NCERT Solution For Class 12 Accountancy Chapter 5 - Dissolution Of Partnership Firm

NCERT Solutions are said to be an extremely helpful book while preparing for the CBSE Class 12 Accountancy examinations. This study material owns a deep knowledge and the Solutions collected by the subject matter wizards are no distinct.

NCERT Solution For Class 12 Accountancy Chapter 5 – Dissolution Of Partnership Firm furnishes us with an all-inclusive data to all the concepts. As the students would have learnt the basic fundamentals about the subject of accountancy in Class 11, this curriculum for Class 12 is a continual part of it; which explains the concepts in a great way.

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Access Solutions for Class 12 Accountancy Chapter 5 – Dissolution Of Partnership Firm

Short Questions for NCERT Accountancy Solutions Class 12 Part 1 Chapter 5

1. State the difference between dissolution of partnership and dissolution of partnership firm.

Basis of Comparison Dissolution of Partnership Dissolution of Partnership firm
Meaning It refers to the stage where a partner/partners discontinue their relationship with the firm. It refers to the situation that all the relation between a firm and its partners cease to exit
Discontinuation Business continues as usual Discontinuation of business due to dissolving of firm
Accounts Revaluation account is created Realization account is created
Liabilities and assets Revaluation is done Sold off to pay for the liabilities
Economic Relationship Continues It comes to an end
Nature Such type of event is voluntary in nature It can be sometimes compulsory and sometimes voluntary
Effect Firm is not dissolved Both firm and partnership are dissolved

2. State the accounting treatment for:

i. Unrecorded assets

ii. Unrecorded liabilities

(i) For Unrecorded Assets

An unrecorded asset is such an asset whose value is written off from books of accounts, but it is in usable form. It is shown as:

1. If sold by cash

Cash A/c Dr.

To Realisation A/c

(Unrecorded asset sold off for cash)

2. If taken over by any partner

Partner’s Capital A/c Dr.

To Realisation A/c

(Partner takes over unrecorded asset)

ii) For unrecorded liabilities

Liabilities that are not recorded in books of firm are called unrecorded liabilities. It can be shown in records as

1. When unrecorded liability is paid off

Realisation A/c Dr.

To Cash A/c

(Paid in cash the price of unrecorded liability)

2. When undertaken by a partner

Realisation A/c Dr.

To Partner’s Capital A/c

(Liability that is unrecorded is taken over by partner)

3. On dissolution, how you deal with partner’s loan if it appears on the

(a) Assets side of the Balance Sheet (b) Liabilities side of the Balance Sheet

(a) When a partner’s loan is on the asset side of balance sheet, it means that partner has borrowed some amount from business and needs to pay back the same. In this instance, the loan amount gets transferred to the partners’ capital account. It is shown as:

Partner’s Capital A/c Dr.

To Partner’s Loan A/c

(Loan account of partner transferred to partner capital account)

(b) When a partner’s loan appears on liabilities side of balance sheet, it means that partner has provided loan to the business and the business has to pay back the amount which it has got from the partner. The loan is paid in cash after full filling payment of all external liabilities.

Partner’s Loan A/c Dr.

To Cash/Bank A/c

(Loan taken from partner paid in cash)

4. Distinguish between firm’s debts and partner’s private debts.

Basis of Comparison Firm’s Debts Partner’s Private Debts
Meaning Debts that are owed by a firm to the outsiders Debts that are owed by a partner to any other person outside the firm.
Liability Liability of firm’s debt lies with all the partners jointly as well as individually. The liability of repaying debt rest only with the partner who has taken the debt.
Debt Settlement by private assets Whenever debts of firm exceeds the assets of firm, the partner’s private assets may be utilized in order to pay firms debt, only on the condition that the partner’s asset is more than his debts The debts that are private will be settled by private assets of the partner. If any surplus happens it will be used in paying for firms debts
Debt settlement by firm’s assets Debts of firms’ are settles using assets’ of firm. If any asset remains after clearing the debt, it gets distributed between the partners. Partner can utilize their share of surplus assets obtained after clearing all debts from firm for personal use.

