12th | Dissolution of a Partnership Firm | Question No. 9 To 12 | Ts Grewal Solution 2022-2023

Question 9:

Simar, Raja and Rita were partners in a firm sharing profits and losses in the ratio of 2:2:1.The firm was dissolved on 31st March, 2019. After the transfer of assets (other than cash) and external liabilities to the Realisation Account, the following transactions took place:

(a) A debtor whose debt of `90,000 had been written off as bad, paid `88,000 in full settlement.

(b) Creditors to whom `1,21,000 were due to be paid, accepted stock at ` 71,000 and the balance was paid to them by a cheque.

(d) Investments were ` 53,000 out of which investments worth ` 43,000 were taken over by Simar at ` 52,000 and the balance of the investments were sold for `12,000.

(e) Expenses on dissolution amounted to `19,000 and the same were paid by the firm.

(f) Profit on dissolution amounted to `30,000.

Pass the necessary Journal entries for the above transactions in the books of the firm. (CBSE 2020)

Answer:

Date	Particulars		` (Dr.)	` (Cr.)
(a)	Bank/Cash A/c	Dr.	88,000
	To Realisation A/c			88,000
	(Bad Debts recovered )
(b)	Realisation A/c	Dr.	50,000
	To Bank A/c			50,000
	(Balance paid)
(c)	Raja's Loan A/c Dr.		18,000
	To Bank/Cash A/c			17,000
	To Realisation A/c			1,000
	(loan of `18,000 settled at `17,000)
	*Alternative treatment*
	Raja's Loan A/c	Dr.	17,000
	To Bank/Cash A/c			17,000
	(Loan was paid)
	Raja's Loan A/c Dr. To Realisation A/c		1,000	1,000
	(difference transferred to realisation A/c)
(e)	Realisation A/c Dr.		19,000
	To Cash/Bank A/c			19,000
	(Realisation expenses were paid)
(f)	Realisation A/c Dr.		30,000
	To Simar's Capital A/c			12,000
	To Raja's Capital A/c			12,000
	To Rita's Capital A/c			6,000
	(Profit of dissolution distributed)

Question 10:

Pass necessary Journal entries to record the following unrecorded assets and liabilities in the books of Paras and Priya:
(a) There was an old furniture in the firm which had been written off completely in the books. This was sold for ` 3,000.
(b) Ashish, an old customer whose account for ` 1,000 was written off as bad in the previous year, paid 60%, of the amount.
(c) Paras agreed to takeover the firm's goodwill (not recorded in the books of the firm), at a valuation of ` 30,000.
(d) There was an old typewriter which had been written off completely from the books. It was estimated to realise ` 400. It was taken by Priya at an estimated price less 25%.
(e) There were 100 shares of ` 10 each in Star Limited acquired at a cost of ` 2,000 which had been written-off completely from the books. These shares are valued @ ` 6 each and divided among the partners in their profit-sharing ratio.

Answer:

Journal
	Particulars		L.F.	( (`)	( `)
(a)	Cash/Bank A/c	Dr.		3,000
	To Realisation A/c				3,000
	(Being Old and unrecorded furniture sold)

(b)	Cash/Bank A/c	Dr.		600
	To Realisation A/c				600
	(Being Bad debts previously written off now recovered)

(c)	Paras’s Capital A/c	Dr.		30,000
	To Realisation A/c				30,000
	(Being Unrecorded goodwill taken over by Paras)

(d)	Priya’s Capital A/c	Dr.		300
	To Realisation A/c				300
	(Being Unrecorded Typewriter taken over by Priya at25% less price)

(e)	Paras’s Capital A/c	Dr.		300
	Priya’s Capital A/c	Dr.		300
	To Realisation A/c				600
	(Being 100 unrecorded shares of ` 10 each in the books taken @ ` 6 each by Paras and Priya and divided between them in profit sharing ratio)

Question 11:

