Chapter 5 Dissolution of Partnership Firm Solutions

Question - 21 : - Rose and Lily shared profits in the ratio of 2:3. Their Balance Sheet on March 31, 2017 was as follows:

Balance Sheet of Rose and Lily as on March 31, 2017

Liabilities

Amount

₹

Assets

Amount

₹

Creditors

40,000

Cash

16,000

Lily’s loan

32,000

Debtors

80,000

Profit and Loss

50,000

Less: Provision for doubtful Debts

3,600

76,400

Capitals:

Lily

1,60,000

Inventory

1,09,600

Rose

2,40,000

Bills Receivable

40,000

Buildings

2,80,000

5,22,000

5,22,000

Rose and Lily decided to dissolve the firm on the above date. Assets (except bills receivables) realised ₹ 4, 84,000. Creditors agreed to take ₹ 38,000. Cost of Realisation was ₹ 2,400. There was a Motor Cycle in the firm which was bought out of the firm’s money, was not shown in the books of the firm. It was now sold for ₹ 10,000. There was a contingent liability in respect of outstanding electric bill of ₹ 5,000, Bill Receivable taken over by Rose at ₹ 33,000.
Show Realisation Account, Partners Capital Account, Loan Account and Cash Account.

Answer - 21 : -

Books of Rose and Lily Realisation Account
Dr.									Cr.
Particulars			Amount ₹		Particulars				Amount ₹
Debtors			80,000		Provision for Doubtful Debts				3,600
Inventory			1,09,600		Creditors				40,000
Bills Receivables			40,000		Cash:
Buildings			2,80,000		Motor cycle		10,000
Cash:					Other Assets		4,84,000		4,94,000
Outstanding Electricity Bill	5,000				Rose’s Capital (Bills Receivable)				33,000
Creditors	38,000
Expenses	2,400		45,400

Profit transferred to:
Rose’ Capital	6,240
Lily’s Capital	9,360		15,600
			5,70,600						5,70,600


Partners’ Capital Accounts
Dr.										Cr.
Particulars		Rose		Lily		Particulars		Rose		Lily
Realisation (Bills Receivable)		33,000				Balance b/d		2,40,000		1,60,000
Cash A/c		2,33,240		1,99,360		Profit and Loss		20,000		30,000
						Realisation (Profit)		6,240		9,360
		2,66,240		1,99,360				2,66,240		1,99,360

Lily’s Loan Account

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Cash

32,000

Balance b/d

32,000

Cash Account

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Balance b/d

16,000

Realisation:

Creditors

38,000

Motor Cycle

10,000

Outstanding Electricity Bill

5,000

Other Assets

4,84,000

4,94,000

Expenses

2,400

45,400

Lily’s Loan

32,000

Rose’s Capital A/c

2,33,240

Lily’s Capital A/c

1,99,360

5,10,000

Question - 22 : - Shilpa, Meena and Nanda decided to dissolve their partnership on March 31, 2017. Their profit sharing ratio was 3:2:1 and their Balance Sheet was as under:

Balance Sheet of Shilpa, Meena and Nanda as on March 31, 2017

Liabilities

Amount

₹

Assets

Amount

₹

Capitals:

Land

81,000

Shilpa

80,000

Stock

56,760

Meena

40,000

Debtors

18,600

Bank loan

20,000

Nanda’s Capital Account

23,000

Creditors

37,000

Cash

10,840

Provision for doubtful debts

1,200

General Reserve

12,000

1,90,200

1,90,200

The stock of value of ₹ 41,660 are taken over by Shiplap for ₹ 35,000 and she agreed to discharge bank loan. The remaining stock was sold at ₹ 14,000 and debtors amounting to ₹ 10,000 realised ₹ 8,000. Land is sold for ₹ 1, 10,000. The remaining debtors realised 50% at their book value. Cost of Realisation amounted to ₹ 1,200. There was a typewriter not recorded in the books worth ₹ 6,000 which were taken over by one of the Creditors at this value. Prepare Realisation Account.

