babu’s Loan A/c
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Bank A/c	30,000	Balance b/d	30,000

	30,000		30,000

Bank Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	7,500	Realisation A/c (Payment of Expenses& Liabilities)	47,100
Realisation A/c (Assets realised)	102,000	and Liabilities)
Chetan’s Capital A/c	24,600	Babu’s Loan	30,000
		Ashok’s Capital A/c	41,200
		Babu’s Capital A/c	15,800

	1,34,100		1,34,100

Question 34:

X, Y 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		Amount (â‚¹)	Assets		Amount â€‹(â‚¹)
Sundry Creditors		41,500	Cash at Bank		22,500
Bills Payable		20,000	Stock		80,000
Bank Loan		40,000	Debtors	50,000
General Reserve		50,000	Less: Provision for Doubtful Debts	2,500	47,500
Investments Fluctuation Reserve		40,000	Investments		55,000
Capital A/cs:			Premises		1,51,500
X	75,000
Y	75,000
Z	15,000	1,65,000


		3,56,500			3,56,500

A bill for â‚¹ 5,000 received from Mohan discounted from bank is not met on maturity.
The assets except Cash at Bank and Investments were sold to a company which paid â‚¹ 3,25,000 in cash.The Investments were sold and â‚¹ 56,500 were received. Mohan proved insolvent and a dividend of 50% was received from his estate. Sundry Creditors (including Bills Payable) were paid â‚¹ 57,500 in full settlement. Realisation Expenses amounted to â‚¹ 15,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.							Cr.
Particulars			Amount (â‚¹)	Particulars		Amount (â‚¹)
Stock			80,000	Creditors		41,500
Debtors			50,000	Bills Payable		20,000
Investment			55,000	Bank Loan		40,000
Premises			1,51,500	Investment Fluctuation Reserve		40,000
Bank A/c :-				Provision for Doubtful Debts		2,500
Bill		5,000		Bank A/c-
Creditors & Bills Payable		57,500		Assets	3,25,000
Expenses		15,000		Investments	56,500
Bank loan		40,000	1,17,500	Bill	2,500	3,84,000
Profit transferred to:
X’s Capital A/c	29,600
Y’s Capital A/c	29,600
Z’s Capital A/c	14,800		74,000

			5,28,000			5,28,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z

Bank A/c	1,24,600	1,24,600	39,800	Balance b/d	75,000	75,000	15,000
(bal. figure)				General Reserve	20,000	20,000	10,000
				Realisation A/c	29,600	29,600	14,800
	1,24,600	1,24,600	39,800		1,24,600	1,24,600	39,800

Bank Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	22,500	Realisation A/c	1,17,500
Realisation A/c	3,84,000	X’s Capital A/c	1,24,600
		Y’s Capital A/c	1,24,600
		Z’s Capital A/c	39,800

	4,06,500		4,06,500

Question 35:

Rita and Sobha are partners in a firm, Fancy Garments Exports, sharing profits and losses equally. On 1st April, 2019, the Balance Sheet of the firm was:


Liabilities		Amount (â‚¹)	Assets		Amount (â‚¹)
Sundry Creditors		75,000	Cash		6,000
Bills Payable		30,000	Bank		30,000
Rita's Loan		15,000	Stock		75,000
Reserve		24,000	Book Debts	66,000
Capital A/cs:			Less: Provision for Doubtful Debts	6,000	60,000
Rita	90,000
Sobha	30,000	1,20,000	Plant and Machinery		45,000
			Land and Building		48,000

		2,64,000			2,64,000

The firm was dissolved on the date given above. The following transactions took place:
(a) Rita took 25% of the Stock at a discount of 20% in settlement of her loan.
(b) Book Debts realised â‚¹ 54,000; balance of the Stock was sold at a profit of 30% on cost.
(c) Sundry Creditors were paid out at a discount of 10%. Bills Payable were paid in full .
(d) Plant and Machinery realised â‚¹ 75,000. Land and Building â‚¹ 1,20,000.
(e) Rita took the goodwill of the firm at a value of â‚¹ 30,000.
(f) An unrecorded asset of â‚¹ 6,900 was handed over to an unrecorded liability of â‚¹ 6,000 in full settlement.
(g) Realisation expenses were â‚¹ 5,250.
Show Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.

Answer:

Realisation Account
Dr.					Cr.
Particulars		Amount (â‚¹)	Particulars		Amount (â‚¹)
Stock		75,000	Provision for Doubtful Debts		6,000
Book Debts		66,000	Sundry Creditors		75,000
Plant and Machinery		45,000	Bills Payable		30,000
Land and building		48,000
			Rita’s Capital A/c		30,000
			(Goodwill taken over)
Bank A/c:			Rita’s Loan A/c (Stock taken over)		15,000
Sundry Creditors	67,500
Bills Payable	30,000		Bank A/c:
Expenses	5,250	1,02,750	Book Debts	54,000
Profit transferred to:			Stock	73,125
Rita’s Capital A/c	70,688		Plant and Machinery	75,000
Sobha’s Capital A/c	70,687	1,41,375	Land and Building	1,20,000	3,22,125
		4,78,125			4,78,125

Partners’ Capital Accounts
Dr.						Cr.
Particulars	Rita (â‚¹)	Sobha (â‚¹)	Particulars	Rita (â‚¹)	Sobha (â‚¹)
Realisation A/c (Assets)	30,000	–	Balance b/d	90,000	30,000
			Reserve Fund	12,000	12,000
Bank A/c	1,42,688	1,12,687	Realisation A/c (Profit)	70,688	70,687

	1,72,688	1,12,687		1,72,688	1,12,687

Rita’s Loan A/c
Dr.		Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
To Realisation A/c	15,000	Balance b/d	15,000

	15,000		15,000

Bank Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	30,000	Realisation A/c	1,02,750
Cash A/c	6,000	Rita’s Capital A/c	1,42,688
Realisation A/c	3,22,125	Sobha’s Capital A/c	1,12,687

	3,58,125		3,58,125

Working Notes:

WN1: Value of Stock Taken Over by Rita

$Stock taken over by Rita = (Book Value of Stock \times \frac{25}{100} \times \frac{80}{100}) [Since stock is taken over at a discount of 20 %] Stock taken over by Rita = ₹ (75, 000 \times \frac{25}{100} \times \frac{80}{100}) = ₹ 15, 000$

WN2: Value of Stock Sold

â€‹ $Book Value of Balance of Stock Sold = Value of Stock - Stock Taken over by Rita Book Value of Balance of Stock Sold = ₹ (75, 000 - 18, 750) = ₹ 56, 250 Value of Stock Sold = ₹ (56, 250 \times \frac{130}{100}) = ₹ 73, 125 [Sold at 30 % Profit]$

Question 36:

Following is the Balance Sheet of Arvind and Balbir as at 31st March, 2019:

