12th | Dissolution of a partnership firm | Question No. 17 To 20 | Ts Grewal Solution 2023-2024

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.

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

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.

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.
 

Pass necessary Journal entries on the dissolution of a firm in the following cases:
(a) Dharam, a partner, was appointed to look after the process of dissolution at a remuneration of  ` 12,000 and he had to bear the dissolution expenses. Dissolution expenses  ` 11,000 were paid by Dharam.
(b) Jay, a partner, was appointed to look after the process of dissolution and was allowed a remuneration of  ` 15,000. Jay agreed to bear dissolution expenses. Actual dissolution expenses  ` 16,000 were paid by Vijay, another partner on behalf of Jay.
(c) Deepa, a partner, was to look after the process of dissolution and for this work she was allowed a remuneration of  ` 7,000. Deepa agreed to bear dissolution expenses. Actual dissolution expenses  ` 6,000 were paid from the firm's bank account.
(d) Dev, a partner, agreed to do the work of dissolution for  ` 7,500. He took away stock of the same amount as his commission. The stock had already been transferred to Realisation Account.
(e) Jeev, a partner, agreed to do the work of dissolution for which he was allowed a commission of  ` 10,000. He agreed to bear the dissolution expenses. Actual dissolution expenses paid by Jeev were  ` 12,000. These expenses were paid by Jeev by drawing cash from the firm.
(f) A debtor of  ` 8,000 already transferred to Realisation Account agreed to pay the realisation expenses of  ` 7,800 in full settlement of his account.