5. State the order of settlement of accounts on dissolution.

Following rules are applicable on settlement of accounts after a firm is dissolute as per Section 48 of Partnership Act, 1932.

1. Amount which is received on sale of assets should be used in this sequence:

i. Paying off all external expenses and liabilities

ii. Loans and advances that are owed to partners should be cleared.

Iii.Capitals of all the partners must be paid off.

Any amount that still remains after paying off all these items must be distributed among partners of the dissolute firm in their original profit sharing ratio.

2. In case of loss and capital deficiency, the following must be paid in this order:

i. Adjust loss and capital deficiency against profits of firm

ii. Adjust against the total capital of the firm

iii. If any loss or deficiencies is present after all the adjustments, the next course of action will be to bear the loss as per individual profit sharing ratio.

6. On what account realisation account differs from revaluation account.

Basis of Comparison Realisation Account Revaluation Account
 Meaning It is an account that is prepared to determine the net profit or loss on sale of assets and discharging of liabilities of the firm It is an account that is prepared to determine variation in value of liabilities and assets of a firm.
Comprises of All Liabilities and assets Only those liabilities and assets that are revaluated
Time of preparation During dissolution of firm During firm restructuring
Frequency of Preparation One time, when firm is dissolved. As and when a new partner is introduced or an existing partner leaves the firm
Effect All accounts related to liabilities and assets are closed There is no account closure when revaluation happens
Records Records all the Liabilities and assets Records liabilities and assets whose value changed over a period.

Long Questions for NCERT Accountancy Solutions Class 12 Part 1 Chapter 5

1. Explain the process of dissolution of a partnership firm?

Dissolution of a partnership firm results in the business being discontinued. Dissolution consists of disposing off assets, clearing payment for liabilities and distributing the profit or loss among all partners.

A firm may be dissolved by the following ways:

1. Dissolution by agreement which can be with consent of all partners or a contract between all partners.

2. Dissolution which becomes compulsory when all partners become insolvent or any changes in government policies making the business illegal.

3. Dissolution that is based on certain condition such as a fixed period, purpose, death of a partner or insolvency of a partner/partners

4. Dissolution by a written notice given by a partner with the intention to dissolve the firm.

5. Dissolution by court on account of a partner becoming lunatic, indulged in illegal activities, found guilty of misconduct, incapable to perform duties or dissolution reason found justified.

Following rules are applicable on settlement of accounts after a firm is dissolute as per Section 48 of Partnership Act, 1932.

1. Amount which is received on sale of assets should be used in the following order

i. Paying off all external expenses and liabilities

ii. Loans and advances that are owed to partners should be cleared.

Iii.Capitals of all the partners should be paid off.

Any amount that still remains after paying off all these items should be distributed among partners of the dissolute firm in their original profit sharing ratio.

2. In case of loss and capital deficiency, the following should be paid in order:

i. Adjust loss and capital deficiency against profits of firm

ii. Adjust against the total capital of the firm

iii. If there exists any loss or deficiencies after all the adjustments, the next course of action will be to bear the loss as per individual profit sharing ratio.

2. What is a Realisation Account?

When a firm is dissolved, it results in closing of all accounts, assets are sold off and liabilities are paid off. To maintain a record of all such activities, a nominal account is prepared which is called as Realisation Account. Its main purpose is to determine profit or loss that happens due to settling off assets and liabilities. If this exercise results in profit or loss, it gets transferred to the Partners’ Capital Account with their original profit sharing ratio.

