TS Grewal Solutions for Class 12 Accountancy – Dissolution of Partnership Firm (Volume I)

Question 1.
What Journal entries would you pass in the following cases?
a. Expenses of realisation Rs.1,500.
b. Expenses of realisation Rs.600 but paid by Mohan, a partner.
c. Mohan, one of the partners of the firm, was asked to look into the dissolution of the firm for which he was allowed a commission of Rs.2,000.
d. Motor car of book value Rs.50,000 taken over by creditors of the book value of Rs.40,000 in final settlement.
Solution:

Question 2.
Pass Journal entries for the following:
a. Realisation expenses of Rs.10,000 were paid by Ajay, a partner.
b. Realisation expenses of Rs.15,000 were to be met by Rahul, a partner, but were paid by the firm.
c. Ramesh, a partner, was paid remuneration of Rs.25,000 and he was to meet all expenses.
d. Anuj, a partner, was paid remuneration of Rs.20,000 and he was to meet all expenses. Firm paid an expense of Rs.5,000.
Solution:

Question 3.
Pass Journal entries for the following:
a. Realisation expenses amounted to Rs.10,000 was paid by the firm on behalf of Alok, a partner, with whom it was agreed at Rs.7,500.
b. Realisation expenses amounted to Rs.5,000. It was agreed that the firm will pay Rs.2,000 and balance by Ravinder, a partner.
c. Dissolution expenses amounted to Rs.10,000 were paid by Amit, a partner, on behalf of the firm.
Solution:

Question 4.
Pass Journal entries for the following at the time of dissolution of a firm:
a. Sale of Assets-Rs.50,000.
b. Payment of Liabilities-Rs.10,000.
c. A commission of 5% allowed to Mr. X, a partner, on sale of assets.
d. Realisation expenses amounted to Rs.15,000. The firm had agreed with Amrit, a partner, to reimburse him up to Rs.10,000.
e. Z, an old customer, whose account for Rs.6,000 was written off as bad in the previous year, paid 60% of the amount written off.
f. Investment (Book Value Rs.10,000) realised 150%.
Solution:

Question 5.
Pass necessary Journal entries for the following transactions on the dissolution of the firm of P and Q after the various assets (other than cash) and outside liabilities have been transferred to Realisation Account.
a. Bank Loan Rs.12,000 was paid.
b. Stock worth Rs.16,000 was taken over by partner Q.
c. Partner P paid a creditor Rs. 4,000.
d. An asset not appearing in the books of accounts realised Rs.1,200.
e. Expenses of realisation Rs.2,000 were paid by partner Q.
f. Profit on realisation Rs.36,000 was distributed between P and Q in 5:4 ratio.
Solution:

Question 6.
X, Y and Z are partners in a firm sharing profits in the ratio of 3:2:1 respectively. The firm was dissolved on 1.3.2013. 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 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.
Solution:

Question 7.
Rohit, Kunal and Sarthak are partners in a firm. They decided to dissolve their firm. Pass necessary Jou entries for the following after various assets (other than Cash and Bank) and the third party liability 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 piece 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 Rs.Kunal at Rs.3,000, whereas 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 remuneration of Rs.15,000 for completing dissolution process and was responsible to bear all the realisation expenses
Solution:

Question 8.

Solution:

Question 9.

Solution:

Question 10.

Solution:

Question 11.

Solution:

Question 12.

The firm was dissolved. Rathi took over Investments at an agreed value of Rs.7,500. Furniture, Stock and Debtors realised Rs.48,400. Rs.9,000 were paid to Sundry Creditors in full settlement. The expenses of realisation were Rs.600. The partners’ accounts were settled by receipt or payment of cash. Show Realisation Account, Partners’ Capital Accounts and Cash Account to close the books of the firm.
Solution:

Question 13.

The firm was dissolved on 1st April, 2016. The fixed assets realised Rs.2,000 whereas Stock and Debtors realised Rs.33,000 in all. The expenses on dissolution were Rs.600. Prepare necessary Ledger Accounts, assuming that the necessary cash has been brought in by the partners.
Solution:

Question 14.

Solution:

Question 15.

Solution:

Question 16.

Solution:

Question 17.

Solution:

Question 18.

P took over Investments for Rs.12,500. Stock and Debtors realised Rs.11,500. Plant and Machinery were sold to Q for Rs.22,500 for cash. Unrecorded assets realised Rs.1,500. Realisation expenses paid amounted to Rs.900.
Prepare necessary Ledger Accounts to close the books of the firm.
Solution:

Question 19.

Solution:

Question 20.

During the course of realisation, a liability under a suit for damages is settled at 20,000 as against Rs.5,000 only provided for in the books of the firm.
Land and Building were sold for Rs.40,000 and the Stock and Sundry Debtors realised Rs.30,000 and Rs.42,000 respectively. The expenses of realisation amounted to Rs.1,200.
You are required to prepare Realisation Account Partners’ Capital Accounts and Bank Account in the books of the firm.
Solution:

Question 21.