Answer - 22 : -

In the books of Shilpa, Meena and Nanda
Realisation Account
Dr.											Cr.
Particulars				Amount ₹		Particulars				Amount ₹
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
Profit transferred to						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 ₹	Particulars	Amount ₹
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 - 23 : - Surjit and Rahi were sharing profits (losses) in the ratio of 3:2, their Balance Sheet as on March 31, 2017 is as follows:

Balance Sheet of Surjit and Rahi as on March 31, 2017

Liabilities

Amount

₹

Assets

Amount

₹

Creditors

38,000

Bank

11,500

Mrs. Surjit loan

10,000

Stock

6,000

Reserve

15,000

Debtors

19,000

Rahi’s loan

5,000

Furniture

4,000

Capital’s:

Plant

28,000

Surjit

10,000

Investment

10,000

Rahi

8,000

Profit and Loss

7,500

86,000

86,000

The firm was dissolved on March 31, 2017 on the following terms:
1. Surjit agreed to take the investments at ₹ 8,000 and to pay Mrs. Surjit’s loan.
2. Other assets were realised as follows:

Stock

₹

5,000

Debtors

₹

18,500

Furniture

₹

4,500

Plant

₹

25,000

3. Expenses on Realisation amounted to ₹ 1,600.
4. Creditors agreed to accept ₹ 37,000 as a final settlement.
You are required to prepare Realisation Account, Partners’ Capital Account and Bank Account.

Answer - 23 : -

8
Dr.								Cr.
Particulars		Amount ₹			Particulars			Amount ₹
Stock		6,000			Creditors			38,000
Debtors		19,000			Mrs. Surjit’s Loan			10,000
Furniture		4,000			Surjit’s Capital A/c (Investment)			8,000
Plant		28,000			Bank:
Investment		10,000			Stock		5,000
Surjit’s Capital A/c		10,000			Debtors		18,500
(Mrs. Surjit’s Loan)					Furniture		4,500
Bank:					Plant		25,000	53,000
Expenses	1,600				Loss transferred to:
Creditors	37,000	38,600			Surjit’s Capital A/c		3,960
					Rahi’s Capital A/c		2,640	6,600

		1,15,600						1,15,600


Partners’ Capital Account
Dr.											Cr.
Particulars			Surjit	Rahi		Particulars			Surjit	Rahi
Realisation (Investment)			8,000			Balance b/d			10,000	8,000
Realisation (Loss)			3,960	2,640		Realisation (Mrs. Surjit Loan)			10,000
Profit and Loss			4,500	3,000
Bank			12,540	8,360		Reserve			9,000	6,000

			29,000	14,000					29,000	14,000

Rahi’s Loan Account

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Balance b/d

5,000

Bank

5,000

Bank Account

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Balance b/d

11,500

Realisation (Creditors and Expenses)

38,600

Realisation A/c (Assets realised)

53,000

Rahi’s Loan

5,000

Surjit’s Capital A/c

12,540

Rahi’s Capital A/c

8,360

64,500

Question - 24 : - Rita, Geeta and Ashish were partners in a firm sharing profits/losses in the ratio of 3:2:1. On March 31, 2017 their balance sheet was as follows:

Liabilities

Amount

₹

Assets

Amount

₹

Capitals:

Cash

22,500

Rita

80,000

Debtors

52,300

Geeta

50,000

Stock

36,000

Ashish

30,000

1,60,000

Investments

69,000

Creditors

65,000

Plant

91,200

Bills payable

26,000

General reserve

20,000

2,71,000

2,71,000

On the date of above mentioned date the firm was dissolved:
1. Rita was appointed to realise the assets. Rita was to receive 5% commission on the rate of assets (except cash) and was to bear all expenses of Realisation,
2. Assets were realised as follows:

₹

Debtors

30,000

Stock

26,000

Plant

42,750

3. Investments were realised at 85% of the book value,
4. Expenses of Realisation amounted to ₹ 4,100,
5. Firm had to pay ₹ 7,200 for outstanding salary not provided for earlier,
6. Contingent liability in respect of bills discounted with the bank was also materialized and paid off ₹ 9,800,
Prepare Realisation Account, Capital Accounts of Partners’ and Cash Account.

Answer - 24 : -

In the books of Rita, Geeta and Ashish

Realisation Account

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Debtors

52,300

Creditors

65,000

Stock

36,000

Bills Payable

26,000

Investment

69,000

Cash:

Plant

91,200

Debtors

30,000

Cash:

Stock

26,000

Outstanding Salaries

7,200

Plant

42,750

Discounted Bill

9,800

Investment

58,650

1,57,400

Creditors

65,000

Bills Payable

26,000

1,08,000

Loss transferred to

Rita’s Capital A/c

7,870

Rita’s Capital A/c

57,985

(Commission- 1,57,400 ´ 5/100)

Geeta’s Capital A/c

38,657

Ashish’s Capital A/c

19,328

1,15,970

364370

Partners’ Capital Account

Dr.

