Dissolution of a partnership Firm

Q1. A and B shared profit 3:2. Their Balance sheet as at 31st March, 2007 was as follows:-

Liabilities ₹ Assets ₹

Creditors 12000 Machinery 100,000

Bills payable 5000 Investment 80,000

Employee Provident fund 1000 Debtors 40,000

Mrs A's Loan 35,000 less: Provision ( 8000) 32,000

Mr. A's Loan 17,000 Stock 150,000

Investment fluctuations fund 6,000 Deferred Revenue Expenditure 28,000

Bank Loan 10,000 Goodwill 20,000

Workman compensation Res. 7,000 Loan to B 11,000

Contingency Reserve 38,000 Cash at Bank 100,000

Profit and loss 20,000

Machinery Replacement fund 12,000

Reserve Fund 8000

A's capital 150,000

B's Capital 200,000

Assets Reaslised as follows:-

Stock ₹ 160,000 , Machinery 10% less than book value, Debtor ₹60,000.

Creditors agreed to accept 5% less.

Prepare Realisation Account, Bank Account , Partner's loan Account and partner's Capital Account of A
and B.
Q2. X and Y shared profit 2:1. Their Balance sheet as at 31st March, 2017 was as follows:-

Liabilities ₹ Assets ₹

Bills payable 10,000 Investment 1,00,000

Workmen compensation Reserve 30,000 Debtors 40,000

Investment fluctuations Reserve 15,000 Provision (5,000) 35,000

Creditors 25,000 Stock 75,000

Capital A/c Profit and loss 50,000

X ‘s 3,00,000 land and building 2,00,000

Y's 2,00,000 5,00,000 loan to X 50,000

A's Loan 5000 Cash at bank 75,000

The Firm was dissolved on 31st March, 2017.

A) The assets Reaslised were

Stock = ₹100,000
Land and building = ₹180,000

B) Creditors agreed to accept 5% less.

Prepare Realisation Account, Bank Account, partner Loan Account and Capital Account of A and B.

Also, pass Journal entries.

Q3. Bale and Yale are equal partners of a firm. They decided to dissolve their partnership on 31st
March, 2019 at which date their Balance sheet stood as:-

A) The assets realised were:-

Stock ₹22,000, Debtors ₹7,500, Machinery ₹ 16,000 ; building ₹35,000.
B) Yale took furniture at ₹ 9,000.
 C) Bale agreed to settled the liability of creditors.
D) Prepare realisation Account, partner loan Ac, Partner's capital Account and Bank account.

Q4 . Pass Journal entries in the following alternative cases:-

A. Creditors for ₹1,40,000 accepted building valued at ₹1,80,000 and paid to the firm ₹
40,000.
B. Creditors for ₹ 30,000 accepted building valued at ₹28000 and paid by the firm ₹2000.
C. Creditors for ₹ 1,40,000 accepted building valued at ₹1,80,000 in full settlement of his
claim.
D. Creditors for ₹ 30,000 accepted building valued at ₹28000 in full settlement.
E. Creditors of ₹ 80,000 accepted building of ₹1,00,000 at 70,000 and balance paid in cash.
F. Creditors of ₹80,000 accepted building of ₹70,000 at ₹90,000 and balance paid in cash.

Q5. (HW) Pass Journal entries in the following alternative cases:-

A) Creditors for ₹1,00,000 accepted building valued at ₹1,70,000 and paid to the firm ₹ 40,000
B) Creditors for ₹ 80,000 accepted Stock valued at ₹68000 and paid by the firm ₹2000.
C) Creditors for ₹ 40,000 accepted building valued at ₹80,000 in full settlement of his claim.
D) Creditors for ₹ 130,000 accepted Machinery valued at ₹1,18000 in full settlement.
E) Creditors of ₹ 80,000 accepted Furniture of ₹90,000 at 70,000 and balance paid in cash.
F) Creditors of ₹100,000 accepted building of ₹70,000 at ₹1,90,000 and balance paid in cash.

Q6. (HW) . X and Y were partners sharing profits in the ratio of 3:2. Give Journal entries under following
situation at the time of dissolution of firm:

A) Workmen Compensation Reserve in the Balance Sheet was ₹ 75,000.

B) Workmen Compensation Reserve was ₹60,000 and liability for it was ₹35,000.
C) Workmen Compensation Reserve was ₹60,000 and liability was ₹75,000
D) Workmen Compensation Reserve was ₹ 60,000 and liability was ₹60,000.
E) Workmen Compensation Reserve was nil and liability was ₹ 15,000
Q7. Ashish and kanav were partners in a firm sharing profit and losses in the ratio of 3:2. On 31st march,
2018 their Balance sheet was as follows:-

On the above date they decided to dissolve the firm.

A) Ashish agreed to pay off his wife loan.

B) Workman compensation claim was determined ₹15000.
C) Trade creditors took over investment at ₹30,000 and balance paid in cheque.
D) Debtors realised ₹18500 and plant realised 10% more.

Prepare Realisation Account, partner’s capital Account and Bank account.

