# 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 BYJUâ€™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, 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

(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

Must Read: Dissolution of Partnership Firm

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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

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