On that date, the partners decide to dissolve the firm. A took over Investments at an agreed valuation Rs.35,000. Other assets were realised as follows:
Sundry Debtors: Full amount. The firm could realise Stock at 15% less and Furniture at 20% less than the book value. Building was sold at Rs.1, 00,000
Compensation to employees paid by the firm amounted to Rs.10,000. This liability was not provided for ii the above Balance Sheet.
You are required to close the books of the firm by preparing Realisation Account, Partners’ Capital Accounts and Bank Account.
Solution:

Question 22.

The firm was dissolved on the date given above. The following transactions took place:
a. Mrs. Rita Chowdhary undertook to pay Mr. Chowdhary’s Loan and took over 50% of the Stock at discount of 20%.
b. Book Debts realised Rs.54,000; balance of the Stock was sold off at a profit of 30% on cost.
c. Sundry Creditors were paid out at a discount of 10%. Bills Payable were paid in full.
d. Plant and Machinery realised Rs.75,000. Land and Building Rs.1, 20,000.
e. Mrs. Rita Chowdhary took over the goodwill of the firm at a valuation of Rs.30,000.
f. Realisation expenses were Rs.5,250.
Show Realisation Account, Partners’ Capital Accounts and Bank Account in the books of the firm.
Solution:

Question 23.

The firm was dissolved on the above date under the following arrangement:
a. Arvind promised to pay off Mrs. Arvind’s Loan and took Stock at Rs.6,000.
b. Balbir took half the Investments @ 10% discount.
c. Book Debts realised Rs.28,500.
d. Trade Creditors and Bills Payable were due on average basis of one month after but were paid immediately on 31st March @ 2% discount per annum.
e. Plant realised Rs.37,500; Building Rs.60,000; Goodwill Rs.9,000 and remaining Investments
f. An old typewriter, written off completely from the firm’s books, now estimator 450. It was taken by Balbir at this estimated price.
g. Realisation expenses were Rs.1,500.
Show Realisation Account, Capital Accounts of Partners and Bank Account.
Solution:

Question 24.

Solution:

Question 25.

Solution:

Question 26.

It was agreed to dissolve the firm and the terms of the dissolution were;
a. I took over Building at book value and agreed to pay off Creditors.
b. Accrued Interest was not collected whereas there was a contingent liability of Rs. 600 which was met.
c. Other assets realised Plant- Rs.25,000; Stock-Rs.11,200; Debtors-Rs.4,600.
d. Realisation expenses Rs. 600.
Prepare Realisation Account, Partners’ Capital Accounts and Cash Account.
Solution:

Question 27.

Following transactions took place:
a. A took over Stock at Rs.36,000. He also took over his wife’s loan.
b. 8 took over half of Debtors at Rs.28,000.
c. C took over Investments at Rs.54,000 and half of Creditors at their book value.
d. Remaining Debtors realised 60% of their book value. Furniture sold for Rs.30,000; Machinery 82,000 and Land Rs.1, 20,000.
e. An unrecorded asset was sold for Rs.22,000.
f. Realisation expenses amounted to Rs.4,000.
Prepare necessary Ledger Accounts to close the books of the firm.
Solution:

Question 28.

The realisation shows the following results:
a. Goodwill was sold for Rs.1,000.
b. Debtors were realised at book value less 10%.
c. Trademarks were realised for Rs.800.
d. Machinery and Stock-in-Trade were taken over by Krishna for Rs.14,400 and Rs.3,600 respectively.
e. An unrecorded asset estimated at Rs.500 was sold for Rs.200.
f. Creditors for goods were settled at a discount of Rs.80. The expenses on realisation were Rs.800.
Prepare Realisation Account Partners’ Capital Accounts and Bank Account.
Solution:

Question 29.
T There are two partners X and Y in a firm and their capitals are Rs.50,000 and Rs.40,000. The creditors are Rs.30,000. The assets of the firm realize Rs.1,00,000. How much will X and Y receive?
Solution:

Question 30.
A, B and C were partners sharing profits in the ratio of 5:3:2. On 31st March, 2016, A’s Capital an B’s Capital were Rs.30,000 and Rs.20,000 respectively but C owed Rs.5,000 to the firm. The liabilities were Rs.20,000. The assets of the firm realized Rs.50,000.
Prepare Realisation Account, Partners’ Capital Accounts and Bank Account.
Solution:

Question 31.
A and B were partners sharing profits and losses as to 7/11th to A and 4/11th to B. They dissolved partnership on 30th May, 2016. As on that date their capitals were: A Rs.7,000 and B Rs.4,000. There we also due on Loan A/c to A Rs.4,500 and to B Rs.750. The other liabilities amounted to Rs.5,000. The assets proved to have been undervalued in the last Balance Sheet and actually realised? Rs.24,000.
Prepare necessary accounts showing the final settlement between partners.
Solution:

Question 32.

Solution:

Question 33.