Liabilities		Amount (â‚¹)	Assets		Amount (â‚¹)
Trade Creditors		45,000	Cash		750
Bills Payable		12,000	Bank		12,000
Mrs. Arvind's Loan		7,500	Stock		7,500
Mrs. Balbir's Loan		15,000	Investments		15,000
Reserve Fund		15,000	Book Debts	30,000
Investments Fluctuation Reserve		1,500	Less: Provision for Doubtful Debts	3,000	27,000
Capital A/cs:			Building		22,500
Arvind	15,000		Plant		30,000
Balbir	15,000	30,000	Goodwill		6,000
			Profit and Loss A/c		5,250
		1,26,000			1,26,000

The firm was dissolved on the above date under the following arrangement:
(a) Arvind promised to pay off Mrs. Arvind's Loan and took Stock at â‚¹ 6,000.
(b) Balbir took half the Investments @ 10% discount.
(c) Book Debts realised â‚¹ 28,500.
(d) Trade Creditors and Bills Payable were due on average basis of one month after 31st March, but were paid immediately on 31st March @ 2% discount per annum.
(e) Plant realised â‚¹ 37,500; Building â‚¹ 60,000; Goodwill â‚¹ 9,000 and remaining Investments â‚¹ 6,750.
(f) An old typewriter, written off completely from the firm's books, now estimated to realise â‚¹ 450. It was taken by Balbir at this estimated price.
(g) Realisation expenses were â‚¹ 1,500.
Show Realisation Account, Capital Accounts of Partners and Bank Account.

Answer:

Realisation Account
Dr.							Cr.
Particulars			Amount Rs	Particulars		Amount Rs
Stock			7,500	Provision for Doubtful Debts		3,000
Investments			15,000	Trade Creditors		45,000
Book Debts			30,000	Bills Payable		12,000
Building			22,500	Mrs. Arvid’s Loan		7,500
Plant			30,000	Mrs. Balbir’s Loan		15,000
Goodwill			6,000	Investments Fluctuation Reserve		1,500
Arvind’s Capital A/c (Mrs. Arvind’s Loan)			7,500	Arvind’s Capital A/c (Stock)		6,000
Bank A/c:				Balbir’s Capital A/c (Investments 7500 × 90%)		6,750
Trade Creditors		44,925		Balbir’s Capital A/c (Unrecorded Typewriter )		450
Bills Payable		11,980		Bank A/c:
Expense		1,500		Book Debts	28,500
Mrs. Balbir’s Loan		15,000	73,405	Plant	37,500
Profit transferred to:				Building	60,000
Arvind’s Capital A/c	23,522.50			Goodwill	9,000
Balbir’s Capital A/c	23,522.50		47,045	Investments	6,750	1,41,750

			2,38,950			2,38,950

Partners’ Capital Accounts
Dr.						Cr.
Particulars	Arvind	Balbir	Particulars	Arvind	Balbir
Profit and Loss A/c	2,625	2,625	Balance b/d	15,000	15,000
Realisation A/c (Assets)	6,000	7,200	Realisation A/c	7,500	–
Bank A/c	44,897.50	36,197.50	Reserve Fund	7,500	7,500
			Realisation A/c (Profit)	23,522.50	23,522.50

	53,522.50	46,022.50		53,522.50	46,022.50

Bank Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	12,000	Realisation A/c	73,405
Cash A/c	750	Arvind’s Capital A/c	44,897.5
Realisation A/c	1,41,750	Balbir’s Capital A/c	36,197.5

	1,54,500		1,54,500

Working Notes:

Creditors	45,000
Less:2% discount for 1 month	(75)
Payment made to Creditors	44,925

Bills Payable	12,000
Less: 2% discount for 1 month	(20)
Payment made for Bills Payable	11,980

Question 37:

Anju, Manju and Sanju were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2019, their Balance Sheet was:


Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
Creditors		50,000	Cash	60,000
Bank Loan		35,000	Debtors	75,000
Employees' Provident Fund		15,000	Stock	40,000
Investments Fluctuation Reserve		10,000	Investments	20,000
Commission Received in Advance		8,000	Plant	50,000
Capital A/cs:			Profit and Loss A/c	3,000
Anju	50,000
Manju	50,000
Sanju	30,000	1,30,000
		2,48,000		2,48,000

On this date, the firm was dissolved. Anju was appointed to realise the assets. Anju was to receive 5% commission on the sale of assets (except cash) and was to bear all expenses of realisation.
Anju realised the assets as follows: Debtors â‚¹ 60,000; Stock â‚¹ 35,500; Investments â‚¹ 16,000; Plant 90% of the book value. Expenses of Realisation amounted to â‚¹ 7,500. Commission received in advance was returned to customers after deducting â‚¹ 3,000.
Firm had to pay â‚¹ 8,500 for Outstanding Salary, not provided for earlier, Compensation paid to employees amounted to â‚¹ 17,000. This liability was not provided for in the above Balance Sheet. â‚¹ 20,000 had to be paid for Employees' Provident Fund.
Prepare Realisation Account, Capital Accounts of Partners and Cash Account.

Answer:

Realisation Account
Dr.							Cr.
Particulars		Amount Rs	Particulars			Amount Rs
Debtors		75,000	Creditors			50,000
Stock		40,000	Bank Loan			35,000
Investments		20,000	Provident Fund			15,000
Plant		50,000	Commission Received in Advance			8,000
Cash A/c:			Investments Fluctuation Fund			10,000
Commision Received in Advance	5,000		Cash A/c:
Outstanding Salary	8,500		Debtors		60,000
Compensation paid to Employees	17,000		Stock		35,500
Provident Fund	20,000		Investments		16,000
Creditors	50,000		Plant		45,000	1,56,500
Bank Loan	35,000	1,35,500	Loss transferred to:
Anuj’s Capital A/c (Commission)		7,825	Anju’s Capital A/c	21,530
			Manju’s Capital A/c	21,530
			Sanju’s Capital A/c	10,765		53,825
		3,28,325				3,28,325

Partners’ Capital Accounts
Dr.								Cr.
Particulars	Anju	Manju	Sanju	Particulars	Anju	Manju	Sanju
Profit and Loss A/c	1,200	1,200	600	Balance b/d	50,000	50,000	30,000
Realisation A/c	21,530	21,530	10,765	Realisation A/c	7,825	–	–
Cash A/c	35,095	27,270	18,635

	57,825	50,000	30,000		57,825	50,000	30,000

Cash Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	60,000	Realisation A/c	1,35,500
Realisation A/c	1,56,500	Anju’s Capital A/c	35,095
		Manju’s Capital A/c	27,270
		Sanju’s Capital A/c	18,635

	2,16,500		2,16,500

Working Notes:

WN 1

WN 2

Question 38:

A, B and C were in partnership sharing profits in the ratio of 7 : 2 : 1 and the Balance Sheet of the firm as at 31st March, 2019 was:

Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
Capital A/cs:			Building	20,000
A	12,410		Plant	31,220
B	8,650		Goodwill	10,000
C	80,620	1,01,680	100 Shares in X Ltd. (At cost)	2,400
Creditors		11,210	1,000 Shares in Y Ltd. (At cost)	10,000
Reserve for Depreciation on Plant		20,000	Stock	11,240
			Debtors	8,740
			Bank	1,210
			Patents	38,080

		1,32,890		1,32,890

â€‹
It was agreed to dissolve the partnership as on 31st March, 2019 and the terms of dissolution were−
(a) A to take over the Building at an agreed amount of â‚¹ 31,500.
(b) B, who was to carry on the business, to take over the Goodwill, Stock and Debtors at book value, the Patents at â‚¹ 30,000 and Plant at â‚¹ 5,000. He was also to pay the Creditors.
(c) C to take over shares in X Ltd. at â‚¹ 15 each.
(d) The shares in Y Ltd. to be divided in the profit-sharing ratio.
Show Ledger Accounts recording the dissolution in the books of the firm.