Cr.

Particulars

Rita

Geeta

Ashish

Particulars

Rita

Geeta

Ashish

Realisation (Loss)

57,985

38,657

19,328

Balance b/d

80,000

50,000

30,000

Bank

39,885

18,010

14,005

General Reserve

10,000

6,667

3,333

Realisation

7,870

97,870

56667

33333

97870

56,667

33,333

Cash Account
Dr.				Cr.
Particulars	Amount ₹	Particulars	Amount ₹
Balance b/d	22,500	Realisation A/c	1,08,000
Realisation	1,57,400	Rita’s Capital	39,885
		Geeta’s Capital A/c	18,010
		Ashish’s Capital A/c	14,005

	1,79,900		1,79,900

Question - 25 : - Anup and Sumit are equal partners in a firm. They decided to dissolve the partnership on December 31, 2017. When the balance sheet is as under:

Balance Sheet of Anup and Sumit as on December 31, 2017

Liabilities

Amount

₹

Assets

Amount

₹

Sundry Creditors

27,000

Cash at bank

11,000

Reserve fund

10,000

Sundry Debtors

12,000

Loan

40,000

Plants

47,000

Capital

Stock

42,000

Anup

60,000

Lease hold land

60,000

Sumit

60,000

1,20,000

Furniture

25,000

1,97,000

1,97,000

TheAssets were realised as follows:

₹

Lease hold land

72,000

Furniture

22,500

Stock

40,500

Plant

48,000

Sundry Debtors

10,500

The Creditors were paid ₹ 25,500 in full settlement. Expenses of Realisation amount to ₹ 2,500.
Prepare Realisation Account, Bank Account, and Partners Capital Accounts to close the books of the firm.

Answer - 25 : -

Books of Anup and Sumit Realisation Account
Dr.												Cr.
Particulars				Amount ₹		Particulars				Amount ₹
Sundry Debtors				12,000		Sundry Creditors				27,000
Plants				47,000		Loan				40,000
Stock				42,000		Bank:
Lease hold land				60,000		Lease hold Land		72,000
Furniture				25,000		Furniture		22,500
Bank:						Stock		40,500
Creditors		25,500				Plant		48,000
Loan		40,000				Sundry Debtors		10,500		1,93,500
Expenses		2500		68,000
Profit transferred to
Anup’s Capital A/c		3,250
Sumit’s Capital A/c		3250		6,500

				2,60,500						2,60,500


Partners’ Capital Account
Dr.											Cr.
Particulars	Anup		Sumit		Particulars		Anup		Sumit
Bank	68,250		68,250		Balance b/d		60,000		60,000
					Reserve Fund		5,000		5,000
					Realisation		3,250		3,250

	68,250		68,250				68,250		68,250

Bank Account
Dr.				Cr.
Particulars	Amount ₹	Particulars	Amount ₹
Balance b/d	11,000	Realisation (Expenses and Liabilities)	68,000
Realisation (Assets )	1,93,500	Anup’s Capital A/c	68,250
		Sumit’s Capital A/c	68,250

	2,04,500		2,04,500

Question - 26 : - Ashu and Harish are partners sharing profit and losses as 3:2. They decided to dissolve the firm on December 31, 2017. Their balance sheet on the above date was:

Balance Sheet of Ashu and Harish as on December 31, 2017

Liabilities

Amount

₹

Assets

Amount

₹

Capitals:

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 ₹ 95,000 and Machinery and Furniture is take over by Harish at value of ₹ 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 ₹ 46,000, expenses of Realisation amounted to ₹ 3,000. Prepare necessary ledger Account.