Q8. Pass necessary Journal entries on the dissolution of a partnership firm in the following cases:-

1. Realisation Expenses of ₹5000, were paid by firm.

2. Realisation expenses of ₹6000 were paid by Deepa , a partner.
3. Realisation expenses of ₹10,000.
4. .Realisation expenses of ₹5000 were paid by firm on behalf of madan, a partner.
5. Dissolution expenses were ₹8000. Out of which, ₹3000 were to be born by firm and balance by
Ravi, a partner. All expenses are paid by firm.
6. Dissolution expenses were ₹20,000. Out of which, ₹12,000 were to be born by firm and
remaining by mohan ( a partner). All expenses paid by mohan.
7. Realisation expenses of ₹20,000. Out of which ₹8000 were paid by rahul ( a partner) and
remaining were paid by firm.
8. Realisation expenses of ₹9000 were to be born by abhishek, a partner. However, it was paid by
leekhit, another partner. It was to be recorded in the books.
9. Sudhir, a partner, was allowed a remuneration of ₹10,000 to carry out dissolution of the firm.
Actual expenses amounted to ₹ 16,000.
10. Realisation expenses were to be borne by A for which he is to get a credit of ₹10,000. Actual
realisation expenses paid out of firm’s Bank Account amounted to ₹12000.
11. X, the partner, is paid remuneration of ₹5000 for dissolution of the firm. Realisation expenses of
₹8000 are met by the firm.
 12. Sarthak (a partner) paid the realisation expenses of ₹ 16000 out of his pocket, who was to get a
remuneration of ₹15000 for Completing dissolution Process and was responsible to bear all the
realisation expenses.
13. Priyanka paid realisation expenses of ₹15000 out of her pocket and she was to get a
remuneration of ₹18000 for completing the dissolution process. (Priyanka is a partner)
14. Q a partner was appointed to look after the process of dissolution for which he was allowed a
remuneration of ₹ 18000. Q agreed to take over stock worth ₹ 18000 as his remuneration. The
stock had already been transferred to Realisation Account.

Q9. (HW) Pass necessary journal entries on dissolution of a partnership firm in the following cases:-
Q10.(HW)

Q11. X, Y and Z shared profit 1:1 . Their Balance sheet as at 31st march, 2022 was as follows:-

Liabilities ₹ Assets ₹

A' Capital A/c 100,000 Cash at Bank 1,50,000

B’s Capital A/c 2,00,000 Cash in hand 50,000

Creditors A/c 15,000 Machinery 80,000

Bills payable 10,000 Stock 40,000

A's current A/c 25,000 B's current A/c 30,000

The firm Dissolved on 31st march, 2022, on the following terms.

A) Machinery Reaslised at ₹2,00, 000

B) Creditors of ₹10,000 , accepted stock at a value of ₹8,000 and balance paid in cash.
C) Prepare Realisation Account, partners capital Account and bank Account.
Q12. (Loan) A and B are partner sharing profit in the ratio 9:1. Their Balance sheet as at 31-3-2022 was
as follows

Liabilities ₹ Assets ₹

A's capital 2,00,000 Machinery 1,00,000

B's Capital 25,000 Stock 1,00,000

Creditors 70,000 Goodwill 1,07,000

B's Loan 2,000 Loan to A 10,000

Bank overdraft 20,000

Firm Dissolve on 31st march 2022.

Prepare Realisation Account, Partners Loan account , partner Capital Account and Bank account.

Q13. Parul, Payal, and priyanka are partners in a firm . they decided to dissolve their firm . pass
necessary journal entries for the following after various assets (other than cash) and third parties
parties liability have transferred to realization a/c :

A) Total debtors were of ₹76000 and a provision for doubtful debt also stood in the books at Rs.
6000. Rs. 12000 debtors proved bad and rest were paid the amount due .
B) Parul agreed to pay off her husband‘ loan ₹7000 at a discount of 5% .
C) A machine which was not recorded in the books was taken over by Payal at 3000 whereas its
expected value was ₹5000.
D) A contingent liability ( not provided for ) of ₹4000 was also discharged .
E) The firm had a debit balance of ₹27000 in the P/L a/c on the date of dissolution (D)

Q14. Rohit, Kunal and Sarthak are partners in a firm. They decided to dissolve their firm. Pass necessary
Journal entries for the following after various assets (other than Cash and Bank) and the third party
liability have been transferred to Realisation Account:

A) Kunal agreed to pay off his wife’s loan of Rs. 6,000.

B) Total Creditors of the firm were Rs. 40,000. Creditors worth Rs. 10,000 were given a price of
furniture costing Rs. 8,000 in full and final settlement. Remaining Creditors allowed a discount of
10%.
C) Rohit had given a loan of Rs. 70,000 to the firm which was duly paid.
D) A machine which was not recorded in the books was taken over by kunal at Rs. 3,000, whereas
its expected value was Rs. 5,000.
E) the firm had a debit balance of Rs. 15,000 in the profit and Loss Account on the date of
dissolution.
 F) Sarthak paid the realisation expenses of Rs. 16,000 out of his private funds, who was to get a
remuneration of Rs. 15,000 for completing dissolution process and was responsible to bear all
the realisation expanses.

Q15.
Q16.
Q17.
Memorandum Balance sheet

Q18.

Q19.