Answer:

Realisation Account
Dr.							Cr.
Particulars	Amount Rs	Particulars				Amount Rs
Building	20,000	Creditors				11,210
Plant	31,220	Reserve for Depreciation on Plant				20,000
Good will	10,000	A’s Capital A/c:
100 Shares in X Ltd.	2,400	Building	31,500
1,000 Shares in Y Ltd.	10,000	Shares of Y Ltd.	7,000			38,500
Stock	11,240	B’s Capital A/c:
Debtors	8,740	Good will	10,000
Patents	38,080	Stock	11,240
B’s Capital A/c (Creditors)	11,210	Debtors	8,740
		Patents	30,000
		Plant	5,000
		Shares of Y Ltd.	2,000			66,980
		C’s Capital:
		Shares of X Ltd.			1,500
		Shares of Y Ltd.			1,000	2,500
		Loss transferred to:
		A’s Capital A/c		2,590
		B’s Capital A/c		740
		C’s Capital A/c		370		3,700

	1,42,890					1,42,890

Partners’ Capital Accounts
Dr.							Cr.
Particulars	A	B	C	Particulars	A	B	C
Realisation A/c (Assets)	38,500	66,980	2,500	Balance b/d	12,410	8,650	80,620
Realisation A/c (Loss)	2,590	740	370	Realisation A/c (Creditors)	–	11,210	–
Bank A/c	–	–	77,750	Bank A/c	28,680	47,860

	41,090	67,720	80,620		41,090	67,720	80,620

Bank Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	1,210	C’s Capital A/c	77,750
A’s Capital A/c	28,680
B’s Capital A/c	47,860
	77,750		77,750

Working Notes:

Distribution of Shares in Y Ltd.

D i s t r i b u t i o n o f s h a r e s i n Y L t d . a m o n g t h e p a r t n e r s : A' s S h a r e = 10, 000 \times \frac{7}{10} = R s . 7, 000 B' s S h a r e = 10, 000 \times \frac{2}{10} = R s . 2, 000 C' s S h a r e = 10, 000 \times \frac{1}{10} = R s . 1, 000

Question 39:

Srijan, Raman and Manan were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. On 31st, March, 2017 their Balance Sheet was as follows:

BALANCE SHEET OF SRIJAN, RAMAN AND MANAN *as on 31st March, 2017*
Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
Capitals:			Capital: Manan	10,000
Srijan	2,00,000		Plant	2,20,000
Raman	1,50,000	3,50,000	Investments	70,000
Creditors		75,000	Stock	50,000
Bills Payable		40,000	Debtors	60,000
Outstanding Salary		35,000	Bank	10,000
			Profit and Loss Account	80,000
		5,00,000		5,00,000

On the above date they decided to dissolve the firm.
(a) Srijan was appointed to realise the assets and discharge the liabilities. Srijan was to receive 5% commission on sale of assets (except cash) and was to bear all expenses of realisation.
(b)

Assets were realised as follows:	â‚¹
Plant	85,000
Stock	33,000
Debtors	47,000

(c) Investments were realised at 95% of the book value.
(d) The firm had to pay â‚¹ 7,500 for an outstanding repair bill not provided for earlier.
(e) A contingent liabillity in respect of bills receivable, discounted with the bank had also materialised and had to be discharged for â‚¹ 15,000.
(f) Expenses of realisation amounting to â‚¹ 3,000 were paid by Srijan.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Dr.	Realisation A/c						Cr.
Particulars			Amount (â‚¹)	Particulars		Amount (â‚¹)
To Plant			2,20,000	By Creditors		75,000
To Investments			70,000	By Bills Payable		40,000
To Stock			50,000	By Outstanding Salary		35,000
To Debtors			60,000

To Srijan’s Capital A/c (Commission)			11,575	By Bank A/c:
To Bank A/c:				Investments	66,500
Outstanding Bill Repair		7,500		Plant	85,000
Contingent liability against bills payable		15,000		Stock	33,000
Creditors		75,000		Debtors	47,000	2,31,500
Bills Payable		40,000
Outstanding Salary		35,000	1,72,500	By Loss on Realisation transferred to:
				Srijan’s Capital A/c	81,030
				Raman’s Capital A/c	81,030
				Manan’s Capital A/c	40,515	2,02,575

			5,84,075			5,84,075

Dr.	Partner’s Capital A/c								Cr.
Particulars		Srijan (â‚¹)	Raman (â‚¹)	Manan (â‚¹)	Particulars	Srijan (â‚¹)	Raman (â‚¹)	Manan (â‚¹)
To balance b/d				10,000	By balance b/d	2,00,000	1,50,000
To Realisation A/c (Loss)		81,030	81,030	40,515	By Realisation A/c (Commission)	11,575
To Profit & Loss A/c		32,000	32,000	16,000
To Bank A/c (Final Payment)		98,545	36,970	–	By Bank A/c			66,515

		2,11,575	1,50,000	66,515		2,11,575	1,50,000	66,515

Dr.	Bank A/c				Cr.
Particulars		Amount (â‚¹)	Particulars	Amount (â‚¹)
To balance b/d		10,000	By Srijan’s Capital A/c	98,545
To Realisation A/c (Asset Realised)		2,31,500	By Raman’s Capital A/c	36,970
To Manan’s Capital A/c		66,515	By Realisation A/c (Liabilities Paid)	1,72,500

		3,08,015		3,08,015

Question 40:

A, B and C were partners sharing profits in the ratio of 2 : 2 : 1. They decided to dissolve their firm on 31st March, 2019 when the Balance Sheet was:

Liabilities		Amount (â‚¹)	Assets		Amount (â‚¹)
Creditors		40,000	Cash		40,000
Bills Payable		46,000	Debtors	70,000
Employees’ Provident Fund		32,000	Less: Provision for Doubtful Debts	6,000	64,000
Mrs. A’s Loan		38,000	Stock		50,000
C’s Loan		30,000	Investments		60,000
Investments Fluctuation Reserve		16,000	Furniture		42,000
Capitals A/cs:			Machinery		1,36,000
A	1,20,000		Land		1,00,000
B	1,00,000		Goodwill		30,000
C	1,00,000	3,20,000

		5,22,000			5,22,000

Following transactions took place:
(a) A took over Stock at â‚¹ 36,000. He also took over his wife's loan.
(b) B took over half of Debtors at â‚¹ 28,000.
(c) C took over Investments at â‚¹ 54,000 and half of Creditors at their book value.
(d) Remaining Debtors realised 60% of their book value. Furniture sold for â‚¹ 30,000; Machinery â‚¹ 82,000 and Land â‚¹ 1,20,000.
(e) An unrecorded asset was sold for â‚¹ 22,000.
(f) Realisation expenses amounted to â‚¹ 4,000.
Prepare necessary Ledger Accounts to close the books of the firm.