The main objectives of preparing a realisation account is:

1. To ensure all accounts are closed

2. To record all transactions that is related to sale of assets and paying off liabilities

3. Determining whether profit or loss is happening due to sale of assets and paying off liabilities.

The format of realisation account is as follows:

Format of Realisation Account
Dr.                                                                                                                                           Cr.
Particulars Amount

Particulars Amount

Various Assets

(Excluding Cash/Bank, fictitious assets, Debit balance of P and L A/c, partner Capital A/c, Current A/c, Loan to Partner)

Cash/Bank

(Payment for realisation expenses)

Cash/Bank

(Payment to outside and unrecorded liabilities)

Partner’s Capital A/c

(If any liability taken on expenses paid by him or remuneration payable to him)

Partner Capital A/c

(Profit on realisation distributed in the profit sharing ratio among all the partners)

Various Liabilities

(Excluding Partner Capital account, reserves, P and L A/c, Current A/c, Loan to Partner)

Provision on assets

(like, Provision for doubtful debts; Provision for depreciation)

Cash/Bank

(Amount received from realisation of assets and unrecorded assets)

Partner ‘s Capital A/c

(If any asset taken over by any partner)

Partner Capital A/c

(Loss on realisation borne by all the partners in their profit sharing ratio)

3. Reproduce the format of Realisation Account.

     

Format of Realisation Account
Dr.                                                                                                                                           Cr.
Particulars Amount

Particulars Amount

Various Assets

(Excluding Cash/Bank, fictitious assets, Debit balance of P and L A/c, partner Capital A/c, Current A/c, Loan to Partner)

Cash/Bank

(Payment for realisation expenses)

Cash/Bank

(Payment to outside and unrecorded liabilities)

Partner’s Capital A/c

(If any liability taken on expenses paid by him or remuneration payable to him)

Partner Capital A/c

(Profit on realisation distributed in the profit sharing ratio among all the partners)

Various Liabilities

(Excluding Partner Capital account, reserves, P and L A/c, Current A/c, Loan to Partner)

Provision on assets

(like, Provision for doubtful debts; Provision for depreciation)

Cash/Bank

(Amount received from realisation of assets and unrecorded assets)

Partner ‘s Capital A/c

(If any asset taken over by any partner)

Partner Capital A/c

(Loss on realisation borne by all the partners in their profit sharing ratio)

 

4. How deficiency of creditors is paid off?

Deficiency of creditors arises when a firm is unable to pay off the creditors after selling of all the assets and utilizing partner’s private assets. In such a situation there are two procedures that needs to be followed:

1. Transferring deficiency to Partners’ Capital Account: In this procedure creditors get paid from the cash available with the firm that includes each partner’s individual contribution. The deficiency is transferred to Partners capital account and therefore is managed by all partners as per their profit sharing ratio. In case a partner becomes insolvent, it is regarded as capital loss for the firm. If the partnership deed has no clause for such a situation, then the capital loss needs to be borne by partners who are in solvent state and as per their capital ratio in the firm, as per Garner vs. Murray case.

2. Transferring the deficiency to Deficiency Account: In this process, a separate account is prepared for creditors. Then for determining the cash obtained from sale of firms and partners private assets, a cash account is prepared. Then after determining the cash available with the firm, creditors and external liabilities are paid, but not in full. The remaining creditors or the deficiency is then transferred to the deficiency account.

Numerical Question for NCERT Accountancy Solutions Class 12 Part 1 Chapter 5

1. Journalise the following transactions regarding Realisation expenses:

[a] Realisation expenses amounted to ₹ 2,500.

[b] Realisation expenses amounting to ₹ 3,000 were paid by Ashok, one of the partners.

[c] Realisation expenses ₹ 2,300 borne by Tarun, personally.

[d] Amit, a partner was appointed to realise the assets, at a cost of ₹ 4,000. The actual amount of Realisation amounted to ₹ 3,000.

 

 

Journal

 

  Particulars L.F. Amount

Amount

(a) Realisation A/c Dr. 2,500
To Bank A/c 2,500
(Realisation expenses paid)
(b) Realisation A/c Dr. 3,000
To Ashok’s Capital A/c 3,000
(Realisation expenses paid by Ashok)
(c) No entry, as all Realisation expenses are borne personally by Tarun
(d) Realisation A/c Dr. 4,000
To Amit’s Capital A/c 4,000
(Realisation expenses paid to Amit)

2. Record necessary journal entries in the following cases:

[a] Creditors worth ₹ 85,000 accepted ₹ 40,000 as cash and Investment worth ₹ 43,000, in full settlement of their claim.

