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 CA. Naresh Aggarwal’s
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 CA. Naresh Aggarwal’s
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Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
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Class XII

Dissolution of
Partnership Firm
 CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Assignment - 4 Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org

Price: 30/-
24 Dissolution of Partnership Firm Practice in Accountancy 1

(c) Undistributed Balance (debit) of Profit & Loss A/c Rs.30,000. The firm has three
partners X, Y and Z. CA. Naresh Aggarwal’s
(d) The assets of the firm realised Rs.1,25,000.
(e) Y who undertakes to carry out the dissolution proceedings is paid Rs.2,000 for
ACADEMY of ACCOUNTS
the same. Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
(f) Creditors paid Rs.28,000 in full settlement of their account of Rs.30,000. West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
[Delhi 2009C]

Q-46: Ram Lal and Shyam Lal were partners in a firm sharing profits in the ratio of
2 : 1. On 28th February 2012, their firm was dissolved. Dissolution resulted in a Q-1: Following is the Balance Sheet of A and B sharing profits and losses in the
loss of Rs.45,000. On that date, the capital account of Ram Lal showed a credit ratio of 3 : 2.
balance of Rs.35,000 and the capital account of Shyam Lal showed a credit balance Balance Sheet
of Rs.40,000. There was a cash balance of Rs. 30,000. Pass necessary journal As on 31.12.2012
entries for : Liabilities Amount Assets Amount
(i) Transfer of loss to the capital accounts of the partners, and
(ii) Making final payments to the partners. Sundry Creditors 30,000 Goodwill 10,000
[Foreign 2000] Bills Payable 10,000 Buildings 25,000
Bank Loan 12,000 Plant & Machinery 25,000
Q-47: P and Q are partners in a firm sharing profits in the ratio of 3 : 2. Mrs. A’s Loan 18,000 Investments 24,000
On 01.01.2012 their capital balances stood at Rs.15,000 and Rs.20,000 General Reserve 6,000 Debtors 15,000
respectively. The books also showed a Profit & Loss A/c (Dr. balance) of Rs.30,000. Capitals: Stock 10,000
The firm had taken a Joint Life Policy in the names of the partners for Rs.3,00,000. A 30,000 Cash 13,000
The annual premium of Rs.15,000 was payable on 15th February each year. The B 20,000 50,000 Profit and Loss A/c 4,000
surrender value of the policy on 01.01.2012 was Rs.90,000. The firm was dissolved 1,26,000 1,26,000
on 01.01.2012 and the Joint Life policy surrendered. The insurance company paid
Rs. 1,00,000 including bonus. The firm was dissolved on that date and the following transaction were occurred:
Pass necessary journal entries for distribution of profit & Loss A/c and realisation of (a) Assets were sold and realised as follows:
Joint Life Policy. Goodwill 6,000
[Delhi 2009C (Modified)] Buildings 50,000
Plant and Machinery 20,000
Debtors 10,000
Typewriter 2,000
Theoretical Questions (b) A took stock at Rs 8,000 and B took Investments at Rs.15,000.
(c) Sundry Creditors and Bills Payable were paid at 5% discount.
(d) A agreed to pay his wife’s loan.
Q-1*: Distinguish between dissolution of partnership and dissolution of partnership (e) Realisation expenses amounted to Rs.2,000.
firm. Prepare Realisation Account, Partner’s Capital Accounts and Bank Account.
[Profit: Rs.2,000; A will get: Rs.42,400; B will get: Rs.6,600; Total of Cash: Rs.1,01,000]
Q-2*: Distinguish between revaluation account and realisation account.
Q-2: A and B were partners in a firm and sharing profits in the ratio of 3 : 2. On 31st
Q-3: Explain the provisions of Section 48 of Partnership Act, dealing with the December, 2012 their Balance Sheet was as follows:
settlement of accounts at the time of dissolution of firm.