Answer:

Realisation Account
Dr.		Cr.
Particulars	Amount Rs	Particulars		Amount Rs
Debtors	70,000	Provision for Doubtful Debts		6,000
Stock	50,000	Creditors		40,000
Investments	60,000	Bills Payable		46,000
Furniture	42,000	Employee’s Provident Fund		32,000
Machinery	1,36,000	Investment Fluctuation Fund		16,000
Land	1,00,000	Mrs. A’s Loan		38,000
Goodwill	30,000	A’s Capital A/c (Stock)		36,000
A’s Capital A/c (Mrs.A’s Loan)	38,000	B’s Capital A/c (Debtors)		28,000
C’s Capital A/c (Creditors)	20,000	C’s Capital A/c (Investments)		54,000
Cash A/c (Expenses)	4,000	Cash A/c (Debtors) 60% × 35,000		21,000
Cash A/c (Creditors)	20,000	Cash A/c (Furniture)		30,000
Cash A/c (Bills Payable)	46,000	Cash A/c (Machinery)		82,000
Cash A/c (Employees’ Provident Fund)	32,000	Cash A/c (Land)		1,20,000
		Cash A/c (Unrecorded Assets)		22,000
		Loss on Revaluation transferred to:
		A	30,800
		B	30,800
		C	15,400	77,000
	6,48,000			6,48,000

Partners’ Capital Account
Dr.				Cr.
Particulars	A	B	C	Particulars	A	B	C
Realisation A/c (Stock)	36,000	-	-	Balance b/d	1,20,000	1,00,000	1,00,000
Realisation A/c (Debtors)	-	28,000	-	Realisation A/c (Mrs.A’s Loan)	38,000	-	-
Realisation A/c (Investments)	-	-	54,000	Realisation A/c (Creditors)	-	-	20,000
Realisation A/c (Loss)	30,800	30,800	15,400
Cash A/c	91,200	41,200	50,600
	1,58,000	1,00,000	1,20,000		1,58,000	1,00,000	1,20,000

C’s Loan A/c
Dr.		Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Cash A/c	30,000	Balance b/d	30,000
	30,000		30,000

Cash A/c
Dr.		Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	40,000	Realisation A/c (Creditors)	20,000
Realisation A/c (Debtors)	21,000	Realisation A/c (Expenses)	4,000
Realisation A/c (Furniture)	30,000	Realisation A/c (Bills Payable)	46,000
Realisation A/c (Machinery)	82,000	Realisation A/c (Employees’ Provident Fund)	32,000
Realisation A/c (Land)	1,20,000	C’s Loan A/c	30,000
Realisation A/c (Unrecorded Assets)	22,000	A’s Capital A/c	91,200
		B’s Capital A/c	41,200
		C’s Capital A/c	50,600
	3,15,000		3,15,000

Question 41:

Krishna and Arjun are partners in a firm. They share profits in the ratio of 4 : 1. They decide to dissolve the firm on 31st March, 2019 at which date their Balance Sheet stood as:

Liabilities		Amount (â‚¹)	Assets		Amount (â‚¹)
Bank Loan		1,500	Trademarks		1,200
Creditors for Goods		8,000	Machinery		12,000
Bills Payable		500	Furniture		400
Capital A/cs:			Stock		6,000
Krishna	16,000		Debtors	9,000
Arjun	6,000	22,000	Less: Provision for Bad Debts	400	8,600
			Cash at Bank		2,800
			Advertisement Suspense		1,000

		32,000			32,000

The realisation shows the following results:
(a) Goodwill was sold for â‚¹ 1,000.
(b) Debtors were realised at book value less 10%.
(c) Trademarks realised â‚¹ 800.
(d) Machinery and Stock-in-Trade were taken by Krishna for â‚¹ 14,400 and â‚¹ 3,600 respectively.
(e) An unrecorded asset estimated at â‚¹ 500 was sold for â‚¹ 200.
(f) Creditors for goods were settled at a discount of â‚¹ 80. The expenses on realisation were â‚¹ 800.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account. â€‹

â€‹

Answer:

Realisation Account
Dr.								Cr.
Particulars		Amount Rs	Particulars				Amount Rs
Trade Marks		1,200	Provision for Bad Debts				400
Machinery		12,000	Bank Loan				1,500
Furniture		400	Creditors for Goods				8,000
Stock		6,000	Bills Payable				500
Debtors		9,000
Bank A/c:			Bank A/c:
Bank Loan	1,500		Goodwill		1,000
Creditors	7,920		Debtors		8,100
Bills Payable	500		Trade Marks		800
Expense	800	10,720	Unrecorded Assets		200		10,100
			Krishna’s Capital A/c:
			Machinery	14,400
			Stock in Trade	3,600			18,000
			Loss transferred to:
			Krishna’s Capital A/c			656
			Arjun’s Capital A/c			164	820

		39,320					39,320

Partners’ Capital Accounts

Dr.

Cr.

Particulars

Krishna

Arjun

Particulars

Krishna

Arjun

Advertisement Suspense A/c

800

200

Balance b/d

16,000

6,000

Realisation A/c (Assets )

18,000

–

Realisation A/c (Loss)

656

164

Bank A/c

3,456

–

Bank A/c

–

5,636

19,456

6,000

19,456

6,000

Bank Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	2,800	Realisation A/c	10,720
Realisation A/c	10,100	Arjun’s Capital A/c	5,636
Krishna’s Capital A/c	3,456

	16,356		16,356

Question 42:

There are two partners X and Y in a firm and their capitals are â‚¹ 50,000 and â‚¹ 40,000. The creditors are â‚¹ 30,000. The assets of the firm realise â‚¹ 1,00,000. How much will X and Y receive?