[b] Creditors were ₹ 16,000. They accepted Machinery valued at ₹ 18,000 in settlement of their claim.

[c] Creditors were ₹ 90,000. They accepted Buildings valued ₹ 1, 20,000 and paid cash to the firm ₹ 30,000.

 

Journal

 

  Particulars L.F. Amount

Amount

(a) Realisation A/c Dr. 40,000
To Cash A/c 40,000
(Creditors worth ₹ 85,000 accepted 40,000 as cash and investment

worth ₹ 43,000 in their full settlement)

(b) No Entry
(Creditors ₹ 16,000 accepted Machinery ₹ 18,000 in the full

settlement. No entry is required since both asset and liability are

already transferred to the Realisation Account)

(c) Cash A/c Dr. 30,000
To Realisation A/c 30,000
(Creditors worth ₹ 90,000 accepted buildings worth ₹ 1,20,000 and

returned ₹ 30,000 as cash after settlement of claim to the firm)

3. There was an old computer which was written-off in the books of Accounts in the previous year. The same has been taken over by a partner Nitin for ₹ 3,000. Journalise the transaction, supposing. That the firm has been dissolved.

 

Journal

 

Particulars L.F. Amount

Amount

Nitin’s Capital A/c Dr. 3,000
To Realisation A/c 3,000
(Unrecorded computer taken over by Nitin)

4. What journal entries will be recorded for the following transactions on the dissolution of a firm:

[a] Payment of unrecorded liabilities of ₹ 3,200.

[b] Stock worth ₹ 7,500 is taken by a partner Rohit.

[c] Profit on Realisation amounting to ₹ 18,000 is to be distributed between the partners Ashish and Tarun in the ratio of 5:7.

[d] An unrecorded asset realised ₹ 5,500.

 

Journal
  Particulars L.F. Amount

Amount

(a) Realisation A/c Dr.   3,200  
  To Bank A/c       3,200
  (Unrecorded liabilities paid)      
             
(b) (Rohit’s Capital A/c Dr.   7,500  
  To Realisation A/c       7,500
  (Stock is taken over by Rohit)      
             
(c) Realisation A/c Dr.   18,000  
  To Ashish’s Capital A/c       7,500
  To Tarun’s Capital A/c       10,500
  (Profit on Realisation is transferred to Partners’ Capital Account)      
             
(d) Bank A/c Dr.   5,500  
  To Realisation A/c       5,500
  (Unrecorded asset sold)        
           

5. Give journal entries for the following transactions:

1. To record the Realisation of various liabilities and assets,

2. A Firm has a Stock of ₹ 1, 60,000. Aziz, a partner took over 50% of the Stock at a discount of 20%,

3. Remaining Stock was sold at a profit of 30% on cost,

4. Land and Building (book value ₹ 1,60,000) sold for ₹ 3,00,000 through a broker who charged 2%, commission on the deal,

5. Plant and Machinery (book value ₹ 60,000) was handed over to a Creditor at an agreed valuation of 10% less than the book value,

6. Investment whose face value was ₹ 4,000 was realised at 50%.

 

Journal
  Particulars L.F. Amount

Amount

1)
(a) For Transfer of Assets
Realisation A/c Dr.
To Assets A/c (Individually)
(Assets transferred to Realisation Account)
(b) For Transfer of Liabilities
Liabilities A/c (Individually) Dr.
To Realisation A/c
(Liabilities transferred to Realisation Account)
(c) For sale of Asset
Cash/Bank A/c Dr.
To Realisation A/c
(Assets sold)
(d) For liabilitiy paid
Realisation A/c Dr.
To Cash/Bank A/c
(Liabilities paid)
2) Aziz’s Capital A/c Dr. 64,000
To Realisation A/c 64,000
(Aziz, a partner took over 50% of stock at 20% discount, the value

of the total stock  was ₹ 1,60,000)

