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.
Solution:
| 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
Solution:
| Journal | |||||
| Date | Particulars | L.F | Dr.(₹) | Cr.(₹) | |
| (i) | Realization A/c | Dr. | 500 | ||
| To Bank A/c
(Payment of realization expenses) |
500 | ||||
| (ii) | Partner’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 A’s Capital A/c
(Commission allowed to A @2% on ₹20,000 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 ₹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.
Solution:
| Journal | |||||
| Date | Particulars | L.F | Dr.(₹) | Cr.(₹) | |
| 1 | Realization A/c | Dr. | 12,000 | ||
| To Bank A/c
(Bank loan discharged) |
12,000 | ||||
| 2 | Realization A/c | Dr. | 400 | ||
| To A’s Capital A/c
(Commission payable to A) |
400 | ||||
| 3 | A’s Capital A/c
B’s Capital A/c |
Dr.
Dr. |
16,800
11,200 |
||
| To Deferred Advertisement Expenditure A/c
(Transfer of fictitious asset to partner’s capital accounts) |
28,000 | ||||
| 4 | B’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 ₹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?
Solution:
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) |
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
Stay tuned to BYJU’S for more DK Goel solutions, question papers, sample papers, syllabus and Commerce notifications.
| DK Goel Accountancy Solutions Class 12 – Part A (Chapter wise) | ||
| Chapter 1 Accounting for Partnership Firms – 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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