••••••••••••••••••••••
2 Dissolution of Partnership Firm Practice in Accountancy 23

Balance Sheet
CA. Naresh Aggarwal’s
Liabilities Amount Assets Amount
Creditors 60,000 Cash 22,000
ACADEMY of ACCOUNTS
Bills Payable 25,000 Debtors 50,000 Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
Provident Fund 12,000 Stock 36,000 West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
Reserve Fund 6,000 Investments 15,000
Capitals: Land and Buildings 40,000
(d) Stock worth Rs.1,600 was taken over by a partner B at Rs.1,200.
A 80,000 Plant and Machinery 50,000
(e) Profits on realisation amounting to Rs.3,500 were shared between partners A
B 50,000 1,30,000 Profit and Loss A/c 20,000
and B in the ratio of 5 : 2.
2,33,000 2,33,000 [All India 1996]
The firm was dissolved on that date and the following transaction were occurred:
Q-42: What journal entries would be passed for the following transactions on the
(a) Assets were sold and realised as follows:
dissolution of a firm, after various assets (other than cash) and third party liabilities
Land & Buildings 55,000
have been transferred to Realisation Account
Plant and Machinery 32,000
(i) Bank Loan Rs.12,000 is paid.
Debtors 40,000
(ii) Deferred revenue advertising expenditure appeared at Rs.35,000.
Goodwill 5,000
(iii) An unrecorded liability Rs.6,000.
(b) A took Investments at Rs 10,000 and B took Stock at Rs.30,000.
(iv) Loss on Realisation Rs.10,000 was to be distributed between A and B.
(c) Sundry Creditors were paid at 10% discount.
[Foreign 1997 (Modified)]
(d) B agreed to pay Bills Payable at book value.
(e) Realisation expenses amounted to Rs.1,000.
Q-43: Ramesh and Rakesh are partners. What journal entries would you make in
Prepare Realisation Account, Partner’s Capital Accounts and Bank Account.
following cases on dissolution of the firm :
[Loss: Rs.14,000; A will get: Rs.53,200; B will get: Rs.33,800; Total of Cash: Rs.1,54,000]
(i) Expenses on realisation Rs.1,500 paid by firm but borne by Rakesh.
(ii) Expenses on realisation Rs.1,600 paid by Ramesh and borne by Rakesh.
Q-3: The following is the Balance Sheet of X and Y as at 31st December, 2012.
(iii) Realisation Expenses amounted to Rs.1,700.
The profit sharing ratios of the partners are 3 : 2
(iv) Realisation Expenses amounted to Rs.1,800 and the partner has to bear
Balance Sheet
realisation expenses.
Liabilities Amount Assets Amount [Delhi 1999C]
Creditors 97,500 Land & Buildings 30,000
Q-44: L and M were partners in a firm sharing profits in the ratio of 4 : 3. The firm
Bills Payable 10,000 Motor Vehicles 18,300
was dissolved on 28.02.2012. Pass necessary journal entries for the following
X’s Capital 85,000 Stock 72,800
transactions
Y’s Capital 63,000 Debtors 1,10,750
(i) Debtors of Rs.20,000 were taken over by L for Rs.18,000.
Bank 10,000
(ii) Creditors of Rs.15,000 were paid at a discount of 5%.
Cash 13,650
(iii) Expenses of dissolution Rs.1,000 were paid by M.
2,55,500 2,55,500 (iv) Loss on realisation was Rs.7,000.
[All India 2009C]
The partners decided to dissolve the firm on and from the date of Balance Sheet.
Motor Vehicles and Stock were sold for cash at Rs.16,950 and Rs.77,600
Q-45: Pass necessary journal entries for the following transactions at the time of
respectively and all debtors were realised in full. X took over the land and Buildings
dissolution of the firm :
at an agreed valuation of Rs.43,500. Creditors were paid off subject to discount
(a) Loan of Rs.10,000 advanced by a partner to the firm was refunded.
amounting to Rs.1,700. Expenses of realisation were Rs.1,250.
(b) X, a partner takes over an unrecorded asset (Typewriter) at Rs.300.
Prepare Realisation Account, Cash Account and Partner’s Capital Account to close
22 Dissolution of Partnership Firm Practice in Accountancy 3