[1,60,000 × (50/100) × (80/100) = ₹ 64,000]
3) Bank A/c Dr. 1,04,000
To Realisation A/c 1,04,000
(Stock worth ₹ 80,000  sold at a profit of 30% on cost) [80,000 × (130/100 = ₹ 1,04,000)]
4) Bank A/c Dr. 2,94,000
To Realisation A/c 2,94,000
(Land and Building sold for ₹ 3,00,000 and 2% commission

paid to the broker)

5) No entry
(Plant and Machinery ₹ 60,000 handed over to the creditors at a

discount of 10%.  No entry is required as both the asset and liability

are already transferred to the Realisation Account)

6) Bank A/c Dr. 2,000
To Realisation A/c 2,000
(Investments worth ₹ 4,000 were realised at 50%)

 

6. How will you deal with the Realisation expenses of the firm of Rashim and Bindiya in the following cases?

1. Realisation expenses amounts to ₹ 1, 00,000,

2. Realisation expenses amounting to ₹ 30,000 are paid by Rashim, a partner.

3. Realisation expenses are to be borne by Rashim for which he will be paid ₹ 70,000 as remuneration for completing the dissolution process. The actual expenses incurred by Rashim were ₹ 1, 20,000.

 

Books of Rashim and Bindiya

 

Journal

 

  Particulars L.F. Amount

Amount

1) Realisation A/c Dr. 1,00,000
To Bank A/c 1,00,000
(Realisation expenses paid)
2) Realisation A/c Dr. 30,000
To Rashim’s Capital A/c 30,000
(Realisation expenses borne by Rashim)
3) Realisation A/c Dr. 70,000
To Rashim’s Capital A/c 70,000
(Realisation expenses borne by Rashim and remuneration to him

for dissolution ₹ 70,000)

7. The book value of assets (other than cash and bank) transferred to Realisation Account is ₹ 1, 00,000. 50% of the assets are taken over by a partner Atul, at a discount of 20%; 40% of the remaining assets are sold at a profit of 30% on cost; 5% of the balance being obsolete, realised nothing and remaining assets are handed over to a Creditor, in full settlement of his claim.

You are required to record the journal entries for Realisation of assets.

 

Journal

 

Particulars L.F. Amount

Amount

Realisation A/c Dr. 1,00,000
To Sundry Assets A/c 1,00,000
(Assets other than cash and bank transferred to Realisation Account)
Atul’s Capital A/c Dr. 40,000
To Realisation A/c 40,000
(Atul took over 50% of assets worth ₹ 1,00,000 at 20% discount) [1,00,000 × (50/100) × (80/100)]
Bank A/c Dr. 26,000
To Realisation A/c 26,000
(Assets worth ₹ 20,000, i.e. 40% of assets of ₹ 50,000 are sold

at a profit of 30%) [50,000 × (40/100) × (130/100)]

No entry is made for obsolescence of the assets and the assets given

to the creditors in the full settlement as these are already transferred to

the Realisation Account and adjusted)

8. Record necessary journal entries to record the following unrecorded liabilities and assets in the books of Paras and Priya:

1. There was an old furniture in the firm which had been written-off completely in the books. This was sold for ₹ 3,000,

2. Ashish, an old customer whose Account for ₹ 1,000 was written-off as bad in the previous year, paid 60%, of the amount,

3. Paras agreed to take over the firm’s goodwill (not recorded in the books of the firm), at a valuation of ₹ 30,000,

4. There was an old typewriter which had been written-off completely from the books. It was estimated to realize ₹ 400. It was taken away by Priya at an estimated price less 25%,

5. There were 100 shares of ₹ 10 each in Star Limited acquired at a cost of ₹ 2,000 which had been written-off completely from the books. These shares are valued @ ₹ 6 each and divided among the partners in their profit sharing ratio.

