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Final Settlement with Partner (Dissolution)

On dissolutio...

Question

On dissolution of the firm, partner’s capital accounts are closed through account.

A

bank

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B

asset

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C

liability

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D

reserve

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Solution

The correct option is A bank
On dissolution of the firm, partner’s capital accounts are closed through the bank account. After the realisation of all assets and paying off liabilities, the partners share the remaining cash and bank balances according to their capital balance.

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Q. Bale and Yale are equal partners of a firm. They decide to dissolve their partnership on 31st March,2018 at which date their Balance Sheet stood as:


Liabilities		₹	Assets	₹
Capital A/cs:			Building	45,000
Bale	50,000		Machinery	15,000
Yale	40,000	90,000	Furniture	12,000
General Reserve		8,000	Debtors	8,000
Bale's Loan A/c		3,000	Stock	24,000
Creditors		14,000	Bank	11,000

		1,15,000		1,15,000

(a) The assets realised were:
Stock ₹ 22,000; Debtors ₹ 7,500; Machinery ₹ 16,000; Building ₹ 35,000.
(b) Yale took over the Furniture at ₹ 9,000.
(c) Bale agreed to accept ₹ 2,500 in full settlement of his Loan Account .
(d) Dissolution Expenses amounted to ₹ 2,500.
Prepare the:
(i) Realisation Account; (ii) Capital Accounts of Partners;
(iii) Bale's Loan Account; (iv) Bank Account.

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