Answer:

Realisation Account
Dr.				Cr.
Particulars	Amount Rs	Particulars			Amount Rs
Sundry Assets (WN)	1,20,000	Creditors			30,000
Cash A/c	30,000	Cash A/c			1,00,000
		Loss transferred to:
		X’s Capital A/c	10,000
		Y’s Capital A/c	10,000		20,000
	1,50,000				1,50,000

Partners’ Capital Accounts
Dr.						Cr.
Particulars	X	Y	Particulars	X	Y
Realisation A/c (Loss)	10,000	10,000	Balance b/d	50,000	40,000
Cash A/c	40,000	30,000

	50,000	40,000		50,000	40,000

Cash Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Realisation A/c	1,00,000	Realisation A/c	30,000
		X’s Capital A/c	40,000
		Y’s Capital A/c	30,000

	1,00,000		1,00,000

Working Note:

Memorandum Balance Sheet
Liabilities		Amount Rs	Assets	Amount Rs
Capital A/c			Sundry Assets	1,20,000
X	50,000		(Balancing Figure)
Y	40,000	90,000
Creditors		30,000

		1,20,000		1,20,000

Question 43:

A, B and C were partners sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2019, A's Capital and B's Capital were â‚¹ 30,000 and â‚¹ 20,000 respectively but C owed â‚¹ 5,000 to the firm. The liabilities were â‚¹ 20,000. The assets of the firm realised â‚¹ 50,000.
Prepare Realisation Account, Partner's Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.					Cr.
Particulars	Amount Rs	Particulars		Amount Rs
Sundry Assets (WN)	65,000	Creditors		20,000
Cash A/c (Creditors)	20,000	Cash A/c (Assets realised)		50,000
		Loss transferred to:
		A’s Capital A/c	7,500
		B’s Capital A/c	4,500
		C’s Capital A/c	3,000	15,000
	85,000			85,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars	A	B	C	Particulars	A	B	C
Balance b/d	–	–	5,000	Balance b/d	30,000	20,000	–
Realisation A/c (Loss)	7,500	4,500	3,000	Cash A/c	–	–	8,000
Cash A/c	22,500	15,500	–

	30,000	20,000	8,000		30,000	20,000	8,000

Cash Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Realisation A/c (Assets)	50,000	Realisation A/c (Creditors)	20,000
C’s Capital A/c	8,000	A’s Capital A/c	22,500
		B’s Capital A/c	15,500

	58,000		58,000

Working Note:

Memorandum Balance Sheet as on March 31, 2018
Liabilities		Amount Rs	Assets	Amount Rs
Capital A/c			C’s Capital A/c	5,000
A	30,000		Sundry Assets	65,000
B	20,000	50,000	(Balancing Figure)
Other liabilities		20,000
		70,000		70,000

Question 44:

A and B were partners sharing profits and losses as to 7/11th to A and 4/11th to B. They dissolved the partnership on 30th May, 2018. As on that date their capitals were: A â‚¹ 7,000 and B â‚¹ 4,000. There were also due on Loan A/c to A â‚¹ 4,500 and to B â‚¹ 750. The other liabilities amounted to â‚¹ 5,000. The assets proved to have been undervalued in the last Balance Sheet and actually realised â‚¹ 24,000.
Prepare necessary accounts showing the final settlement between partners.

Answer:

Realisation Account
Dr.				Cr.
Particulars		Amount Rs	Particulars	Amount Rs
Sundry Assets (WN)		21,250	Other liabilities	5,000
Cash A/c (Liabilities)		5,000	Cash A/c (Assets Realised)	24,000
Profit transferred to:
A’s Capital A/c	1,750
B’s Capital A/c	1,000	2,750

		29,000		29,000

Partners’ Capital Accounts
Dr.						Cr.
Particulars	A	B	Particulars	A	B
Cash A/c	8,750	5,000	Balance b/d	7,000	4,000
			Realisation A/c (Profit)	1,750	1,000
	8,750	5,000		8,750	5,000

Partners’ Loan Accounts
Dr.						Cr.
Particulars	A	B	Particulars	A	B
Cash A/c	4,500	750	Balance b/d	4,500	750

	4,500	750		4,500	750

Cash Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Realisation A/c (Assets)	24,000	A’s Capital A/c	8,750
		B’s Capital A/c	5,000
		A’s Loan A/c	4,500
		B’s Loan A/c	750
		Realisation A/c	5,000

	24,000		24,000

Working Note:

Memorandum Balance Sheet as on May 30, 2018
Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Sundry Assets	21,250
A	7,000		(Balancing Figure)
B	4,000	11,000
A’s Loan		4,500
B’s Loan		750
Other Liabilities		5,000

		21,250		21,250

Question 45:

A and B dissolve their partnership. Their position as at 31st March, 2019 was:

Particulars	â‚¹

A's Capital	25,000
B's Capital	15,000
Sundry Creditors	20,000
Cash in Hand and at Bank	750

The balance of A's Loan Account to the firm stood at â‚¹ 10,000. The realisation expenses amounted to â‚¹ 350. Stock realised â‚¹ 20,000 and Debtors â‚¹ 25,000. B took a machine at the agreed valuation of â‚¹ 7,500. Other fixed assets realised â‚¹ 20,000.
You are required to close the books of the firm.

Answer:

Realisation Account
Dr.							Cr.
Particulars			Amount Rs	Particulars		Amount Rs
Sundry Assets (WN)			69,250	Sundry Creditors		20,000
Bank A/c:				Bank A/c:
S. Creditors	20,000			Stock	20,000
Expenses	350		20,350	Debtors	25,000
Profit transferred to:				Other Assets	20,000	65,000
A’s Capital A/c		1,450		B’s Capital A/c (Machinery)		7,500
B’s Capital A/c		1,450	2,900
			92,500			92,500

A’s Loan Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Bank A/c	10,000	Balance b/d	10,000

	10,000		10,000

Partners’ Capital Accounts
Dr.						Cr.
Particulars	A	B	Particulars	A	B
Realisation A/c (Machinery)	–	7,500	Balance b/d	25,000	15,000
Bank A/c	26,450	8,950	Realisation A/c (Profit)	1,450	1,450

	26,450	16,450		26,450	16,450

Bank Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	750	A’s Loan A/c	10,000
Realisation A/c	65,000	A’s Capital A/c	26,450
		B’s Capital A/c	8,950
		Realisation A/c	20,350

	65,750		65,750

Working Note:

Memorandum Balance Sheet as on March 31, 2019
Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Cash in Hand and at Bank	750
A	25,000
B	15,000	40,000	Sundry Assets
Sundry Creditors		20,000	(other than Cash and Bank)	69,250
A’s Loan		10,000

		70,000		70,000

Question 46:

Ashok and Kishore were in partnership sharing profits in the ratio of 3 : 1. They agreed to dissolve the firm. The assets (other than cash of â‚¹ 2,000) of the firm realised â‚¹ 1,10,000. The liabilities and other particulars on that date were:

Creditors	â‚¹ 40,000
Ashok's Capital	â‚¹ 1,00,000
Kishore's Capital	â‚¹ 10,000	(Dr. Balance)
Profit and Loss A/c	â‚¹ 8,000	(Dr. Balance)
Realisation Expenses	â‚¹ 1,000

You are required to close the books of the firm.