Aman and Harsh were partners in a firm. They decided to dissolve their firm. Pass necessary Journal entries for the following after various assets (other than Cash and Bank) and third party liabilities have been transferred to Realisation Account:
(a) There was furniture worth ` 50,000. Aman took over 50% of the furniture at 10% discount and the remaining furniture was sold at 30% profit on book value.
(b) Profit and Loss Account was showing a credit balance of ` 15,000 on the date of dissolution.
(c) Harsh's loan of ` 6,000 was discharged at ` 6,200.
(d) The firm paid realisation expenses amounting to ` 5,000 on behalf of Harsh who had to bear these expenses.
(e) There was a bill for 1,200 under discount. The bill was received from Soham who proved insolvent and a first and final dividend of 25% was received from his estate.
(f) Creditors to whom the firm owed ` 6,000, accepted stock of ` 5,000 at a discount of 5% and the balance in cash.

Answer:

Journal
Date	Particulars		L.F.	Debit ( `)	Credit ( `)

a.	Aman’s Capital A/c	Dr.		22,500
	Bank A/c	Dr.		32,500
	To Realisation A/c				55,000
	(Being Assets realized)

b.	Profit & Loss A/c	Dr.		15,000
	To Aman’s Capital A/c				7,500
	To Harsh’s Capital A/c				7,500
	(Being Profit distributed)

c.	Harsh’s Loan A/c	Dr.		6,000
	Realisation A/c	Dr.		200
	To Bank A/c				6,200
	(Being Loan Discharged)
		Dr.		5,000
d.	Harsh’s Capital A/c				5,000
	To Bank A/c
	(Being Expenses paid on behalf of partner)

e.	Bank A/c	Dr.		300
	To Realisation A/c				300
	(Being Amount received)

	Realisation A/c	Dr.		1,200
	To Bank A/c				1,200
	(Being Amount paid)

f.	Realisation A/c	Dr.		1,250
	To Bank A/c				1,250
	(Being Creditors paid)

g.	Aman’s Capital A/c	Dr.		4,000
	Harsh’s Capital A/c	Dr.		4,000
	To Realisation A/c				8,000
	(Being Loss on dissolution transferred to Partners Capital A/c)

Question 12:

Rohit, Kunal and Sarthak are partners in a firm. They decided to dissolve their firm. Pass necessary Journal entries for the following after various assets (other than Cash and Bank) and the third party liability have been transferred to Realisation Account:
(a) Kunal agreed to pay off his wife's loan of ` 6,000.
(b) Total Creditors of the firm were ` 40,000. Creditors worth ` 10,000 were given a piece of furniture costing ` 8,000 in full and final settlement. Remaining Creditors allowed a discount of 10%.
(c) Rohit had given a loan of ` 70,000 to the firm which was duly paid.
(d) A machine which was not recorded in the books was taken over by Kunal at ` 3,000, whereas its expected value was ` 5,000.
(e) The firm had a debit balance of ` 15,000 in the Profit and Loss Account on the date of dissolution.
(f) Sarthak paid the realisation expenses of ` 16,000 out of his private funds, who was to get a remuneration of ` 15,000 for completing dissolution process and was responsible to bear all the realisation expenses.

Answer:

Journal
Date	Particulars		L.F.	Debit `	Credit `
(a)	Realisation A/c	Dr.		6,000
	To Kunal’s Capital A/c				6,000
	(Being Kunal agrees to pay off his wife’s loan)

(b)	Realisation A/c	Dr.		27,000
	To Cash A/c				27,000
	(Being Creditors worth ` 30,000 paid off at a discount of 10%)

(c)	Rohit’s Loan A/c	Dr.		70,000
	To Cash A/c				70,000
	(Being Loan paid by the firm)

(d)	Kunal’s Capital A/c	Dr.		3,000
	To Realisation A/c				3,000
	(Being asset taken over by Kunal)

(e)	Rohit’s Capital A/c	Dr.		5,000
	Kunal’s Capital A/c	Dr.		5,000
	Sarthak’s Capital A/c	Dr.		5,000
	To Profit and Loss A/c				15,000
	(Being Loss distributed equally)

(f)	Realisation A/c	Dr.		15,000
	To Sarthak’s Capital A/c				15,000
	(Being remuneration of ` 15,000 paid for completion of dissolution process)