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12th | Dissolution of a Partnership Firm | Question No.  29 To 32 | Ts Grewal Solution 2022-2023

Question 29:


Yogesh and Naresh were partners sharing profits equally. They dissolved the firm on 1st April, 2022. Naresh was assigned the responsibility to realise the assets and pay the liabilities at a remuneration of  `10,000 including expenses. Balance Sheet of the firm as on that date was as follows:

Liabilities

 ( `)

Assets

 ( `)

Creditors

40,000

Cash/Bank

6,000

Bills Payable

40,000

Investments

30,000

Naresh's Loan

44,000

Debtor

40,000

 

M `. Yogesh's Loan

42,000

Less: Provision for Doubtful Debts

4,000

36,000

Investment Fluctuation Reserve

 

8,000

Bills Receivable

33,400

Capital A/cs:

 

 

Profit and Loss A/c

1,10,600

Yogesh

21,000

 

 

 

Naresh

21,000

42,000

 

 

 

 

 

 

 

 

2,16,000

 

2,16,000

 

 

 

 

 

The firm was dissolved on following terms:
(a) Yogesh was to pay his wife's loan.
(b) Debtor realised 
`30,000.
(c) Naresh was to take investments at an agreed value of 
` 26,000.
(d) Creditors  and Bills Payable were payable after two months but were paid immediately at a discount of 15% p.a.
(e) Bills Receivable were received allowing 5% rebate.
(f) A Debtor previously written off as Bad Debt paid 
`15,000.
(g) An unrecorded asset realised 
`10,000.
Prepare Realisation Account, Partners' Capital Accounts, Partners' Loan Account and Cash/Bank Account.

Answer:


Dr.

Realisation A/c

Cr.

Particulars

 ( `)

Particulars

 ( `)

To Investments

30,000

By Investment Fluctuation Reserve

8,000

To Debtor

40,000

By Provision for Doubtful Debts

4,000

To Bills Receivable

33,400

By Creditors

40,000

 

 

By Bills Payable

40,000

To Yogesh’s Capital A/c (Wife’s Loan)

42,000

By M `. Yogesh’s Loan

42,000

To Cash/Bank A/c:

 

 

 

Creditors  [40,000 – (40,000 × 15/100 × 2/12)]

39,000

 

By Cash/Bank A/c:

 

Bills Payable [40,000 – (40,000 × 15/100 × 2/12)]

39,000

78,000

  Debtor

30,000

 

 

 

  Bills Receivable

31,730

 

To Naresh’ Capital A/c (Commission)

10,000

  Bad Debt Recovered

15,000

 

To Realisation Gain transferred to:

 

  Unrecorded Asset

10,000

86,730

    Yogesh’s Capital A/c

6,665

 

 

 

    Naresh’s Capital A/c

6,665

13,330

By Naresh’s Capital A/c (Investment taken over)

26,000

 

 

 

 

 

2,46,730

 

2,46,730

 

 

 

 

       

Dr.

Partner’s Capital A/c

Cr.

Particulars

Yogesh

( `)

Naresh

( `)

Particulars

Yogesh

( `)

Naresh

( `)

To Realisation A/ c (Asset taken over)

 

26,000

By balance b/d

21,000

21,000

 

 

 

By Realisation A/c (Gain)

6,665

6,665

To Profit & Loss A/c

55,300

55,300

By Realisation A/c (Liability paid)

42,000

 

To Cash/Bank A/c

14,365

 

 

 

 

 

 

By Realisation A/c (Commission)

 

10,000

 

 

 

By Naresh’s Loan A/c

 

43,635

 

 

 

 

 

 

 

69,665

81,300

 

69,665

81,300

 

 

 

 

 

 

 

Dr.

Naresh’s Loan A/c

Cr.

Particulars

 ( `)

Particulars

 ( `)

To Naresh’s Capital A/c

43,635

By balance b/d

44,000

To Cash/Bank A/c

365

 

 

 

 

 

 

 

44,000

 

44,000

 

 

 

 

 

Dr.

Cash/ Bank A/c

Cr.

Particulars

 ( `)

Particulars

 ( `)

To balance b/d

6,000

By Yogesh’s Capital A/c

14,365

To Realisation A/c (Asset Realised)

86,730

By Naresh’s Loan A/c

365

 

 

By Realisation A/c (Liabilities Paid)

78,000

 

 

 

 

 

92,730

 

92,730

 

 

 

 

 

Question 30:


Michael, Jackson and John are in partnership sharing profits and losses in the proportions of 1/2, 1/3 and 1/6 respectively. On 31st March, 2022, they decided to dissolve the partnership and the position of the firm on this date is represented by the following Balance Sheet:

Liabilities

Amount
(
`)

Assets

Amount
(
`)

Creditors

40,000

Cash at Bank

3,000

Loan A/c:

 