Answer:

Realisation Account
Dr.					Cr.
Particulars		Amount Rs	Particulars			Amount Rs
Sundry Assets (WN)		1,20,000	Creditors			40,000
Cash A/c:			Cash A/c (Assets Realised)			1,10,000
Creditors	40,000		Loss transferred to:
Expenses	1,000	41,000	Ashok’s Capital A/c	8,250
			Kishore’s Capital A/c	2,750		11,000

		1,61,000				1,61,000

Partners’ Capital Accounts
Dr.						Cr.
Particulars	Ashok	Kishore	Particulars	Ashok	Kishore
Balance b/d	–	10,000	Balance b/d	1,00,000	–
Realisation A/c (Loss)	8,250	2,750	Cash A/c	–	14,750
Profit and Loss A/c	6,000	2,000
Cash A/c	85,750

	1,00,000	14,750		1,00,000	14,750

Cash Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	2,000	Realisation A/c	41,000
Realisation A/c	1,10,000	Ashok’s Capital A/c	85,750
Kishore’s Capital A/c	14,750

	1,26,750		1,26,750

Working Note:

Memorandum Balance Sheet
Liabilities	Amount Rs	Assets	Amount Rs
Creditors	40,000	Cash	2,000
Ashok’s Capital	1,00,000	Kishore’s Capital	10,000
		Profit and Loss A/c	8,000
		Sundry Assets (Balancing figure)	1,20,000

	1,40,000		1,40,000

Question 47:

X, Y and Z entered into a partnership and contributed â‚¹ 9,000; â‚¹ 6,000 and â‚¹ 3,000 respectively. They agreed to share profits and losses equally. The business lost heavily during the very first year and they decided to dissolve the firm. After realising all assets and paying off liabilities, there remained a cash balance of â‚¹ 6,000.
Prepare Realisation Account and Partner's Capital Accounts.

Answer:

Realisation Account
Dr.					Cr.
Particulars	Amount Rs	Particulars		Amount Rs
Sundry Assets (*WN 2*)	18,000	Cash A/c (Asset realised )		6,000
		Loss transferred to:
		X’s Capital A/c	4,000
		Y’s Capital A/c	4,000
		Z’s Capital A/c	4,000	12,000

	18,000			18,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Realisation A/c (Loss)	4,000	4,000	4,000	Balance b/d	9,000	6,000	3,000
Cash A/c	5,000	2,000	–	Cash A/c	–	–	1,000

	9,000	6,000	4,000		9,000	6,000	4,000

Working Notes:

WN 1

Cash Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Realisation A/c	6,000	X’s Capital A/c	5,000
Z’s Capital A/c	1,000	Y’s Capital A/c	2,000

	7,000		7,000

WN 2

Memorandum Balance Sheet
Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Sundry Assets	18,000
X’s Capital A/c	9,000		(Balancing figure)
Y’s Capital A/c	6,000
Z’s Capital A/c	3,000	18,000
		18,000		18,000

Question 48:

A, B and C started business on 1st April, 2018 with capitals of â‚¹ 1,00,000; â‚¹ 80,000 and â‚¹ 60,000 respectively sharing profits (losses) in the ratio of 4 : 3 : 3. For the year ended 31st March, 2019, the firm suffered a loss of â‚¹ 50,000. Each of the partners withdrew â‚¹ 10,000 during the year.
On 31st March, 2019, the firm was dissolved, the creditors of the firm stood at â‚¹ 24,000 on that date and Cash in Hand was â‚¹ 4,000. The assets realised â‚¹ 3,00,000 and Creditors were paid â‚¹ 23,500 in full settlement of their claims.
Prepare Realisation Account and show your workings clearly.

Answer:

Realisation Account
Dr.					Cr.
Particulars		Amount (â‚¹)	Particulars	Amount (â‚¹)
Sundry Assets (*WN 2*)		1,80,000	Sundry Creditors	24,000
Cash A/c (Creditors)		23,500	Cash A/c (Assets)	3,00,000
Profit transferred to:
A’s Capital A/c	48,200
B’s Capital A/c	36,150
C’s Capital A/c	36,150	1,20,500

		3,24,000		3,24,000

Partners’ Capital Accounts
Dr.							Cr.
Particulars	A	B	C	Particulars	A	B		C
				Balance b/d	70,000	55,000		35,000
Cash A/c	1,18,200	91,150	71,150	Realisation A/c	48,200	36,150		36,150

	1,18,200	91,150	71,150		1,18,200	91,150		71,150

Cash Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Balance b/d	4,000	Realisation A/c	23,500
Realisation A/c	3,00,000	A’s Capital A/c	1,18,200
		B’s Capital A/c	91,150
		C’s Capital A/c	71,150

	3,04,000		3,04,000

Working Notes:

WN 1 Calculation of Partners’ Capital as on April 01, 2019

Particulars	X	Y	Z
Capital as on April 01, 2018	1,00,000	80,000	60,000
Less:Drawings	(10,000)	(10,000)	(10,000)
Less: Share of Loss (4 : 3 : 3)	(20,000)	(15,000)	(15,000)
Capital as on April 01, 2019	70,000	55,000	35,000

WN 2

Memorandum Balance Sheet as on March 31, 2019
Liabilities	Amount (â‚¹)	Assets	Amount (â‚¹)
Capital A/cs:		Cash in Hand	4,000
A	70,000	Sundry Assets	1,80,000
B	55,000	(Balancing figure)
C	35,000
Creditors	24,000

	1,84,000		1,84,000

Question 49:

A, B and C were in partnership sharing profits and losses in the ratio of 2 : 1 : 1. They decided to dissolve the partnership. On that date of dissolution, Sundry Assets (including cash â‚¹ 5,000) amounted to â‚¹ 88,000, assets realised â‚¹ 80,000 (including an unrecorded asset which realised â‚¹ 4,000). A contingent liability on account of bills discounted â‚¹ 8,000 was paid by the firm. The Capital Accounts of A, B and C showed a balance of â‚¹ 20,000 each.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account.

Answer:

Realisation Account
Dr.						Cr.
Particulars		Amount Rs	Particulars		Amount Rs
Sundry Assets		83,000	Sundry Liabilities (WN )		28,000
			Cash A/c (Assets realised)		80,000
Cash A/c:			Loss transferred to:
Sundry Liabilities	28,000		A’s Capital A/c	5,500
Contingent Liabilities	8,000	36,000	B’s Capital A/c	2,750
			C’s Capital A/c	2,750	11,000
		1,19,000			1,19,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars	A	B	C	Particulars	A	B	C
Realisation A/c (Loss)	5,500	2,750	2,750	Balance b/d	20,000	20,000	20,000
Bank A/c	14,500	17,250	17,250

	20,000	20,000	20,000		20,000	20,000	20,000

Cash Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	5,000	Realisation A/c	36,000
Realisation A/c	80,000	A’s Capital A/c	14,500
		B’s Capital A/c	17,250
		C’s Capital A/c	17,250

	85,000		85,000

Working Notes:

Memorandum Balance Sheet
Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Cash in Hand	5,000
A	20,000		Sundry Assets	83,000
B	20,000
C	20,000	60,000
Sundry Liabilities		28,000
(Balancing figure)
		88,000		88,000

Question 50:

On 1st April, 2018, A, B and C commenced business in partnership sharing profits and losses in proportion of 1/2, 1/3 and 1/6 respectively. They paid into their Bank A/c as their capitals â‚¹ 22,000; â‚¹ 10,000 by A, â‚¹ 7,000 by B and â‚¹ 5,000 by C. During the year, they drew â‚¹ 5,000; being â‚¹ 1,900 by A, â‚¹ 1,700 by B and â‚¹ 1,400 by C.
On 31st March, 2019, they dissolved their partnership, A taking up Stock at an agreed valuation of â‚¹ 5,000, B taking up Furniture at â‚¹ 2,000 and C taking up Debtors at â‚¹ 3,000. After paying up their Creditors, there remained a balance of â‚¹ 1,000 at Bank. Prepare necessary accounts showing the distribution of the cash at the Bank and of the further cash brought in by any partner or partners as the case required.

Answer:

Realisation Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars			Amount (â‚¹)
Sundry Assets (WN)	17,000	A’s Capital (Stock)			5,000
		B’s Capital (Furniture)			2,000
		C’s Capital (Debtors)			3,000
		Bank A/c (Assets realised)			1,000
		Loss transferred to:
		A’s Capital A/c	3,000
		B’s Capital A/c	2,000
		C’s Capital A/c	1,000		6,000
	17,000				17,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars	A	B	C	Particulars	A	B	C
Realisation A/c	5,000	2,000	3,000	Balance b/d	8,100	5,300	3,600
Realisation A/c (Loss)	3,000	2,000	1,000	Cash A/c	–	–	400
Cash A/c	100	1,300	–

	8,100	5,300	4,000		8,100	5,300	4,000

Bank Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Realisation A/c	1,000	A’s Capital A/c	100
C’s Capital A/c	400	B’s Capital A/c	1,300

	1,400		1,400

Working Notes:

Memorandum Balance Sheet as on March 31, 2019
Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
Capital A/cs:
A	10,000 – 1,900	8,100	Sundry Assets	17,000
B	7,000 – 1,700	5,300	(Balancing figure)
C	5000 – 1400	3,600

		17,000		17,000

Question 51:

The partnership between A and B was dissolved on 31st March, 2019. On that date the respective credits to the capitals were A − â‚¹ 1,70,000 and B − â‚¹ 30,000. â‚¹ 20,000 were owed by B to the firm; â‚¹ 1,00,000 were owed by the firm to A and â‚¹ 2,00,000 were due to the Trade Creditors. Profits and losses were shared in the proportions of 2/3 to A, 1/3 to B.
The assets represented by the above stated net liabilities realise â‚¹ 4,50,000 exclusive of â‚¹ 20,000 owed by B. The liabilities were settled at book figures. Prepare Realisation Account, Partners' Capital Accounts and Cash Account showing the distribution to the partners.

Answer:

Realisation Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars			Amount (â‚¹)
Sundry Assets (WN)	4,80,000	Trade Creditors			2,00,000
B’s Loan	20,000
		Cash (Assets realised)			4,50,000
Cash A/c (Creditors)	2,00,000	B’s Capital A/c (B’s Loan)			20,000
		Loss transferred to:
		A’s Capital A/c	20,000
		B’s Capital A/c	10,000		30,000

	7,00,000				7,00,000

Partners’ Capital Accounts
Dr.						Cr.
Particulars	A	B	Particulars	A	B
Realisation A/c	–	20,000	Balance b/d	1,70,000	30,000
Realisation A/c (Loss)	20,000	10,000
Cash A/c	1,50,000

	1,70,000	30,000		1,70,000	30,000

Cash Account
Dr.			Cr.
Particulars	Amount (â‚¹)	Particulars		Amount (â‚¹)
Realisation A/c (Assets)	4,50,000	Realisation A/c (Creditors)		2,00,000
		A’s Capital A/c		1,50,000
		A’s Loan A/c		1,00,000

	4,50,000			4,50,000

Working Notes:

Memorandum Balance Sheet as at 31st March, 2019
Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
Capital A/cs:			B’s Loan	20,000
A	1,70,000
B	30,000	2,00,000	Sundry Assets	4,80,000
A’s Loan		1,00,000	(Balancing figure)
Trade Creditors		2,00,000

		5,00,000		5,00,000

Question 52:

X and Y were partners sharing profits and losses in the ratio of 3 : 2. They decided to dissolve the firm on 31st March, 2019. On that date, their Capitals were X − â‚¹ 40,000 and Y − â‚¹ 30,000. Creditors amounted to â‚¹ 24,000.
Assets were realised for â‚¹ 88,500. Creditors of â‚¹ 16,000 were taken over by X at â‚¹ 14,000. Remaining Creditors were paid at â‚¹ 7,500. The cost of realisation came to â‚¹ 500.
Prepare necessary accounts.

Answer:

Realisation Account
Dr.					Cr.
Particulars		Amount (â‚¹)	Particulars			Amount (â‚¹)
Sundry Assets		94,000	Creditors			24,000
X’s Capital A/c (Creditors)		14,000	Cash (Assets Realised)			88,500
Cash A/c:			Loss transferred to:
Creditors	7,500		X’s Capital A/c	2,100
Expenses	500	8,000	Y’s Capital A/c	1,400		3,500

		1,16,000				1,16,000

Partners’ Capital Accounts
Dr.						Cr.
Particulars	X	Y	Particulars	X	Y
Realisation A/c (Loss)	2,100	1,400	Balance b/d	40,000	30,000
Cash A/c	51,900	28,600	Realisation A/c (Creditors)	14,000	–

	54,000	30,000		54,000	30,000

Cash Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Realisation A/c (Assets)	88,500	Realisation A/c	8,000
		X’s Capital A/c	51,900
		Y’s Capital A/c	28,600
	88,500		88,500

Working Notes

Memorandum Balance Sheet as on March 31, 2019
Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
Capital A/cs:			Sundry Assets	94,000
X	40,000		(Balancing figure)
Y	30,000	70,000
Creditors		24,000

		94,000		94,000

Question 53:

P, Q and R are partners sharing profits and losses in the ratio of 3 : 3 : 2 respectively. Their respective capitals are in their profit-sharing proportions. On 1st April, 2018, the total capital of the firm and the balance of General Reserve are â‚¹ 80,000 and â‚¹ 20,000 respectively. During the year 2018-19, the firm made a profit of â‚¹ 28,000 before charging interest on capital @ 5%. The drawings of the partners are P $—$ â‚¹ 8,000; Q $—$ â‚¹ 7,000; and R $—$ â‚¹ 5,000. On 31st March, 2019, their liabilities were â‚¹ 18,000.
On this date, they decided to dissolve the firm. The assets realised â‚¹ 1,08,600 and realisation expenses amounted to â‚¹ 1,800.
Prepare necessary Ledger Accounts to close the books of the firm.