Solution:

Question 34.
X, Y and Z entered into a partnership and contributed Rs.9,000; Rs.6,000 and Rs.3,000 respectively. They agreed to share profits and losses equally. The business lost heavily during the very first year and they decided to dissolve the firm. After realising all assets and paying off liabilities, there remained a cash balance of Rs.6,000.
Prepare Realisation Account and Partners’ Capital Accounts.
Solution:

Question 35.
A, B and C started business on 1st April, 2011 with capitals of Rs.1,00,000; Rs.80,000 and Rs.60,000 respectively sharing profits (losses) in the ratio of 4 : 3 : 3. For the year ended 31st March, 2012, the firm suffered a loss of Rs.50,000. Each of the partners withdrew Rs.10,000 during the year. On 31st March, 2012, the firm was dissolved, the creditors of the firm stood at Rs.24,000 on that date and Cash in Hand was Rs.4,000. The assets realised? Rs.3,00,000 and Creditors were paid Rs.23,500 in full settlement of their claims.
Prepare Realisation Account and show your workings clearly.
Solution:

Question 36.
A, B and C were in partnership sharing profits and losses in the ratio of 2:1:1. They decided to dissolve the partnership. On that date of dissolution, Sundry Assets (including cash Rs.5,000) amounted to Rs.88,000, assets realised Rs.80,000 (including an unrecorded asset which realised Rs.4,000). A contingent liability on account of bills discounted Rs.8,000 was paid by the firm. The Capital Accounts of A, B and C showed a balance of Rs.20,000 each.
Prepare Realisation Account, Partners’ Capital Accounts and Cash Account.
Solution:

Question 37.
On 1st April, 2015, A, B and C commenced business in partnership sharing profits and losses in proportion of 1/2, 1/3 and 1/6 respectively. They paid into their Bank A/c as their capitals Rs.22,000; Rs.10,000 by A, Rs.7,000 by B and Rs.5,000 by C. During the year, they drew Rs.5,000; being Rs.1,900 by A, Rs.1,700 by B and Rs.1,400 by C On 31st March, 2016, they dissolved their partnership, A taking up Stock at an agreed valuation of Rs. 5,000, B taking up Furniture at Rs.2,000 and C taking up Debtors at Rs.3,000. After paying up their Creditors, there remained a balance of Rs.1,000 at Bank.
Prepare necessary accounts showing the distribution of the cash at the Bank and of the further cash brought in by any partner or partners as the case required.
Solution:

Question 38.
The partnership between A and B was dissolved on 31st March, 2016. On that date the respective credits to the capitals were A-Rs.1,70,000 and B-Rs.30,000. Rs.20,000 were owed by B to the firm; Rs.1,00,000 were owed by the firm to A and Rs.2,00,000 were due to the Trade Creditors. Profits and losses were shared in the proportions of, 2/3 to A, 1/3 to B. The assets represented by the above stated net liabilities realised Rs.4,50,000 exclusive of Rs.20,000 owed by B. The liabilities were settled at book figures.
Prepare Realisation Account, Partners’ Capital Accounts and Cash Account showing the distribution to the partners.
Solution:

Question 39.
X and Y were partners sharing profits and losses in the ratio of 3:2. They decided to dissolve the firm on 31st March, 2016. On that date, their Capitals were X – Rs.40,000 and Y- Rs.30,000. Creditors amounted to Rs.24,000.
Asssts were realised for Rs.88,500. Creditors of Rs.16,000 were taken over by X at Rs.14,000. Remaining Creditors were paid at Rs.7,500. The cost of realisation came to Rs.500.
Prepare necessary accounts.
Solution:

Question 40.
P, Q and R are three partners sharing profits and losses in the ratio of 3:3:2 respectively. Their respective capitals are in their profit-sharing proportions. On 1st April, 2015, the total capital of the firm and the balance of General Reserve are Rs.80,000 and Rs.20,000 respectively. During the year 2015-16, the firm made a profit of Rs.28,000 before charging interest on capital @ 5%. The drawings of the partners are P-Rs. 8,000; Q-Rs.7,000; and Rs.5,000. On 31st March, 2016, their liabilities were Rs.18,000.
On this date, they decided to dissolve the firm. The assets realised Rs.1,08,600 and realization expenses amounted to Rs.1,800.
Prepare necessary Ledger Accounts to close the books of the firm.
Solution:

Question 41.
X, Y and Z entered into partnership on 1st April, 2012. They contributed capital Rs.40,000, Rs.30,000 a Rs.20,000 respectively and agreed to share profits in the ratio of 3:2:1. Interest on capital was to allowed @ 15% p.a. and interest on drawings was to be charged at an average rate of 5%. During the years ended 31st March, 2014, the firm made profit of Rs.21,600 and Rs.25,140 respectively before allow or charging interest on capital and drawings. The drawings of each partner were Rs.6,000 per year. On 31st March, 2014, the partners decided to dissolve the partnership due to difference of opinion. that date, the creditors amounted to Rs.20,000.The assets, other than cash Rs.2,000, realized Rs.1,21,01 Expenses of dissolution amounted to Rs.760.
Draw up necessary Ledger Accounts to close the books of the firm.
Solution: