12th | Dissolution of a Partnership Firm | Question No. 5 To 8 | Ts Grewal Solution 2022-2023

Question 5:

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

Answer:

	Journal
S.N.	Particulars		L.F.	Debits `	Credit `
(a)	Realisation A/c	Dr.		7,500
	To Alok’s Capital A/c				7,500
	(Remuneration allowed to Alok)
	Alok’s capital A/c	Dr.		10,000
	To Bank A/c				10,000
	(Expenses paid by the firm on behalf of Alok)
	Alternatively, only one single entry can also be passed instead of above two entries.
	Realisation A/c	Dr.		7,500
	Alok’s Capital A/c	Dr.		2,500
	To Bank A/c				10,000
	(Realisation expenses paid)

(b)	Realisation A/c	Dr.		5,000
	To Ravinder’s Capital A/c				3,000
	To Bank A/c				2,000
	(Realisation expenses paid)

(c)	Realisation A/c	Dr.		10,000
	To Amit’s Capital A/c				10,000
	(Realisation expenses paid by Amit on behalf of the firm)

Question 6:

Record necessary Journal entries in the following cases:
(a) Creditors worth ` 85,000 accepted ` 40,000 as cash and Investment worth ` 43,000, in full settlement of their claim.
(b) Creditors were ` 16,000. They accepted Machinery valued at ` 18,000 in settlement of their claim.
(c) Creditors were ` 90,000. They accepted Building valued at ` 1,20,000 and paid cash to the firm ` 30,000.

Answer:

Journal
	Particulars			L.F.	( `)	( `)
(a)	Realisation A/c		Dr.		40,000
	To Cash A/c					40,000
	(Creditors worth ` 85,000 accepted 40,000 as cash and investment worth ` 43,000 in full settlement)

(b)	No Entry
	(Creditors worth ` 16,000 accepted Machinery worth ` 18,000 in full settlement. No entry as both asset and liability are already transferred to the Realisation Account)

(c)	Cash A/c	Dr.			30,000
	To Realisation A/c					30,000
	(Creditors worth ` 90,000 accepted Building worth ` 1,20,000 and paid back ` 30,000 as cash after settlement of claim to the firm)

Question 7:

Pass Journal entries for the following at the time of dissolution of a firm:

(a) Sale of Assets − `50,000.
(b) Payment of Liabilities − `10,000.
(c) A commission of 5% allowed to Mr. X, a partner, on sale of assets.
(d) Realisation expenses amounted to `15,000. The firm had agreed with Amrit, a partner, to reimburse him up to ` 10,000.

(e) Employees provident fund `10,000,
(f) Z, an old customer, whose account for `6,000 was written off as bad in the previous year, paid 60% of the amount written off.
(g) Investment (Book Value `10,000) realised at 150%.

(h) Realisation expenses were `10,000. The firm had agreed with krishan a partner, to reimburse him up to ` 7,500.

Answer:

Journal
S.N.	Particulars		L.F.	Debits `	Credit `
(a)	Cash A/c	Dr.		50,000
	To Realisation A/c				50,000
	(Assets realized for cash)

(b)	Realisation A/c	Dr.		10,000
	To Cash A/c				10,000
	(Payment of liabilities made)

(c)	Realisation A/c	Dr.		2,500
	To X’s Capital A/c				2,500
	(5% commission allowed to Mr. X’s on sale of assets of ` 50,000)

(d)() (e)	Realisation A/c	Dr.		10,000
	To Amrit’s Capital A/c				10,000
	(Amrit was allowed remuneration on account of realisation)
	Amrit’s Capital A/c	Dr.		15,000
	To Cash A/c				15,000
	(Realisation expenses paid on behalf of amrit)
	Alternatively, only one single entry can also be passed instead of above two entries.
	Realisation A/c	Dr.		10,000
	Amrit’s Capital A/c	Dr.		5,000
	To Cash A/c				15,000
	(Realisation expenses paid)

	Realization A/c Dr.
	To Cash A/c
	(Paid provident fund)

(f)	Cash A/c	Dr.		3,600
	To Realisation A/c				3,600
	(60% of the Bad debts against Z an old customer now recovered)

(g)	Cash A/c	Dr.		15,000
(g)	To Realisation A/c				15,000
	(Investments are realised at 150%)

(h)	Realisation A/c			7,500
	To Krishna’s Capital A/c				7,500
	(Krishna, a partner, reimbursed for realization expenses)

Question 8: The firm of Manjeet, Sujeet and Jagjeet was dissolved on 31st March, 2018. It was agreed that Sujeet will take care of the dissolution related activities and will get 10% of the value of assets realised. Sujeet agreed to bear the realisation expenses. Assets realised 10,00,750 and realisation expenses were 90,000, which were paid from the firm's cash. 4,50,000 were paid to the creditors in full settlement of their claim.

Pass necessary Journal entries for the above transactions in the books of the firm. (CBSE 2019)

Answer:

	Journal
S.N.	Particulars		L.F.	Debits `	Credit `
(a)	Bank A/c	Dr.		10,00,750
	To Realisation A/c				10,00,750
	(Being assets realized on dissolution)

(b)	Realisation A/c	Dr.		1,00,075
	To Sujeet’s Capital A/c				1,00,075
	(Being 10% of assets realized on dissolution)

(c)	Sujeet’s Capital A/c	Dr.		90,000
	To Bank A/c				90,000
	(Being realization expenses paid)

(d)	Realisation A/c	Dr.		4,50,000
	To Bank A/c				4,50,000
	(Being creditors paid in full settlement on dissolution)