X, Y and Z are partners in a firm sharing profits in the ratio of 3:2:1 respectively. The firm was dissolved on 1st March, 2013. After transferring assets (other than cash) and third party liabilities to the 'Realisation Account' you are provided with the following information:
(a) There was a balance of Rs. 18,000 in the firm's Profit and Loss Account.
(b) There was an unrecorded bike of Rs. 50,000 which was taken over by X.
(c) Creditors of Rs. 5,000 were paid Rs. 4,000 in full settlement of accounts.
Pass necessary Journal entries for the above at the time of dissolution of firm.

Open in App

Solution

(a) Profit and Loss A/C.... Dr. 18000
To X's Capital A/C 9000
To Y's Capital A/C 6000
To Z's Capital A/C 3000
(Being transfer of accumulated profits to the partner's capital accounts)

(b) X's Capital A/C....... Dr. 50000
To Realisation A/C 50000
(Being unrecorded asset taken over by X)

(c) No entry is to be passed since creditors were paid in full settlement.

Suggest Corrections

Similar questions

Q. X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1 respectively. The firm was dissolved on 1st March, 2013. After transferring assets (other than cash) and third party liabilities to the 'Realisation Account' you are provided with the following information:
(a) There was a balance of ₹ 18,000 in the firm's Profit and Loss Account.
(b) There was an unrecorded bike of ₹ 50,000 which was taken over by X.
(c) Creditors of ₹ 5,000 were paid ₹ 4,000 in full settlement of accounts.
Pass necessary Journal entries for the above at the time of dissolution of firm.

L and M were partners in a firm sharing profit in the ratio of 2 :3. On 28-2-2016 the firm was dissolved. After transferring assets (other than cash) and outsiders' liabilities to realisation account you are given the following information :

(a) A creditor for Rs. 1,40,000 accepted building valued at Rs 1,80,000 and paid to the firm Rs. 40,000.

(b) A second creditor for Rs. 30,000 accepted machinery valued at Rs. 28,000 in full settlement of his claim.

(c) A third creditor amounting to Rs. 70,000 accepted Rs. 30,000 in cash and investments of the book value of Rs. 45,000 in full settlement of his claim.

(d) Loss on realisation was Rs 4,000.

Pass necessary Journal entries for the above transactions in the books of the firm assuming that all payments were made by cheque.

Q. Achal and Vichal were partners in a firm sharing profits in the ratio of 3 : 5. On 31st March, 2019, their Balance Sheet was as follows:


Liabilities		Amount (₹)	Assets	Amount (₹)
Capital A/cs:			Land and Building	4,00,000
Achal	3,00,000		Machinery	3,00,000
Vichal	5,00,000	8,00,000	Debtors	2,22,000
Creditors		1,79,000	Cash at Bank	78,000
Employees' Provident Fund		21,000
		10,00,000		10,00,000

The firm was dissolved on 1st April, 2019 and the Assets and Liabilities were settled as follows:
(a) Land and Building realised ₹ 4,30,000.
(b) Debtors realised ₹ 2,25,000 (with interest) and ₹ 1,000 were recovered for Bad Debts written off last year.
(c) There was an Unrecorded Investment which was sold for ₹ 25,000.
(d) Vichal took over Machinery at ₹ 2,80,000 for cash.
(e) 50% of the Creditors were paid ₹ 4,000 less in full settlement and the remaining Creditors were paid full amount.
Pass necessary Journal entries for dissolution of the firm.

Q. Ashu and Harish are partners sharing profits and losses as 3 : 2 . They decided to dissolve the firm on 31st March, 2018. Their Balance Sheet on the above date was:


Liabilities		₹	Assets	₹
Capital A/cs:			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

The firm was dissolved on 1st April,2018 and the Assets and Liabilities were settled as follows :
(a) Land and Building b realised ₹ 4,30,000.
(b) Debtors realised ₹ 2,25,000 (with interest) and ₹ 1,000 were recovered for Bad Debts written off last year .
(c) There was an Unrecorded Investment which was sold for ₹ 25,000.
(d) Vichal took over Machinery at ₹ 2,80,000 for cash.
(e) 50% of the Creditors were paid ₹ 4,000 less in full settlement and the remaining Creditors were paid full amount .
Pass necessary journal entries for dissolution of the firm.

Ashu is to take over the building at ₹ 95,000 and Machinery and Furniture is taken 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 Accounts.

Q. Lal and Pal were partners in a firm sharing profits in the ratio of 3 : 7. On 1st April, 2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to Realisation Account, you are given the following information:
(a) A creditor of ₹ 3,60,000 accepted machinery valued at ₹ 5,00,000 and paid to the firm ₹ 1,40,000.
(b) A second creditor for ₹ 50,000 accepted stock at ₹ 45,000 in full settlement of his claim.
(c) A third creditor amounting to ₹ 90,000 accepted ₹ 45,000 in cash and investments worth ₹ 43,000 in full settlement of his claim.
(d) Loss on dissolution was ₹ 15,000.
Pass necessary Journal entries for the above transactions in the books of firm assuming that all payments were made by cheque.

Join BYJU'S Learning Program