capitals of Rs.1,60,000; Rs.1,20,000 and Rs. 80,000 respectively. They shared profits
in the ratio of 3 : 2 : 1. Interest on Capital was to be allowed at the rate of 5% p.a. and CA. Naresh Aggarwal’s
interest on drawings charged at the rate 6% p.a. Firm earned profits of Rs.60,000 in
2011 and Rs.48,000 in 2012, before charging interest on capital and drawings. The
ACADEMY of ACCOUNTS
drawings of each partner were Rs. 24,000 per year. Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
The firm was dissolved on 31.12.2012. On that date creditors were amounted to West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
Rs.80,000. Assets realised Rs.4,80,000; other than cash of Rs. 8,000.
Prepare necessary accounts to dissolve the firm.
the books of the firm.
[Sundry Assets: 3,96,000; Realisation Profit: 84,000;
[Profit: Rs.17,400; X will get: Rs.51,940; Y will get: Rs.69,960; Cash: 2,28,950]
Capitals as on 31.12.2012: A-1,65,288; B-1,08,000; C-50,712;
Partners will get: A-2,07,288; B-1,36,000; C-64,712; Total of Cash: 4,88,000]
Q-4: A, B and C are partners in a firm sharing profits in the ratio of 2 : 1 : 1. Their
Balance Sheet as on 31.03.2012 was as under:
Q-39: A, B and C started business on 1st January, 2012. They shared profit and
Balance Sheet
loss in the ratio of 2 : 2 : 1. Capitals contributed by them were A Rs.80,000; B
Rs.60,000 and C Rs.40,000. The partners were entitled to interest on capital at the Liabilities Amount Assets Amount
rate of 6% p.a.
Creditors 50,000 Goodwill 30,000
During the year the firm earned a profit (before interest) of Rs. 50,000. The partners
A’s Capital 80,000 Land & Buildings 80,000
had withdrawn A Rs.20,000; B Rs.16,000 and C Rs.10,000.
B’s Capital 80,000 Plant & Machinery 56,000
On 31st December, 2012 the firm was dissolved. The assets realised Rs. 2,00,000.
C’s Capital 60,000 Motor Car 54,000
The creditors of Rs. 30,000 were paid at a discount of 3%. Expenses incurred on
Debtors 48,000
realisation were Rs. 2,900.
Cash 2,000
Prepare Partners’ Capital Accounts, Realisation Account and Cash Account to
close the books of the firm. 2,70,000 2,70,000
[Sundry Assets: 2,14,000; Capitals as on 31.12.2012: A-80,480; B-63,280; C-40,240;
The firm was dissolved on that date. The assets realised as follows:
Realisation Loss: 16,000; Partners will get: A-74,080; B-56,880; C-37,040; Total of Cash: 2,00,000]
Goodwill Rs. 20,000; Land & Buildings Rs. 1,00,000; Plant & Machinery Rs. 50,000;
Motor Car Rs. 28,000 and Debtors 50% of the book value.
Q-40: X and Y were partners in a firm sharing profits and losses in the ratio of
Realisation Expenses were Rs. 2,000.
5 : 3 on 31.12.2012, their firm was dissolved. Pass necessary journal entries for the
Prepare Realisation Account, Capital Accounts of Partners and Cash Account to
following transactions in connection with the dissolution of the firm :
close the books of the firm.
(i) The firm had a debit balance of Rs.16,000 in the Profit & Loss Account on the
[Loss: 48,000; A will get: 56,000; B will get: 68,000; C will get: 48,000; Total of Cash: 2,24,000]
date of dissolution.
(ii) Y agreed to pay the dissolution expenses for which he had allowed Rs.1,000.
Q-5: Following is the Balance Sheet of Anju and Manju who are partners in a firm
(iii) The firm had a Joint Life Policy which was not shown in its books. The surrender
sharing profits in the ratio of 3 : 2 as at 30.06.2012.
value of the policy on the date of dissolution was Rs.4,000.
Balance Sheet
(iv) An unrecorded typewriter realised Rs.2,000.
(v) Loss on Dissolution was Rs.12,000. Liabilities Amount Assets Amount
[Delhi 1998C]
Creditors 31,500 Plant and Machinery 15,000
General Reserves 1,250 Stock 3,000
Q-41: A firm, under dissolution has already transferred assets (other than cash)
Anju’s Capital 5,000 Debtors 9,500
and outside liabilities to the Realisation Account. What entries will be passed for
Manju’s Capital 4,000 Investments 6,000
the following transactions taking place subsequently
Bank 5,750
(a) Rs.1,400 were paid for realisation expenses.
Profit and Loss A/c 2,500
(b) Creditors were paid Rs.32,000.
(c) An unrecorded asset realised Rs.800. 41,750 41,750
4 Dissolution of Partnership Firm Practice in Accountancy 21

