DK Goel Solutions for Class 12 Accountancy Vol 1 Chapter 5 Dissolution of a Partnership Firm

DK Goel Accountancy Class 12 Solutions Chapter 5 Dissolution of a Partnership Firm which is outlined by expert Accountancy teachers from the latest version of DK Goel Accountancy Class 12 textbook solutions. We at BYJU’S provide DK Goel Solutions to assist students to comprehend all the theories in particular. Learn more concepts in Accountancy, however, the concepts of Admission of a partner, Accounting Ratios and Cash Flow Statement (As per AS – 3 Revised) is required.

DK Goel Solutions Class 12 – Chapter 5 – Part A

Question 1

A, B and C were partners in a company sharing profits in the ratio 4:3:3. On 1-4-2015 they decided to dissolve the company. On that date, A’s capital was ₹1,25,000, B’s capital was ₹45,000 and C’s capital was ₹15,000(Dr.). The creditors amounted to ₹23,150 and cash in hand was ₹3,920. The assets realized ₹1,44,910 and the expenses of dissolution were ₹1,860. Prepare realization account and show your working clearly.


Balance Sheet as on 1st April 2015
Liabilities Assets
Creditors 23,150 Cash in Hand 3,920
Capital Accounts: C’s Capital (Dr.) 15,000
A 1,25,000 Sundry Assets(Balancing Fig.) 1,74,230
B 45,000 1,70,000
1,93,150 1,93,150
Dr. Realization Account Cr.
Particular Particular
To Sunder Assets 1,74,230 By Creditors 23,150
To Cash (Creditors paid) 23,150 By Cash (Assets realized) 1,44,910
To Cash (Expenses) 1,860 By Loss on Realization transferred to:
A’s Capital A/c 12,472
B’s Capital A/c 9,354
C’s Capital A/c 9,354 31,180
1,99,240 1,99,240

Question 2

Give the necessary journal entries in each of the following alternative cases:

(i) Realization expenses amounted to 500

(ii) Realization expenses paid by the company amounted to ₹500 and the partner has to bear the realization expenses

(iii) ‘A’ one of the partners was to bear all the realization expenses for which he was given a commission of 2% of net cash realized from dissolution. Cash realized from assets was ₹25,000 and cash paid for liabilities amounted to ₹5,000


Date Particulars L.F Dr.(₹) Cr.(₹)
(i) Realization A/c Dr. 500
To Bank A/c

(Payment of realization expenses)

(ii) Partner’s Capital A/c Dr. 500
To Bank A/c

(Payment of realization expenses by the firm on behalf of the partner)

(iii) Bank A/c Dr. 25,000
To Realization A/c

(Amount realized on the sale of assets)

Realization A/c Dr. 5,000
To Bank A/c

(Amount paid for liabilities)

Realization A/c Dr. 400
To A’s Capital A/c

(Commission allowed to A @2% on ₹20,000 i.e 25,000 – 5,000)


Question 3

A and B share profits and losses in the ratio of 3:2. They have decided to dissolve the firm. Assets and external liabilities have been transferred to realization A/c. Pass the journal entries to affect the following.

(1) Bank Loan of ₹12,000 is paid off.

(2) A was to bear all expenses of realization for which he is given a commission of ₹400

(3) Deferred Advertisement Expenditure A/c appeared in the book at 28,000

(4) Stock worth ₹1,600 was taken over by B at ₹1,200

(5) An unrecorded computer realized ₹7,000

(6) There was an outstanding bill of repairs for ₹2,000, which was paid off.


Date Particulars L.F Dr.(₹) Cr.(₹)
1 Realization A/c Dr. 12,000
To Bank A/c

(Bank loan discharged)

2 Realization A/c Dr. 400
To A’s Capital A/c

(Commission payable to A)

3 A’s Capital A/c

B’s Capital A/c





To Deferred Advertisement Expenditure A/c

(Transfer of fictitious asset to partner’s capital accounts)

4 B’s Capital A/c Dr. 1,200
To Realization A/c

(Stock taken over by B)

5 Bank A/c Dr. 7,000
To Realization A/c

(Amount realized from unrecorded computers)

6 Realization A/c Dr. 2,000
To Bank A/c

(Payment of outstanding repairs)


Question 4

If the total assets are ₹5,00,000, total liabilities are ₹1,00,000, the amount realized on the sale of assets is ₹ 4,20,000 and realization expenses are ₹5,000, what will be the profit or loss on realization?


Profit and loss of realization can be calculated by preparing a realization account as follows.

Realization Account
Particular Particular
To Assets

To Bank(Liabilities paid)

To Bank(expenses of realization)




By liabilities

By Bank(Assets realized)



By Capital A/c

(Loss on realization)

6,05,000 6,05,000

Must Read: Dissolution of Partnership Firm

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