Stock

50,000

Michael

10,000

Sundry Debtor

50,000

Workmen Compensation Reserve

21,000

Land and Building

57,000

Capital A/cs:

 

Profit and Loss A/c

15,000

 Michael

60,000

 

Advertisement Suspense A/c

6,000

 Jackson

40,000

 

 

 

 John

10,000

1,10,000

 

 

 

1,81,000

 

1,81,000

 

 

 

 

 

During the realisation, a liability under a suit for damages is settled at  ` 20,000 as against  ` 5,000 only provided for in the books of the firm.
Land and Building were sold for 
` 40,000 and the Stock and Sundry Debtor realised  ` 30,000 and  ` 42,000 respectively. The expenses of realisation amounted to  ` 1,200.
There was a car in the firm, which was completely written off from the books. It was taken by Michael for 
` 20,000. He also agreed to pay Outstanding Salary of  ` 20,000 not provided in books.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.

 

Answer:


Realisation Account

Dr.

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Land and Building

57,000

Creditors

40,000

Stock

50,000

Bank

 

Sundry Debtor

50,000

Land and building

40,000

 

 

 

Stock

30,000

 

Bank A/c:

 

Sundry   Debtor

42,000

1,12,000

Creditors 

(40,000
+ 15,000)

55,000

 

 

 

Expenses

1,200

56,200

Loss transferred to:

 

 

 

Michael’s Capital A/c

30,600

 

 

 

Jackson’s Capital A/c

20,400

 

 

 

John’s Capital A/c

10,200

61,200

 

2,13,200

 

2,13,200

 

 

 

 

 

 

Partners Capital Accounts

 

 

Dr.

 

Cr.

 

Particulars

Michael

Jackson

John

Particulars

Michael

Jackson

John

Profit and Loss A/c
Advertisement Suspense A/c
Realisation A/c (Loss)


7,500

3,000

30,600


5,000

2,000

20,400


2,500

1,000

10,200

Balance b/d
Workmen Compensation Reserve A/c
 
  Bank A/c

60,000


10,500
------

40,000


7,000
------

10,000


3,500

200

Bank A/c

29,400

19,600

-------

 

 

 

 

 

 

 

 

 

 

 

 

 

70,500

47,000

13,700

 

70,500

47,000

13,700

 

 

 

 

 

 

 

 

 

Michael’s Loan Account  

Dr.

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Bank A/c

10,000

Balance b/d

10,000

 

 

 

 

 

 

 

 

 

10,000

 

10,000

 

 

 

 

 

Bank Account  

Dr.

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Balance b/d

3,000

Michael’s Loan A/c
Realisation A/c

10,000
56,200

Realisation A/c

1,12,000

Michael’s Capital A/c

29,400

John’s Capital A/c

200

Jackson’s Capital A/c

19,600

 

 

 

 

 

1,15,200

 

1,15,200

 

 

 

 

 

Question 31:


Prashant and Rajesh are partners in a firm sharing profits and losses in the ratio of 2 : 1. On 31st March, 2022, their Balance Sheet was:

Liabilities

   ( `)

Assets

( `)

Bank Overdraft                   

30,000

Cash in Hand

6,000

General Reserve

56,000

Bank Balance

10,000

Investments Fluctuation Reserve           

20,000

Sundry Debtor

26,000

 

Prashant 's Loan

34,000

Less: Provision for Doubtful Debtor

2,000

24,000

Capital A/c:

 

                                

 

Prashant

50,000

Investments

40,000

 

 

 

Stock

 

10,000

 

 

Furniture

 

10,000

 

 

Building

 

60,000

 

 

Rajesh 's Capital

 

30,000

 

1,90,000

 

1,90,000

 

 

 

 


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

Answer:


Realisation Account

Dr.

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Sundry Debtor 

26,000

Provision for Doubtful Debts  

2,000

Investments

40,000

Bank Overdraft

30,000

Stock

10,000

Investments Fluctuation Reserve   

20,000

Furniture

10,000

 

 

Building

60,000

Prashant’s Capital A/c (Investments)

35,000

Bank A/c:

 

Bank A/c:

 

Compensation to
Employees

10,000

 

Sundry Debtor 

26,000

 

Bank Overdraft

30,000

40,000

Stock

8,500

 

Profit transferred to:                  

 

Furniture

8,000

 

Prashant’s Capital A/c

29,000

 

Building

1,00,000

1,42,500

Rajesh’s Capital A/c       

14,500

43,500

 

 

 

2,29,500

 

2,29,500

 

 

 

 

 

 

Partners Capital Accounts

Dr.

 

Cr.

Particulars

Prashant

Rajesh

Particulars

Prashant

Rajesh

Balance b/d

30,000

Balance b/d

50,000

Realisation A/c (Investment)

35,000

 

General Reserve A/c

37,333

18,667

Bank A/c

81,333

3,167

Realisation A/c (Profit )

29,000

14,500

 

 

 

 

 

 

 

1,16,333

33,167

 

1,16,333

33,167

 

 

 

 

 

 

 

Prashant’s Loan Account 

Dr.

