12th | Dissolution of a Partnership Firm | Question No. 25 To 28 | Ts Grewal Solution 2022-2023

Question 25:

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2022, their Balance Sheet was as follows:

BALANCE SHEET as at 31st March, 2022
Liabilities			( `)	Assets	( `)
Creditors			38,000	Cash at Bank	11,500
Mr. A's Loan			10,000	Stock	6,000
B's Loan			15,000	Debtor	19,000
Reserve			5,000	Furniture	4,000
A's Capital	10,000			Plant	28,000
B's Capital		8,000	18,000	Investments	10,000
				Profit and Loss A/C	7,500

			86,000		86,000

The firm was dissolved on 31st March, 2022 and both the partners agreed to the following:
(a) A took Investments at an agreed value of ` 8,000. He also agreed to settle M `. A's Loan.
(b) Other assets realised as: Stock − ` 5,000; Debtor − ` 18,500; Furniture − ` 4,500; Plant − ` 25,000.
(c) Expenses of realisation came to ` 1,600.
(d) Creditors agreed to accept ` 37,000 in full settlement of their claims.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Realisation Account

Dr.

Cr.

Particulars

( `)

Particulars

( `)

Stock

6,000

Creditors

38,000

Debtor

19,000

M `. A’s Loan

10,000

Furniture

4,000

Plant

28,000

A’s Capital A/c (Investments)

8,000

Investments

10,000

Bank A/c:

A’s Capital A/c

(M `. A’s loan)

10,000

Stock

5,000

Bank A/c :

Debtor

18,500

Expenses

1,600

Furniture

4,500

Creditors

37,000

38,600

Plant

25,000

53,000

Loss transferred to:

A’s Capital A/c

3,960

B’s Capital A/c

2,640

6,600

1,15,600

Partners Capital Accounts

Dr.

Cr.

Particulars

Realisation (loss)

3,960

2,640

Balance b/d

10,000

8,000

Realisation A/c

8,000

–

Reserve A/c

3,000

2,000

Profit and Loss A/c

4,500

3,000

Realisation A/c

10,000

–

Bank A/c

6,540

4,360

23,000

10,000

23,000

10,000

B’s Loan Account
Dr.				Cr.
Particulars	( `)	Particulars	( `)
		Balance b/d	15,000
Bank A/c	15,000
	15,000		15,000

Bank Account
Dr.				Cr.
Particulars	( `)	Particulars	( `)
Balance b/d	11,500	Realisation A/c	38,600
Realisation A/c	53,000	A’s Capital A/c	6,540
		B’s Capital A/c	4,360
		B’s Loan A/c	15,000
	64,500		64,500

Question 26:

Balance Sheet of P, Q and R as at 31st March, 2022, who were sharing profits in the ratio of 5 : 3 : 1, was:

Liabilities		( `)	Assets		( `)
Bills Payable		40,000	Cash at Bank		40,000
Loan from Bank		30,000	Stock		19,000
General Reserve		9,000	Sundry Debtor	42,000
Capital A/cs:			Less: Provision for Doubtful Debts	2,000	40,000
P	44,000
Q	36,000		Building		40,000
R	20,000	1,00,000	Plant and Machinery		40,000

		1,79,000			1,79,000

The partners dissolved the business. Assets realised − Stock ` 23,400; Debtor 50%; Fixed Assets 10% less than their book value. Bills Payable were settled for ` 32,000. There was an Outstanding Bill of Electricity ` 800 which was paid off. Realisation expenses ` 1,250 were also paid.
Prepare Realisation Account, Partner's Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.					Cr.
Particulars		( `)	Particulars		( `)
Building		40,000	Provision for Doubtful Debts		2,000
Plant and machinery		40,000	Bills Payable		40,000
Stock		19,000	Loan from Bank		30,000
Sundry Debtor		42,000
Bank A/c:			Bank A/c:
Bills Payable	32,000		Stock	23,400
Outstanding Bill	800		Debtor	21,000
Expenses	1,250		Building	36,000
Loan from Bank	30,000	64,050	Plant and Machinery	36,000	1,16,400
			Loss transferred to:
			P’s Capital A/c	9,250
			Q’s Capital A/c	5,550
			RCapital A/c	1,850	16,650
		2,05,050			2,05,050

Partners Capital Accounts
Dr.								Cr.
Particulars	P	Q	R	Particulars	P	Q	R
Realisation A/c (Loss)	9,250	5,550	1,850	Balance b/d	44,000	36,000	20,000
				Reserve Fund	5,000	3,000	1,000
Bank A/c	39,750	33,450	19,150
	49,000	39,000	21,000		49,000	39,000	21,000

Bank Account
Dr.				Cr.
Particulars	( `)	Particulars	( `)
Balance b/d	40,000	Realisation A/c	64,050
Realisation A/c	1,16,400	P’s Capital A/c	39,750
		Q’s Capital A/c	33,450
		R’s Capital A/c	19,150
	1,56,400		1,56,400

Question 27:

Ashu and Harish are partners sharing profit and losses as 3 : 2 . They decided to dissolve the firm on 31st March, 2022. 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
			Debtor	48,000
			Cash in Hand	8,000

		3,00,000		3,00,000

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. Debtor realised for ` 46,000, expenses of realisation amounted to ` 3,000. Prepare necessary Ledger Accounts.