The firm was dissolved on 30.06.2012. Plant and machinery realised Rs.9,000
and stock Rs.2,500. Rs.8,000 were collected from the debtors. Investments were CA. Naresh Aggarwal’s
sold for Rs.7,000. Unrecorded B/R realised Rs.1,000.
Creditors were paid Rs. 28,500 in full settlement and realisation expenses were
ACADEMY of ACCOUNTS
Rs.1,500. Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
Prepare Realisation Account, Capital Accounts of Anju and Manju and Bank West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
Account to close the books of the firm.
[Loss: 4,500; Anju will get: 1,550; Manju will get: 1,700; Total of Bank: 33,250]
Q-35: A, B and C were partners from 1st April, 2010 with capitals of Rs.60,000;
Q-6: The following is the Balance Sheet of X, Y and Z as at 31st December, 2012. Rs.40,000 and Rs.30,000 respectively. They shared profits in the ratio of 2 : 2 : 1.
The profit sharing ratios of the partners are 3 : 2 : 1. They carried on business for two years. In the first year ending on 31st March,
Balance Sheet 2011, they made a profit of Rs.40,000 but in the second year ending on 31st
March, 2012, a loss of Rs.12,000 was incurred. As the business was no longer
Liabilities Amount Assets Amount profitable they dissolved the firm on 31st March, 2012. Creditors on that date were
Creditors 17,000 Bank 3,500 Rs.15,000. The partners withdrew for personal use Rs. 8,000 per partner per year.
Bills Payable 12,000 Stock 19,800 The assets realised Rs. 80,000. The expenses of realisation were Rs. 1,000.
Bank Loan 5,300 Debtors 14,000 Prepare Realisation Account and show your workings clearly.
General Reserve 12,000 Investments 8,000 [Sundry Assets: 1,25,000; Capitals as on 01.04.2012: A-55,200; B-35,200; C-19,600;
Capitals : Joint Life Policy 4,000 Realisation Loss: 46,000; Partners will get: A-36,800; B-16,800; C-10,400; Total of Cash: 80,000]
X 25,000 Furniture 10,000
Y 11,000 Machinery 25,000 Q-36: P, Q and R commenced business on 1st April 2010 with Capitals of
Z 8,000 44,000 Deferred Revenue Expenditure 6,000 Rs.1,20,000; Rs.1,00,000 and Rs.80,000 respectively. Profit for the first year was
Rs. 96,000 while losses in the second year amounted to Rs.24,000. Drawings per
90,300 90,300 partner were Rs. 14,000 per annum.
The firm was dissolved on that date and the following transaction were occurred: The firm was dissolved on 1st April 2012. Creditors on that day were Rs.28,000
(a) The Joint Life Policy is taken over by X at Rs. 5,000. who were paid Rs. 25,000 in full and final settlement. Cash in hand was Rs.10,000
(b) Other assets are realised as follows : on that date. Other assets realised Rs.3,24,000. Expenses of dissolution were
Stock Rs.17,500; Debtors Rs.14,500; Furniture Rs.6,800; Investments Rs.7,000; amounted to Rs.6,000.
Unrecorded Equipments Rs.3,300 and Machinery Rs.20,000. Prepare the Realisation Account and Cash Account.
(c) Expenses on realisation amounted to Rs.2,000. [Sundry Assets: 3,06,000; Capitals as on 01.04.2012: P-1,16,000; Q-96,000; R-76,000;
Close the books of the firm giving relevant ledger accounts. Real. Profit:15,000; Partners will get: P-1,21,000; Q-1,01,000; R-81,000; Total of Cash: 3,34,000]
[Loss: 8,700; X will get: 18,650; Y will get: 10,100; Z will get: 7,550; Total of Bank: 72,600]
Q-37: A and B were partners from 1.4.2010 with capitals of Rs.90,000 and
Q-7: Following is the Balance Sheet of A and B on 31.12.2012 Rs.50,000 respectively. They shared profits and losses in the ratio of 5 : 3. They
Balance Sheet carried on business for 2 years. The first year they made a profit of Rs.60,000 and
in the 2nd year ending 31st March 2012, they incurred a loss of Rs.30,000. As the
Liabilities Amount Assets Amount business was no longer profitable they decided to wind up. Creditors on that date
Sundry Creditors 60,000 Cash 26,000 were Rs.15,000. The partners withdrew Rs.5,000 each per year for their personal
Mrs. A’s Loan 10,000 Stock 10,000 expenses. The assets realised Rs.1,00,000. The expenses on realisation was
General Reserve 20,000 Investments 20,000 Rs.2,000. Prepare Realisation Account and show your workings clearly.
Investment Fluctuation Fund 2,000 Debtors 40,000 [Foreign 2009]
A’s Capital 20,000 Less: Provision 4,000 36,000 [Sundry Assets: 1,65,000; Capitals as on 01.04.2012: A-98,750; B-51,250; Realisation Loss: 67,000]
B’s Capital 20,000 Plant 40,000
Q-38: A, B and C entered into partnership on 01.01.2011. They contributed
1,32,000 1,32,000
20 Dissolution of Partnership Firm Practice in Accountancy 5