Answer - 26 : -

Books of Ashu and Harish Realisation Account
Dr.									Cr.
Particulars				Amount ₹		Particulars		Amount ₹
Building				80,000		Creditors		88,000
Machinery				70,000		Bank overdraft		50,000
Furniture				14,000		Ashu’s Capital A/c (Assets taken)		1,43,000
Stock				20,000		Harish’s Capital A/c (Assets taken)		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
Profit transferred to
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 ₹	Particulars	Amount ₹
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

WorkingNotes:

	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 - 27 : - Sanjay, Tarun and Vineet shared profit in the ratio of 3:2:1. On December 31, 2017 their balance sheet was as follows:

Balance Sheet of Sanjay, Tarun and Vineet as on December 31, 2017

Liabilities

Amount

₹

Assets

Amount

₹

Capitals:

Plant

90,000

Sanjay

1,00,000

Debtors

60,000

Tarun

1,00,000

Furniture

32,000

Vineet

70,000

2,70,000

Stock

60,000

Creditors

80,000

Investments

70,000

Bills payable

30,000

Bills receivable

36,000

Cash in hand

32,000

3,80,000

3,80,000

On this date the firm was dissolved. Sanjay was appointed to realise the assets. Sanjay was to receive 6% commission on the sale of assets (except cash) and was to bear all expenses of Realisation.
Sanjay realised the assets as follows: Plant ₹ 72,000, Debtors ₹ 54,000, Furniture ₹ 18,000, Stock 90% of the book value, Investments ₹ 76,000 and Bills receivable ₹ 31,000. Expenses of Realisation amounted to ₹ 4,500.
Prepare Realisation Account, Capital Accounts and Cash Account

Answer - 27 : -

Books of Sanjay, Tarun and Vineet Realisation Account
Dr.										Cr.
Particulars			Amount ₹		Particulars				Amount ₹
Plant			90,000		Creditors				80,000
Debtors			60,000		Bills Payable				30,000
Furniture			32,000		Cash:
Stock			60,000		Plant			72,000
Investment			70,000		Debtors			54,000
Bills Receivable			36,000		Furniture			18,000
Cash :					Stock			54,000
Creditors	80,000				Investments			76,000
Bills Payable	30,000		1,10,000		Bills Receivable			31,000	3,05,000
Sanjay’s Capital A/c			18,300		Loss transferred to
(6% commission)					Sanjay’s Capital			30,650
					Tarun’s Capital A/c			20,433
					Vineet’s Capital A/c			10,217	61,300
			4,76,300						4,76,300


Partners’ Capital Account
Dr.														Cr.
Particulars		Sanjay		Tarun		Vineet	Particulars				Sanjay	Tarun	Vineet
Realisation (Loss)		30,650		20,433		10,217	Balance b/d				1,00,000	1,00,000	70,000
Cash		87,650		79,567		59,783	Realisation (commission)				18,300

		1,18,300		1,00,000		70,000					1,18,300	1,00,000	70,000

Cash Account
Dr.				Cr.
Particulars	Amount ₹	Particulars	Amount ₹
Balance b/d	32,000	Realisation	1,10,000
Realisation	3,05,000	Sanjay’s Capital A/c	87,650
		Tarun’s Capital A/c	79,567
		Vineet’s Capital A/c	59,783

	3,37,000		3,37,000

Question - 28 : - The following is the Balance Sheet of Gupta and Sharma as on December 31, 2017:

Balance Sheet of Gupta and Sharma as on December 31, 2017

Liabilities

Amount

₹

Assets

Amount

₹

Sundry Creditors

38,000

Cash at Bank

12,500

Mrs.Gupta’s loan

20,000

Sundry Debtors

55,000

Mrs.Sharma’s loan

30,000

Stock

44,000

Reserve fund

6,000

Bills Receivable

19,000

Provision of doubtful debts

4,000

Machinery

52,000

Capital

Investment

38,500

Gupta

90,000

Fixtures

27,000

Sharma

60,000

1,50,000

2,48,000

2,48,000

The firm was dissolved on December 31, 2017 and asset realised and settlements of liabilities as follows:
(a) The Realisation of the assets were as follows:

₹

Sundry Debtors

52,000

Stock

42,000

Bills receivable

16,000

Machinery

49,000

(b) Investment was taken over by Gupta at agreed value of ₹ 36,000 and agreed to pay of Mrs. Gupta’s loan.
(c) The Sundry Creditors were paid off less 3% discount.
(d) The Realisation expenses incurred amounted to ₹ 1,200.
Journalise the entries to be made on the dissolution and prepare Realisation Account, Bank Account and Partners Capital Accounts.

Answer - 28 : -

Books of Gupta and Sharma

Journal

Date

Particulars

L.F.