Answer:

Realisation Account
Dr.					Cr.
Particulars		( `)	Particulars	( `)
Building		80,000	Creditors	88,000
Machinery		70,000	Bank overdraft	50,000
Furniture		14,000	Ashu’s Capital A/c (see working note)	1,43,000
Stock		20,000	Harish’s Capital A/c (see working note)	1,12,000
Investments		60,000	Cash (Debtor)	46,000
Debtor		48,000
Ashu’s Capital A/c (Creditors )		88,000
Harish’s Capital A/c (Bank Overdraft)		50,000
Cash (Expenses)		3,000
Realisation Profit
Ashu’s Capital A/c	3,600
Harish’s Capital A/c	2,400	6,000
		4,39,000		4,39,000

Partners Capital Account
Dr.					Cr.
Particulars	Ashu	Harish	Particulars	Ashu	Harish
Realisation (Assets taken)	1,43,000	1,12,000	Balance b/d	1,08,000	54,000
Cash	56,600		Realisation (Liabilities)	88,000	50,000
			Realisation (Profit)	3,600	2,400
			Cash		5,600
	1,99,600	1,12,000		1,99,600	1,12,000

Cash Account
Dr.			Cr.
Particulars	( `)	Particulars	( `)
Balance b/d	8,000	Realisation (Expenses)	3,000
Realisation (Debtor)	46,000	Ashu’s Capital A/c	56,600
Harish’s Capital A/c	5,600
	59,600		59,600

Working Notes :

	Ashu	Harish
Building	95,000
Machinery and Furniture		80,000
Stock (3:2)	12,000	8,000
Investment (3:2)	36,000	24,000
	1,43,000	1,12,000

Question 28:

A, B and C were equal partners. On 31st March, 2022, their Balance Sheet stood as:


Liabilities		( `)	Assets	( `)
Creditors		50,400	Cash	3,700
Reserve		12,000	Stock	20,100
Capital A/cs:			Debtor	62,600
A	40,000		Loan to A	10,000
B	25,000		Investments	16,000
C	15,000	80,000	Furniture	6,500
			Building	23,500
		1,42,400		1,42,400

The firm was dissolved on the above date on the following terms:
(a) For the purpose of dissolution, Investments were valued at ` 18,000 and A took over the Investments at this value.
(b) Fixed Assets realised ` 29,700 whereas Stock and Debtor realised ` 80,000.
(c) Expenses of realisation amounted to ` 1,300.
(d) Creditors allowed a discount of ` 800.
(e) One Bill receivable for ` 1,500 under discount was dishonoured as the acceptor had become insolvent and was unable to pay anything and hence the bill had to be met by the firm.
Prepare Realisation Account, Partner's Capital Accounts and Cash Account showing how the accounts would finally be settled among the partners.

Answer:

Realisation Account
Dr.					Cr.
Particulars		( `)	Particulars			( `)
Stock		20,100	Creditors			50,400
Debtor		62,600
Investments		16,000	A’s Capital A/c (Investments)			18,000
Furniture		6,500	Cash A/c:
Building		23,500	Furniture and Building	29,700
Cash A/c:			Stock and Debtor	80,000		1,09,700
Expenses	1,300
Creditors	49,600
Bills	1,500	52,400	Loss transferred to :
			A’s Capital A/c	1,000
			B’s Capital A/c	1,000
			C’s Capital A/c	1,000		3,000

		1,81,100				1,81,100

Partners Capital Accounts
Dr.								Cr.
Particulars	A	B	C	Particulars	A	B	C
Realisation A/c (Investment)	18,000	–	–	Balance b/d	40,000	25,000	15,000
Realisation A/c (Loss)	1,000	1,000	1,000	Reserve	4,000	4,000	4,000
Cash A/c	25,000	28,000	18,000
	44,000	29,000	19,000		44,000	29,000	19,000

A’s Loan A/c
Dr.		Cr.
Particulars	( `)	Particulars	( `)
Balance b/d	10,000	Bank A/c	10,000

	10,000		10,000

Cash Account
Dr.				Cr.
particulars	( `)	Particulars	( `)
Balance b/d	3,700	Realisation A/c	52,400
Realisation A/c	1,09,700	A’s Capital A/c	25,000
A's Loan A/c	10,000	B’s Capital A/c	28,000
		C’s Capital A/c	18,000
	1,23,400		1,23,400