respectively. Rs.1,20,000 were due to creditors and Rs.50,000 were due for Bank
Loan and Reserve has been maintained for Rs. 28,000. X and Y shared profits in CA. Naresh Aggarwal’s
the ratio of 4 : 1. Cash balance of Rs. 18,000 was also kept in the firm. Assets
realised Rs. 3,00,000. Prepare Memorandum Balance Sheet, Realisation Account,
ACADEMY of ACCOUNTS
Partner’s Capital Accounts and Cash Account. Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
[Sundry Assets: 3,40,000; Realisation Loss: 40,000; West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
Partners will get: A-90,400; B-57,600; Total of Cash: 3,18,000]

Q-32: A and B dissolve their partnership. Their position as at 31.12.2012 was as The firm was dissolved on that date on the following terms :
follows : (a) A promised to pay Mrs. A’s Loan and took over stock at Rs.8,000.
A’s Capital 30,000 (b) Debtors realised Rs.38,000.
B’s Capital 20,000 (c) Creditors payable after one month were paid immediately at 6% p.a. discount.
Sundry Creditors 12,500 (d) Plant realised Rs.50,000 and investments Rs.19,000.
Cash at Bank 1,000 (e) Old typewriter completely written off, estimated to realise Rs.600 is taken over
The balance of A’s Loan Account to the firm stood at Rs. 10,000. The realisation by B.
expenses amounted to Rs. 400. Stock realised Rs. 20,000 and Debtors Rs. 15,000, (f) Realisation expenses, Rs.2,000 paid by A.
B took a machine at the agreed valuation of Rs. 10,000. Other fixed assets realised Prepare necessary ledger accounts to close books of the firm.
Rs. 30,000. Prepare necessary accounts to dissolve the firm. [Profit: 9,900; A will get: 38,950; B will get: 34,350; Total of Cash: 1,33,000]
[Sundry Assets: 71,500; Realisation Profit: 3,100;
Partners will get: A-41,550 (including loan); B-11,550; Total of Bank: 66,000] Q-8: Seeta, Geeta and Meeta are partners sharing profits and losses in the ratio
of 5 : 3 : 2. They decided to dissolve their firm on 31.12.2012, the date on which
Q-33: A, B and C were partners in a firm sharing profits in the ratio of 4 : 3 : 3. On their Balance Sheet stood as under:
01.04.2012 they decided to dissolve the firm. On that date A’s capital was Balance Sheet
Rs.1,25,000; B’s capital was Rs.45,000 and C’s capital was Rs.15,000 (Dr.) The Liabilities Amount Assets Amount
creditors amounted to Rs.23,150 and cash in hand was Rs.4,520. The assets
realised Rs.1,44,910 and the expenses of dissolution were Rs.1,860. Creditors 19,000 Bank 3,500
Prepare Realisation Account and show your workings clearly. Bills Payable 12,000 Stock 19,800
[All India 2009] Loan from Priya 7,300 Debtors 15,000
[Sundry Assets: Rs.1,73,630; Realisation Loss: Rs.30,580] Joint Life Policy Reserve 4,000 Less: Provision 1,000 14,000
Capitals : Joint Life Policy 4,000
Q-34: Ram and Shyam were in partnership sharing profits in the ratio of 3 : 1. They Seeta 25,000 Investment 10,000
agreed to dissolve the firm. The assets (other than cash of Rs.4,000) of the firm Geeta 10,000 Furniture 12,000
realised Rs.2,20,000. The liabilities and other particulars of the firm on the date of Meeta 9,000 44,000 Machinery 30,000
dissolution were as follows : Less: Prov. for Dep. 7,000 23,000
Ram’s Capital 2,00,000 86,300 86,300
Shyam’s Capital 20,000 (Dr.)
Creditors 80,000 The following additional information is given:
Profit and Loss A/c 16,000 (Dr.) (a) The Joint Life Policy is taken by Seeta at Rs. 5,000.
Realisation Expense 2,000 (b) Investments are taken by Geeta at 10% discount.
Creditors were settled at 10% discount. (c) Other assets are realised as follows :
Prepare Partners’ Capital Accounts, Realisation Account and Cash Account to Stock Rs.16,500; Debtors Rs.14,500; Furniture Rs.7,800; Machinery Rs.20,500.
close the books of the firm. (d) Expenses on realisation amounting to Rs. 500 which are paid by Meeta.
[Sundry Assets: Rs.2,40,000; Realisation Loss: Rs.14,000; Total of Cash: Rs.2,51,500; Close the books of the firm giving relevant ledger accounts.
Ram will get: Rs.1,77,500; Shyam will bring: Rs.27,500] [Loss: 6,000; Seeta will get: 17,000; Geeta will bring: 800; Meeta will get: 8,300; Total Bank: 63,600]
6 Dissolution of Partnership Firm Practice in Accountancy 19

