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12th | Dissolution of a Partnership Firm | Question No.  13 To 16 | Ts Grewal Solution 2022-2023

Question 13:


Suman and Rajan were partners in a firm sharing profits and losses in the ratio of 3: 1. The firm was dissolved on 31st March, 2019. Pass the necessary Journal entries for the following transactions after various assets (other than cash in hand and at bank) and third party liabilities have been transferred to Realisation Account:

(a) Dissolution expenses ` 10,000 were paid by the firm.

(b) Rajan had given a loan of ` 60,000 to the firm for which he accepted ` 58,000 in full settlement.

(c) The firm had a debit balance of ` 40,000 in the Profit &Loss Account on the date of dissolution.

(d) Profit on realisation was ` 12,000. (CBSE 2020)

 

 Answer:


 

Date

Particulars

 

`  (Dr.)

` (Cr.)

(a)

Realisation A/c

Dr.

10,000

 

 

 To Cash/Bank A/c

 

 

10,000

 

(Dissolution expenses were paid by the firm)

 

 

(b)

Rajan's Loan A/c

Dr.

60,000

 

 

 To Bank/Cash A/c

 

 

58,000

 

 To Realisation A/c

 

2,000

 

(Rajan‘s loan of ` 60,000 to the firm for which he accepted ` 58,000 in full settlement)

 

 

(c)

Dr. Suman's Capital A/c

Dr.

30,000

 

 

Rajan's Capital A/c

Dr.

10,000

 

 

 To Profit & Loss A/c

 

40,000

 

(Accumulated loss distributed)

 

 

(d)

Realisation A/c                                                  Dr.

12,000

 

 

 To Suman's Capital A/c

 

9,000

 

 To Rajan's Capital A/c

 

3,000

 

(Profit distributed)

 

 

 

Question 14:


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.

Answer:


In the books of Lal and Pal

Journal Entry

Date

Particulars

L.F.

Debit

 `

Credit

 `

(a)

Bank A/c

Dr.

 

1,40,000

 

 

  To Realisation A/c

 

 

1,40,000

 

(A creditor of  ` 3,60,000 accepted machinery valued at  ` 5,00,000 and paid  ` 1,40,000 to the firm)

 

 

 

 

 

 

 

 

(b)

No entry

 

 

 

 

 

 

 

 

 

(c)

Realisation A/c

Dr.

 

45,000

 

 

   To Cash A/c

 

 

 

45,000

 

(A third creditor of  ` 90,000 accepted  ` 45,000 in cash and investments worth  ` 43,000 in full settlement of his claim)

 

 

 

 

 

 

 

 

 

 

(d)

Lal’s Capital A/c

Dr.

 

4,500

 

 

Pal’s Capital A/c

Dr.

 

10,500

 

 

  To Realisation A/c

 

 

 

15,000

 

(Loss on dissolution transferred to Partners capital accounts)

 

 

 

 

 

 

 

 

 

 

Note: No entry will be made when asset is taken over by the creditor

 

Question 15:


Pass Journal entries for payment of following unrecorded liabilities on the dissolution of a firm of partners Shiv and Mohan:

(a) There was a contingent liability in respect of bills discounted but not matured of `18,500. An acceptor of one bill of `2,500 became insolvent and fifty paise in a rupee was recovered. The liability of the firm on account of this bill discounted and dishonoured has not so far been recorded

(b) There was a contingent liability in respect of a claim for damages for `75,000, such liability was settled for `50,000 and paid by the partner Shiv.

(c) Firm will have to pay `10,000 as compensation to an injured employee, which was a contingent liability not accepted by the firm.

(d) `5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70% by a compromise between the customer and the firm.

Answer:


Date

Particulars

 

`  (Dr.)

` (Cr.)

(a) (i)

Realisation A/c

Dr.

2,500

 

 

 To Bank A/c

 

 

2,500

 

(An acceptor of one bill, became insolvent)

 

 

(ii)

Bank A/c

Dr.

1,250

 

 

 To Realisation A/c

 

 

1,250

 

(Fifty paise in a rupee was recovered)

 

 

(b)

Realisation A/c

Dr.

50,000

 

 

 To Shiv's Capital A/c

 

 

50,000

 

(Liability was settled for `50,000 and paid by the partner Shiv)

 

 

(c)

Realisation A/c

Dr.

10,000

 

 

 To Bank A/c

 

 

10,000

 

(Compensation was paid to employee)

 

 

(d)

Realisation A/c

Dr.

3,500

 

 

 To Bank A/c

 

 

3,500

 

(Settlement was made)

 

 

 

Question 16:


Pass the Journal entries for the following transactions on the dissolution of the firm of P and Q after various assets (other than cash) and outside liabilities have been transferred to Realisation Account:
(a) Stock 
` 2,00,000. 'P' took over 50% of stock at a discount of 10%. Remaining stock was sold at a profit of 25% on cost.
(b) Debtor
`  ` 2,25,000. Provision for Doubtful Debts  ` 25,000.  ` 20,000 of the book debts proved bad.
(c) Land and Building (Book value  ` 12,50,000) sold for 
` 15,00,000 through a broker who charged 2% commission.
(d) Machinery (Book value  ` 6,00,000) was handed over to a creditor at a discount of 10%.
(e) Investment (Book value  ` 60,000) realised at 125%.
(f) Goodwill of  ` 75,000 and prepaid fire insurance of 
` 10,000.
(g) Trade Creditors  
` 1,60,000. Half of the trade Creditors accepted Plant and Machinery at an agreed valuation of  ` 54,000 and cash in full settlement of their claims after allowing a discount of  ` 16,000. Remaining trade Creditors were paid 90% in final settlement.
 

Answer:


Journal

Date

Particulars

L.F.

Debit

 ( `)

Credit

 ( `)

 

 

 

 

 

 

a.

P’s Capital A/c

Dr.

 

90,000

 

 

Bank A/c

Dr.  

 

1,25,000

 

 

       To Realisation  A/c

 

 

 

2,15,000

 

(Stock realized)

 

 

 

 

 

 

 

 

 

 

b.

Bank A/c

Dr.

 

2,05,000

 

 

    To Realisation  A/c

 

 

 

2,05,000

 

(Debtor realized)

 

 

 

 

 

 

 

 

 

 

c.

Bank A/c

Dr.

 

14,70,000

 

 

    To Realisation  A/c

 

 

 

14,70,000

 

(Land and Building realized)

 

 

 

 

 

 

 

 

 

 

d.

No Entry

 

 

 

 

 

 

 

 

 

 

e.

Bank A/c

Dr.

 

75,000

 

 

    To Realisation  A/c

 

 

 

75,000

 

(Investment realized )

 

 

 

 

 

 

 

 

 

 

f.

No Entry

 

 

 

 

 

 

 

 

 

 

g.

Realisation  A/c

Dr.

 

82,000

 

 

    To Bank A/c (10,000 + 72,000)

 

 

 

82,000

 

(Creditors  paid)

 

 

 

 

 

 

 

 

 

 

Ts Grewal Solution 2022-2023

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Class 12 / Volume – I

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