Amount

₹

Amount

₹

2012

Dec. 31

Realisation A/c

Dr.

2,35,500

To Sundry Debtors A/c

55,000

To Stock A/c

44,000

To Bills Receivable A/c

19,000

To Machinery A/c

52,000

To Investment A/c

38,500

To Fixtures A/c

27,000

(Assets transferred to Realisation Account)

Dec. 31

Sundry Creditors A/c

Dr.

38,000

Mrs. Gupta’s Loan A/c

Dr.

20,000

Mrs. Sharma’s Loan A/c

Dr.

30,000

Provision for Doubtful Debts

Dr.

4,000

To Realisation A/c

92,000

(Liabilities transferred to Realisation Account)

Dec. 31

Bank A/c

Dr.

1,59,000

To Realisation A/c

1,59,000

(Assets realised: Sundry Debtors ₹ 52,000, Stock ₹ 42,000,

Bills Receivable ₹ 16,000, Machinery ₹ 49,000)

Dec. 31

Realisation A/c

Dr.

20,000

To Gupta’s Capital A/c

20,000

(Gupta took over Mrs. Gupta’s Loan)

Dec. 31

Gupta’s Capital A/c

Dr.

36,000

To Realisation A/c

36,000

(Investment taken over by Gupta)

Dec. 31

Realisation A/c

Dr.

66,860

To Bank A/c

66,860

(Liabilities paid: Mrs. Sharma’s Loan ₹ 30,000 and Creditors

₹ 38,000 paid off less 3% discount)

Dec. 31

Realisation A/c

Dr.

1,200

To Bank A/c

1,200

(Realisation expenses paid)

Dec. 31

Gupta’s Capital A/c

Dr.

18,280

Sharma’s Capital A/c

Dr.

18,280

To Realisation A/c

36,560

(Loss on Realisation transferred to Partners’ capital Account)

Dec. 31

Reserve Fund A/c

Dr.

6,000

To Gupta’s Capital A/c

3,000

To Sharma’s Capital A/c

3,000

(Reserve fund distributed among partners ratio)

Dec. 31

Gupta’s Capital A/c

Dr.

58,720

Sharma’s Capital A/c

Dr.

44,720

To Bank A/c

1,03,440

(Final payment made to partners)

Realisation Account

Dr.

Cr.

Particulars

Amount

₹

Particulars

Amount

₹

Sundry Debtors

55,000

Sundry Creditors

38,000

Stock

44,000

Mrs. Gupta’s Loan

20,000

Bills Receivable

19,000

Mrs. Sharma’s Loan

30,000

Machinery

52,000

Provision for Doubtful Debts

4,000

Investment

38,500

Bank :

Fixtures

27,000

Sundry Debtors

52,000

Gupta’s Capital A/c (Mrs. Gupta Loan)

20,000

Stock

42,000

Bank A/c:

Bills Receivable

16,000

Creditors

36,860

Machinery

49,000

1,59,000

Mrs. Sharma’s Loan

30,000

Gupta’s Capital A/c (Investment)

36,000

Expense

1,200

68,060

Loss transferred to

Gupta’s Capital A/c

18,280

Sharma’s Capital A/c

18,280

36,560

3,23,560

Partners’ Capital Account
Dr.										Cr.
Particulars	Gupta		Sharma		Particulars	Gupta			Sharma
Realisation (Investment)	36,000				Balance b/d	90,000			60,000
Realisation (Loss)	18,280		18,280		Realisation (Mrs. Gupta Loan)	20,000
Bank	58,720		44,720		Reserve Fund	3,000			3,000

	1,13,000		63,000			1,13,000			63,000


Bank Account
Dr.								Cr.
Particulars		Amount ₹		Particulars			Amount ₹
Balance b/d		12,500		Realisation			68,060
Realisation (Assets realised)		1,59,000		(Payment of expenses and liabilities)
				Gupta’s Capital A/c			58,720
				Sharma’s Capital A/c			44,720

		1,71,500					1,71,500

Question - 29 : - 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 December 31, 2017, when the balance sheet of the firm as under:

Balance Sheet of Ashok, Babu and Chetan as on December 31, 2017

Liabilities

Amount

₹

Assets

Amount

₹

Sundry Creditors

20,000

Bank

7,500

Bills payable

25,500

Sundry Debtors

58,000

Babu’s loan

30,000

Stock

39,500

Capital’s:

Machinery

48,000

Ashok

70,000

Investment

42,000

Babu

55,000

Freehold Property

50,500

Chetan

27,000

1,52,000

Current Accounts :

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

Answer - 29 : -

Realisation Account
Dr.												Cr.
Particulars				Amount ₹		Particulars					Amount ₹
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:						(Free hold property)
Sundry Creditors		18,600				Bank:
Bills payable		25,500				Sundry Debtors		56,500
Expenses		3,000		47,100		Stock		36,500
Profit Transferred to						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 Accounts
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 Accounts

Dr.

Cr.

Particulars

Ashok

Babu

Chetan

Particulars

Ashok

Babu

Chetan

Ashok’s Current

28,800

Balance b/d

70,000

55,000

27,000

Babu’s Current

39200

Bank

24,600

Chetan’s Current

51600

Bank

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

Particulars

Amount

Cash A/c

30,000

Balance b/d

30,000

30,000

Bank Account
Dr.				Cr.
Particulars	Amount ₹	Particulars	Amount ₹
Balance b/d	7,500	Realisation (Payment of Expenses	47,100
Realisation (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 - 30 : - The following is the Balance sheet of Tanu and Manu, who shares profit and losses in the ratio of 5:3, On December 31, 2017:

Balance Sheet of Tanu and Manu as on December 31, 2017

Liabilities

Amount

₹

Assets

Amount

₹

Sundry Creditors

62,000

Cash at Bank

16,000

Bills Payable

32,000

Sundry Debtors

55,000

Bank Loan

50,000

Stock

75,000

Reserve fund

16,000

Motor car

90,000

Capital:

Machinery

45,000

Tanu

1,10,000

Investment

70,000

Manu

90,000

2,00,000

Fixtures

9,000

3,60,000

3,60,000

On the above date the firm is dissolved and the following agreement was made: Tanu agree to pay the bank loan and took away the sundry debtors. Sundry creditors accepts stock and paid ₹ 10,000 to the firm. Machinery is taken over by Manu for ₹ 40,000 and agreed to pay of bills payable at a discount of 5%.. Motor car was taken over by Tanu for ₹ 60,000. Investment realised ₹ 76,000 and fixtures ₹ 4,000. The expenses of dissolution amounted to ₹ 2,200.
Prepare Realisation Account, Bank Account and Partners Capital Accounts.

Answer - 30 : -

Books of Tanu and Manu Realisation Account
Dr.									Cr.
Particulars		Amount ₹		Particulars				Amount ₹
Sundry Debtors		55,000		Sundry Creditors				62,000
Stock		75,000		Bills Payable				32,000
Motor Car		90,000		Bank Loan				50,000
Machinery		45,000		Tanu’s Capital A/c:
Investment		70,000		Sundry Debtors			55,000
Fixtures		9,000		Motor Car			60,000	1,15,000
Manu’s Capital A/c (Bills Payable)		30,400		Bank:
Bank (Expenses)		2,200		Stock			10,000
Tanu’s Capital A/c (Bank Loan)		50000		Investment			76,000
				Fixtures			4,000	90,000
				Manu’s Capital (Machinery)				40,000
				Loss transferred to
				Manu’s Capital A/c			23,500
				Manu’s Capital A/c			14,100	37,600

		4,26,600						4,26,600


Partners’ Capital Account
Dr.									Cr.
Particulars	Tanu		Manu		Particulars	Tanu		Manu
Realisation (Assets taken)	1,15,000		40,000		Balance b/d	1,10,000		90,000
Realisation (Loss)	23,500		14,100		Realisation (Liabilities)	50,000		30,400
Bank	31,500		72,300		Reserve Fund	10,000		6,000

	1,70,000		1,26,400			1,70,000		1,26,400

Bank Account
Dr.				Cr.
Particulars	Amount ₹	Particulars	Amount ₹
Balance b/d	16,000	Realisation (Expenses)	2,200
Realisation (Assets)	90,000	Tanu’s Capital A/c	31,500
		Manu’s Capital A/c	72,300

	1,06,000		1,06,000

Free - Previous Years Question Papers

Balance Sheet of Rose and Lily as on March 31, 2017
Liabilities	Amount ₹	Assets		Amount ₹
Creditors	40,000	Cash		16,000
Lily’s loan	32,000	Debtors	80,000
Profit and Loss	50,000	Less: Provision for doubtful Debts	3,600	76,400
Capitals:
Lily	1,60,000	Inventory		1,09,600
Rose	2,40,000	Bills Receivable		40,000
		Buildings		2,80,000
	5,22,000			5,22,000