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

 

 

Balance b/d

34,000

Bank A/c

34,000

 

 

 

34,000

 

34,000

 

 

 

 

 

Bank Account   

Dr.

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Balance b/d

10,000

Realisation A/c           

40,000

Cash A/c

6,000

Prashant’s Capital A/c

81,333

Realisation A/c          

1,42,500

Rajesh’s Capital A/c

3,167

 

 

Prashant’s Loan  A/c

34,000

 

1,58,500

 

1,58,500

 

 

 

 

 

 

Question 32:


Ashok, Babu and Chetan are in partnership sharing profit in the proportion of 1/2, 1/3, 1/6 respectively. They dissolve the partnership of the 31st March, 2022 when the Balance Sheet of the firm as under:

 

 

 

Liabilities

( `)

Assets

( `)

Sundry Creditors      

20,000

Bank

7,500

Bills Payable

25,500

Sundry Debtor

58,000

Babu's Loan         

30,000

Stock

 

39,500

Capital A/cs:

 

Machinery

48,000

Ashok

70,000

 

Investments

 

42,000

Babu

55,000

 

Freehold Property

 

50,500

Chetan

27,000

1,52,000

 

 

 

Current A/cs:        

       

 

 

 

 

Ashok

10,000

 

 

 

 

Babu

5,000

 

 

 

 

Chetan

3,000

18,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,45,500

 

2,45,500

 

 

 

 


The Machinery was taken over by Babu for 
` 45,000, Ashok took over the Investments for  ` 40,000 and Freehold property took over by Chetan at  ` 55,000. The remaining Assets realised as follows:
Sundry Debtor 
` 56,500 and Stock  ` 36,500. Sundry Creditors  were settled at discount of 7%. A Office computer, not shown in the books of accounts realised  ` 9,000. Realisation expenses amounted to  ` 3,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:


Realisation Account

Dr.

 

Cr.

 

Particulars

 ( `)

Particulars

 ( `)

Sundry Debtor

58,000

Sundry Creditors

20,000

Stock

39,500

Bills Payable

25,500

Machinery

48,000

Ashok’s Current A/c (Investment)

40,000

Investment

42,000

Babu’s Current A/c (Machinery)

45,000

Freehold property

50,500

Chetan’s Current A/c

55,000

Bank:

 

(Freehold property)

 

Sundry Creditors

18,600

 

Bank:

 

Bills Payable

25,500

 

  Sundry Debtor

56,500

 

Expenses

3,000

47,100

  Stock

36,500

 

Realisation Profit

 

  Unrecorded Computer

9,000

1,02,000

Ashok’s Current A/c

1,200

 

 

 

 

Babu’s Current A/c

800

 

 

 

 

Chetan’s Current A/c

400

2,400

 

 

 

 

 

 

 

 

 

 

2,87,500

 

2,87,500

 

 

 

 

 

 

Partners' Current Account

 

Dr.

 

Cr.

 

Particulars

Ashok

Babu

Chetan

Particulars

Ashok

Babu

Chetan

Realisation

40,000

45,000

55,000

Balance b/d

10,000

5,000

3,000

(Assets taken)

 

 

 

Realisation (Profit)

1,200

800

400

 

 

 

 

Ashok's Capital A/c

28,800

 

 

 

 

 

 

Babu's Capital A/c

 

39200

 

 

 

 

 

Chetan's Capital A/c

 

 

51600

 

40,000

45,000

55,000

 

40,000

45,000

55,000

 

 

 

 

 

 

 

 

 

Partners' Capital Account

Dr.

 

Cr.

Particulars

Ashok

Babu

Chetan

Particulars

Ashok

Babu

Chetan

Ashok's Current A/c

28,800

 

 

Balance b/d

70,000

55,000

27,000

Babu's Current A/c

 

39200

 

Bank A/c

 

 

24,600

Chetan's Current A/c

 

 

51600

 

 

 

 

Bank A/c

41,200

15,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70,000

55,000

51,600

 

70,000

55,000

51,600

 

 

 

 

 

 

 

 

 

Babu’s Loan A/c

Dr.

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Bank A/c

30,000

Balance b/d

30,000

 

 

 

 

 

30,000

 

30,000

 

 

 

 

 

Bank Account

 

Dr.

 

Cr.

Particulars

 ( `)

Particulars

 ( `)

Balance b/d

7,500

Realisation A/c (Payment of Expenses& Liabilities)

47,100

Realisation A/c (Assets realised)

102,000

and Liabilities)

 

Chetan’s Capital A/c

24,600

Babu’s Loan

30,000

 

 

Ashok’s Capital A/c

41,200

 

 

Babu’s Capital A/c

15,800

 

 

 

 

 

1,34,100

 

1,34,100

 

 

 

 

 

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