 Books of Paras and Priya

 

Journal

 

 
  Particulars L.F. Amount

Amount

1) Bank A/c Dr.   3,000  
  To Realisation A/c       3,000
  (Unrecorded furniture sold)      
             
2) Bank A/c Dr.   600  
  To Realisation A/c       600
  (Bad Debt recovered which was previously written off as bad)      
             
3) Paras’s Capital A/c Dr.   30,000  
  To Realisation A/c       30,000
  (Unrecorded goodwill taken over by Paras)      
           
4) Priya’s Capital A/c Dr.   300  
  To Realisation A/c       300
  (Unrecorded Typewriter estimated ₹ 400 taken over by Priya at

25% less price)

     
           
5) Paras’s Capital A/c Dr.   300  
  Priya’s Capital A/c Dr.   300  
  To Realisation A/c       600
  (100 shares of ₹ 10 each  which were not recorded in the books 

taken @ ₹ 6 each by Paras and Priya and divided between them in

their profit sharing ratio)

     
         

9. All partners wish to dissolve the firm. Yastin, a partner wants that her loan of ₹ 2, 00,000 must be paid off before the payment of capitals to the partners. But, Amart, another partner wants that the capitals must be paid before the payment of Yastin’s loan. You are required to settle the conflict giving reasons.

As per section 48 of Partnership Act 1932, at the time of dissolution, loans and advances from the partners must be paid off before the settlement of their capital accounts. Hence, Yastin’s argument is correct that her loan of ₹ 2, 00,000 must be paid off before the payment of partners’ capital.

10. What journal entries would be recorded for the following transactions on the dissolution of a firm after various assets (other than cash) on the third party liabilities have been transferred to Realisation Account?

1. Arti took over the Stock worth ₹ 80,000 at ₹ 68,000.

2. There was unrecorded Bike of ₹ 40,000 which was taken over By Mr. Karim.

3. The firm paid ₹ 40,000 as compensation to employees.

4. Sundry creditors amounting to ₹ 36,000 were settled at a discount of 15%.

5. Loss on Realisation ₹ 42,000 was to be distributed between Arti and Karim in the ratio of 3:4.

 

 

Journal 
  Particulars L.F. Amount

Amount

1 Arti’s Capital A/c Dr. 68,000
To Realisation A/c 68,000
(Arti took over stock worth ₹ 80,000 at ₹ 68,000)
2. Karim’s Capital A/c Dr. 40,000
To Realisation A/c 40,000
(Karim took over an unrecorded bike of  ₹ 40,000)
3. Realisation A/c Dr. 40,000
To Bank A/c 40,000
(Compensation paid to the employees )
4. Realisation A/c Dr. 30,600
To Bank A/c 30,600
(Creditors amounting ₹ 36,000 were settled at a discount of 15%) [36,000 × (85/100)]
5. Arti’s Capital A/c Dr. 18,000
Karim’s Capital A/c Dr. 24,000
To Realisation A/c 42,000
(Loss on Realisation transferred to Partners’ Capital Account)

 

11. 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.

 

 

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
32,000 32,000
Cash Account
Dr.   Cr.
Particulars Amount

Particulars Amount

Balance b/d 16,000 Realisation:
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 5,10,000

Note: Here the Contingent Liability of Electricity Bill has been treated as Electricity Bill Payable.

 

12. 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.

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

13. 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.

 

 

 

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
5,000 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 64,500

 

14. 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.

 

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     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

 

 

15. 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
         

The Assets 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.

 

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

16. 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.

 

 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

 

Working Notes:

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

 

17. 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

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

 

18. 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.

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 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

 

19. 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.

 

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 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

 

20. 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.

 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

Concepts covered in this chapter –

  • Dissolution of partnership
  • Dissolution of a firm
  • Settlement of Accounts
  • Accounting treatment

Conclusion

NCERT Solutions for Class 12 Accountancy chapter 5 provides a wide degree of illustrative examples; which assists the students to comprehend and learn quickly. The above mentioned are the illustrations for Class 12 CBSE syllabus. For more solutions and study materials of NCERT solutions for Class 12 Accountancy, visit BYJU’S or download the app for more information.

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