Balance Sheet of Shilpa, Meena and Nanda as on March 31, 2017
Liabilities	Amount ₹	Assets	Amount ₹
Capitals:		Land	81,000
Shilpa	80,000	Stock	56,760
Meena	40,000	Debtors	18,600
Bank loan	20,000	Nanda’s Capital Account	23,000
Creditors	37,000	Cash	10,840
Provision for doubtful debts	1,200
General Reserve	12,000
	1,90,200		1,90,200

Balance Sheet of Surjit and Rahi as on March 31, 2017
Liabilities	Amount ₹	Assets	Amount ₹
Creditors	38,000	Bank	11,500
Mrs. Surjit loan	10,000	Stock	6,000
Reserve	15,000	Debtors	19,000
Rahi’s loan	5,000	Furniture	4,000
Capital’s:		Plant	28,000
Surjit	10,000	Investment	10,000
Rahi	8,000	Profit and Loss	7,500
	86,000		86,000

Balance Sheet of Anup and Sumit as on December 31, 2017
Liabilities		Amount ₹	Assets	Amount ₹
Sundry Creditors		27,000	Cash at bank	11,000
Reserve fund		10,000	Sundry Debtors	12,000
Loan		40,000	Plants	47,000
Capital			Stock	42,000
Anup	60,000		Lease hold land	60,000
Sumit	60,000	1,20,000	Furniture	25,000
		1,97,000		1,97,000

	₹
Lease hold land	72,000
Furniture	22,500
Stock	40,500
Plant	48,000
Sundry Debtors	10,500

Balance Sheet of Ashu and Harish as on December 31, 2017
Liabilities		Amount ₹	Assets	Amount ₹
Capitals:			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

Balance Sheet of Sanjay, Tarun and Vineet as on December 31, 2017
Liabilities		Amount ₹	Assets	Amount ₹
Capitals:			Plant	90,000
Sanjay	1,00,000		Debtors	60,000
Tarun	1,00,000		Furniture	32,000
Vineet	70,000	2,70,000	Stock	60,000
Creditors		80,000	Investments	70,000
Bills payable		30,000	Bills receivable	36,000
			Cash in hand	32,000
		3,80,000		3,80,000

Balance Sheet of Gupta and Sharma as on December 31, 2017
Liabilities		Amount ₹	Assets	Amount ₹
Sundry Creditors		38,000	Cash at Bank	12,500
Mrs.Gupta’s loan		20,000	Sundry Debtors	55,000
Mrs.Sharma’s loan		30,000	Stock	44,000
Reserve fund		6,000	Bills Receivable	19,000
Provision of doubtful debts		4,000	Machinery	52,000
Capital			Investment	38,500
Gupta	90,000		Fixtures	27,000
Sharma	60,000	1,50,000
		2,48,000		2,48,000

	₹
Sundry Debtors	52,000
Stock	42,000
Bills receivable	16,000
Machinery	49,000

Balance Sheet of Ashok, Babu and Chetan as on December 31, 2017
Liabilities		Amount ₹	Assets	Amount ₹
Sundry Creditors		20,000	Bank	7,500
Bills payable		25,500	Sundry Debtors	58,000
Babu’s loan		30,000	Stock	39,500
Capital’s:			Machinery	48,000
Ashok	70,000		Investment	42,000
Babu	55,000		Freehold Property	50,500
Chetan	27,000	1,52,000
Current Accounts :
Ashok	10,000
Babu	5,000
Chetan	3,000	18,000
		2,45,500		2,45,500

Balance Sheet of Tanu and Manu as on December 31, 2017
Liabilities		Amount ₹	Assets	Amount ₹
Sundry Creditors		62,000	Cash at Bank	16,000
Bills Payable		32,000	Sundry Debtors	55,000
Bank Loan		50,000	Stock	75,000
Reserve fund		16,000	Motor car	90,000
Capital:			Machinery	45,000
Tanu	1,10,000		Investment	70,000
Manu	90,000	2,00,000	Fixtures	9,000
		3,60,000		3,60,000

Chapter 5 Dissolution of Partnership Firm Solutions

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