Answer:

Dr.	Realistationn Account					Cr.
Particulars			Amount (â‚¹)	Particulars		Amount (â‚¹)
Sundry Assets (*WN 1*)			1,26,000	Creditors		18,000
				Cash A/c (Assets Realised)		1,08,600
Cash A/c:				Loss transferred to:
Creditors		18,000		P’s Capital A/c	7,200
Expenses		1,800	19,800	Q’s Capital A/c	7,200
				R’s Capital A/c	4,800	19,200

			1,45,800			1,45,800

Partners’ Capital Accounts
Dr.								Cr.
Particulars	P	Q	R	Particulars	P	Q	R
Drawings A/c	8,000	7,000	5,000	Balance b/d	30,000	30,000	20,000
Realisation A/c (Loss)	7,200	7,200	4,800	Interest on Capital A/c	1,500	1,500	1,000
Cash A/c	32,800	33,800	22,200	P/L Appropriation A/c (*WN 3*)	9,000	9,000	6,000
				General Reserve	7,500	7,500	5,000
	48,000	48,000	32,000		48,000	48,000	32,000

Cash Account
Dr.				Cr.
Particulars	Amount (â‚¹)	Particulars	Amount (â‚¹)
Realisation A/c	1,08,600	Realisation A/c	19,800
		P’s Capital A/c	32,800
		Q’s Capital A/c	33,800
		R’s Capital A/c	22,200

	1,08,600		1,08,600

Working Note:

WN 1

Memorandum Balance Sheet as on 31st March, 2019
Liabilities		Amount (â‚¹)	Assets	Amount (â‚¹)
Capital A/cs:			Sundry Assets	1,26,000
P (WN 2)	22,000		(Balancing figure)
Q (WN 2)	23,000
R (WN 2)	15,000	60,000
General Reserve		20,000
Profit and Loss A/c		28,000
Creditors		18,000
		1,26,000		1,26,000

WN 2

Computatation of Partners' Capital after drawings as on 31st March, 2019
Dr.								Cr.
Particulars	P	Q	R	Particulars	P	Q	R
Drawings A/c	8,000	7,000	5,000	Balance b/d	30,000	30,000	20,000
Adjusted Capital	22,000	23,000	15,000
	30,000	30,000	20,000		30,000	30,000	20,000

WN 3

Profit and Loss Appropriation Account
Dr.	for the year ending 31st March, 2019					Cr.
Particulars			Amount (â‚¹)	Particulars	Amount (â‚¹)
Interest on Capital A/cs:				Profit and Loss A/c	28,000
P		1,500
Q		1,500
R		1,000	4,000
Profit transferred to:
P’s Capital A/c		9,000
Q’s Capital A/c		9,000
R’s Capital A/c		6,000	24,000

			28,000		28,000

Question 54:

X, Y and Z entered into partnership on 1st April, 2016. They contributed capital â‚¹ 40,000, â‚¹ 30,000 and â‚¹ 20,000 respectively and agreed to share profits in the ratio of 3 : 2 : 1. Interest on capital was to be allowed @ 15% p.a. and interest on drawings was to be charged at an average rate of 5%. During the two years ended 31st March, 2018, the firm made profit of â‚¹ 21,600 and â‚¹ 25,140 respectively before allowing or charging interest on capital and drawings. The drawings of each partner were â‚¹ 6,000 per year.
On 31st March, 2018, the partners decided to dissolve the partnership due to difference of opinion. On that date, the creditors amounted to â‚¹ 20,000. The assets, other than cash â‚¹ 2,000, realised â‚¹ 1,21,000. Expenses of dissolution amounted to â‚¹ 760.
Draw up necessary Ledger Accounts to close the books of the firm.

Answer:

Profit and Loss Appropriation for the year ended March 31, 2017
Dr.						Cr.
Particulars			Amount Rs	Particulars			Amount Rs
Interest on Capital A/c:				Profit and Loss A/c			21,600
X (40,000 × 15%)		6,000		Interest on Drawings
Y (30,000 × 15%)		4,500		X (6,000 × 5%)	300
Z (20,000 × 15%)		3,000	13,500	Y (6,000 × 5%)	300
				Z (6,000 × 5%)	300		900
Profit transferred to:
X’s Capital A/c	4,500
Y’s Capital A/c	3,000
Z’s Capital A/c	1,500		9,000
			22,500				22,500

Partners’ Capital Accounts for the year 2016-17
Dr.							Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Drawings A/c	6,000	6,000	6,000	Cash A/c	40,000	30,000	20,000
Interest on Drawings	300	300	300	Interest on Capital A/c	6,000	4,500	3,000
				P/L Appropriation A/c	4,500	3,000	1,500
Balance c/d	44,200	31,200	18,200

	50,500	37,500	24,500		50,500	37,500	24,500

Profit and Loss Appropriation Account for the year ended March 31, 2018
Dr.						Cr.
Particulars		Amount Rs	Particulars		Amount Rs
Interest on Capital A/c			Profit and Loss		25,140
X (44,200 × 15%)	6,630		Interest on Drawings
Y (31,200 × 15%)	4,680		X (6,000 × 5%)	300
Z (18,200 × 15%)	2,730	14,040	Y (6,000 × 5%)	300
Profit transferred to :			Z (6,000 × 5%)	300	900
X’s Capital A/c	6,000
Y’s Capital A/c	4,000
Z’s Capital A/c	2,000	12,000
		26,040			26,040

Partners’ Capital Accounts for the year ended March 31,2018
Dr.								Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
Drawings A/c	6,000	6,000	6,000	Balance b/d	44,200	31,200	18,200
Interest on Drawing	300	300	300	Interest on Capital A/c	6,630	4,680	2,730
Balance c/d	50,530	33,580	16,630	P/L Appropriation A/c	6,000	4,000	2,000

	56,830	39,880	22,930		56,830	39,880	22,930

				Balance b/d	50,530	33,580	16,630
Cash A/c	51,280	34,080	16,880	Realisation A/c (Profit)	750	500	250

	51,280	34,080	16880		51,280	34,080	16,880

Realisation Account
Dr.						Cr.
Particulars			Amount Rs	Particulars	Amount Rs
Sundry Assets			1,18,740	Creditors	20,000
Cash A/c:				Cash (Assets realised)	1,21,000
Creditors	20,000
Expanses	760		20,760
Profit transferred to:
X’s Capital A/c		750
Y’s Capital A/c		500
Z’s Capital A/c		250	1,500

			1,41,000		1,41,000

Partners’ Capital Accounts
Dr.								Cr.
Particulars	X	Y	Z	Particulars	X	Y	Z
				Balance b/d	50,530	33,580	16,630
Cash A/c	51,280	34,080	16,880	Realisation A/c (Profit)	750	500	250

	51,280	34,080	16880		51,280	34,080	16,880

Cash Account
Dr.				Cr.
Particulars	Amount Rs	Particulars	Amount Rs
Balance b/d	2,000	Realisation A/c	20,760
Realisation A/c	1,21,000	X’s Capital A/c	51,280
		Y’s Capital A/c	34,080
		Z’s Capital A/c	16,880

	1,23,000		1,23,000

Memorandum Balance Sheet as on March 31, 2018
Liabilities		Amount Rs	Assets	Amount Rs
Capital A/cs:			Cash	2,000
X	50,530		Sundry Assets	1,18,740
Y	33,580
Z	16,630	1,00,740
Creditors		20,000

		1,20,740		1,20,740

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