Q-9: A, B and C are partners sharing profits and losses in the ratio of 3 : 2 : 1. On
31.03.2012, their Balance Sheet was as follows : CA. Naresh Aggarwal’s
Balance Sheet
ACADEMY of ACCOUNTS
Liabilities Amount Assets Amount Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
Creditors 40,200 Cash at Bank 12,500 West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
Bills Payable 16,800 Stock 57,400
X’s Loan 57,000 Debtors 57,000 Q-27: Radha and Meera were partners in a business. On 1.1.2012 They decided to
Capitals Less : Provision 3,000 54,000 dissolve the firm. On that date Capitals of partners were Rs. 60,000 and Rs. 40,000
A 80,000 Plant & Machinery 1,31,100 respectively. Creditors were Rs. 15,000 and Cash Balance was Rs. 2,000. Radha
B 12,000 had taken a loan from the firm of Rs. 10,000 and Meera has given a loan of Rs. 6,000
C 40,000 1,32,000 to the firm. Assets realised Rs. 92,500 (except Radha’s Loan). Expense of dissolution
Profit and Loss A/c 9,000 were Rs. 1,500. Prepare necessary accounts.
2,55,000 2,55,000 [Sundry Assets: 1,09,000; Loss: 18,000; Radha will receive 41,000;
Meera will receive Rs.37,000 (Including Loan)]
The firm was dissolved on 1.04.2012:
(a) There was a joint life policy of Rs. 60,000. The policy was surrendered for Q-28: X and Y were partners in a business. On 1.1.2012 They decided to dissolve
Rs.15,000. the firm. On that date Capitals of partners were Rs. 30,000 and Rs. 50,000
(b) The assets were realised as follows: respectively. Creditors were Rs. 12,500 and Cash Balance was Rs. 1,500. X had
Stock Rs. 47,000; Goodwill Rs. 12,000; Debtors 60% of the book value; taken a loan from the firm of Rs. 5,000. Assets realised Rs. 85,000 (except X’s
Machinery Rs. 90,000. Loan). Expense of dissolution came to Rs. 2,000.
(c) Liabilities were paid in full. You are required to show relevant Accounts and Journal Entries for dissolution.
(d) A bill for Rs. 90,000 under discount was dishonored and had to be taken up by [Sundry Assets: Rs.86,000; Loss: Rs.3,000; X & Y will receive Rs.23,500 and Rs.48,500]
the firm.
(e) The expenses on realisation were amount to Rs.400, paid by C. Q-29: M and N were partners sharing profits in the ratio of 3 : 2. On the date of
You are required to prepare Realisation A/c, Partners’ Capital A/cs and Bank A/c. dissolution their capitals were M: Rs. 7,650, N: Rs. 4,300. The creditors amounted
[Delhi 1996, Modified] to Rs. 27,500. The balance of cash was Rs. 760. The assets realised Rs. 25,430,
[Loss: 1,34,700; A will get: 17,150; B will bring: 29,900; C will get: 19,450; Total of Bank: 2,40,600] the expenses on dissolution were Rs. 540. All partners were solvent.
Close the books of the firm showing the Realisation, Capital and Cash accounts.
Q-10: The Balance Sheet of A, B and C sharing profits and losses 3 : 2 : 1 [All India 1999]
respectively stood as follows on 30.06.2012 [Sundry Assets: 38,690; Loss: 13,800; M will bring: 630; N will bring: 1,220; Total of Cash: 28,040]
Balance Sheet

