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 BYJUâ€™S provide DK Goel Solutions to assist students to comprehend all the theories in particular. Click here to 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, Aâ€™s capital was â‚¹1,25,000, Bâ€™s capital was â‚¹45,000 and Câ€™s capital was â‚¹15,000(Dr.). The creditors amounted to â‚¹23,150 and cash in hand was â‚¹3,920. The assets realized â‚¹1,44,910 and the expenses of dissolution were â‚¹1,860. Prepare realization account and show your working clearly.
Solution:
Balance Sheet as on 1st April, 2015 | ||||
Liabilities | â‚¹ | Assets | â‚¹ | |
Creditors | 23,150 | Cash in Hand | 3,920 | |
Capital Accounts: | Câ€™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 | â‚¹ | Particular | â‚¹ | |
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: | ||
Aâ€™s Capital A/c | 12,472 | |||
Bâ€™s Capital A/c | 9,354 | |||
Câ€™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 â‚¹500 and the partner has to bear the realization expenses
(iii) â€˜Aâ€™ 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 â‚¹25,000 and cash paid for liabilities amounted to â‚¹5,000
Solution:
Journal | |||||
Date | Particulars | L.F | Dr.(â‚¹) | Cr.(â‚¹) | |
(i) | Realization A/c | Dr. | 500 | ||
To Bank A/c
(Payment of realization expenses) |
500 | ||||
(ii) | Partnerâ€™s Capital A/c | Dr. | 500 | ||
To Bank A/c
(Payment of realization expenses by the firm on behalf of the partner) |
500 | ||||
(iii) | Bank A/c | Dr. | 25,000 | ||
To Realization A/c
(Amount realized on the sale of assets) |
25,000 | ||||
Realization A/c | Dr. | 5,000 | |||
To Bank A/c
(Amount paid for liabilities) |
5,000 | ||||
Realization A/c | Dr. | 400 | |||
To Aâ€™s Capital A/c
(Commission allowed to A @2% on â‚¹20,000 i.e 25,000 – 5,000) |
400 |
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 â‚¹12,000 is paid off.
(2) A was to bear all expenses of realization for which he is given a commission of â‚¹400
(3) Deferred Advertisement Expenditure A/c appeared in the book at 28,000
(4) Stock worth â‚¹1,600 was taken over by B at â‚¹1,200
(5) An unrecorded computer realized â‚¹7,000
(6) There was an outstanding bill of repairs for â‚¹2,000, which was paid off.
Solution:
Journal | |||||
Date | Particulars | L.F | Dr.(â‚¹) | Cr.(â‚¹) | |
1 | Realization A/c | Dr. | 12,000 | ||
To Bank A/c
(Bank loan discharged) |
12,000 | ||||
2 | Realization A/c | Dr. | 400 | ||
To Aâ€™s Capital A/c
(Commission payable to A) |
400 | ||||
3 | Aâ€™s Capital A/c
Bâ€™s Capital A/c |
Dr.
Dr. |
16,800
11,200 |
||
To Deferred Advertisement Expenditure A/c
(Transfer of fictitious asset to partnerâ€™s capital accounts) |
28,000 | ||||
4 | Bâ€™s Capital A/c | Dr. | 1,200 | ||
To Realization A/c
(Stock taken over by B) |
1,200 | ||||
5 | Bank A/c | Dr. | 7,000 | ||
To Realization A/c
(Amount realized from unrecorded computers) |
7,000 | ||||
6 | Realization A/c | Dr. | 2,000 | ||
To Bank A/c
(Payment of outstanding repairs) |
2,000 |
Question 4
If the total assets are â‚¹5,00,000, total liabilities are â‚¹1,00,000, the amount realized on the sale of assets is â‚¹ 4,20,000 and realization expenses are â‚¹5,000, what will be the profit or loss on realization?
Solution:
Profit and loss of realization can be calculated by preparing a realization account as follows.
Realization Account | |||
Particular | â‚¹ | Particular | â‚¹ |
To Assets
To Bank(Liabilities paid) To Bank(expenses of realization) |
5,00,000
1,00,000 5,000 |
By liabilities
By Bank(Assets realized) |
1,00,000
4,20,000 |
By Capital A/c
(Loss on realization) |
85,000 | ||
6,05,000 | 6,05,000 |
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DK Goel Accountancy Solutions Class 12 â€“ Part A (Chapter wise) | ||
Chapter 1 Accounting for Partnership Firms â€“ Fundamentals | Chapter 2 Change in Profit Sharing Ratio Among the Existing Partners | |
Chapter 3 Admission of a partner | Chapter 4 Retirement or Death of a Partner |