Liabilities Amount Assets Amount Q-30: A, B and C were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On
31.03.2012 they decided to dissolve the firm. On that date A’s Capital was
Creditors 50,400 Cash at Bank 3,700 Rs.3,00,000; B’s Capital was Rs.15,000 (Dr.) and C’s Capital was Rs.37,500 (Dr.).
Investment Fluctuation Fund 10,000 Stock 20,100 The Creditors amounted to Rs.1,20,000 and Cash balance was Rs. 18,000. The
Reserve Fund 15,000 Debtors 62,600 assets realised Rs.3,00,000; Creditors were paid at a discount of 10% and the
Capital Accounts: Investments 16,000 expenses of dissolution were Rs.1,860.
A 30,000 Furniture 6,500 Prepare realisation account, partner’s capital accounts and the cash account.
B 20,000 Building 23,500 [Sundry Assets: 3,49,500; Realisation Loss: 39,360; Total of Cash: 3,90,180;
C 10,000 60,000 Advertisement Suspense A/c 3,000 A will get: 2,80,320; B will bring: 26,808; C will bring: 45,372]
1,35,400 1,35,400
Q-31: The partnership between X and Y was dissolved on March 31, 2012. On
The firm was dissolved as on that date. For the purpose of dissolution, the that date their respective credits to the Capitals were Rs.1,00,000 and Rs.60,000
18 Dissolution of Partnership Firm Practice in Accountancy 7

Rs.100 as discount and assume the responsibility for the discharge of the loan
together with accrued interest of Rs.30 which has not been recorded in books. CA. Naresh Aggarwal’s
(iv) The remaining debtors were sold to a debt collecting agency for 50% of the
book value.
ACADEMY of ACCOUNTS
(v) The expenses of dissolution were Rs.270. Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
Prepare necessary accounts to close the books of the firm. West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
[Haryana Board 1987, Delhi 1990]
[Loss: 6,800; A will get: 11,420; B will bring: 5,560; C will bring: 830; Total Cash: 11,690]
investments were valued at Rs.18,000 and stock at Rs.17,500. A agreed to take
Q-26: X, Y and Z are partners sharing profits and losses in the ratio of 2 : 2 : 1. over the investments and B to take over the stock. C took over the furniture at book
On 31st March 2012, their Balance Sheet was as follows: value. Debtors and Building realised for Rs.57,000 and Rs.25,000 respectively.
Balance Sheet Expenses of realisation amounted to Rs.450.
As on 31.03.2012 Prepare Realisation Account, Capital Accounts and Bank Account.
[Profit: Rs.4,850; A, B and C will get: Rs.20,425; Rs.8,117; Rs.6,308; Total of Cash: Rs.85,700]
Liabilities Amount Assets Amount
Capitals: Cash 18,000 Q-11: Sonu and Monu were sharing profits of a partnership firm in the ratio of
X - 80,000 Bills Receivable 30,000 2 : 1. They decided to dissolve their firm on 31.03.2012, when their Balance Sheet
Y - 50,000 Furniture 24,000 was as follows :
Z - 30,000 1,60,000 Stock 54,000 Balance Sheet
Creditors 55,000 Debtors 32,000
Liabilities Amount Assets Amount
Y’s Loan 15,000 Less: Provision 2,000 30,000
Mrs. X’s Loan 5,000 Z’s Loan 12,000 Creditors 16,000 Building 20,000
Investment Fluctuation Fund 3,000 Joint Life Policy 8,000 General Reserve 6,000 Machinery 15,000
Bill Payable 25,000 Investments 52,000 Loan from Radha 2,000 Stock 6,000
General Reserve 10,000 Machinery 40,000 Loan from Meera 6,000 Debtors 19,000
Joint Life Policy Fund 8,000 Goodwill 20,000 Capitals: Less : Provision 1,000 18,000
Employee’s Provident Fund 12,000 Profit and Loss Account 5,000 Sonu 22,000 Cash in Hand 11,000
Monu 18,000 40,000
2,93,000 2,93,000
70,000 70,000
The firm is dissolved on that date and assets realised as follows:
(i) Creditors accepted all the investment, Machinery and Rs. 2,000 in full settlement The firm was dissolved on 31.03.2012. As a result:
of their claim. (i) Sonu will dispose off the assets and pay the liabilities. For which he will get a
(ii) X agrees to take 50% of the B/R at 12,000 and agree to pay his wife’s Loan. remuneration of Rs.300.
(iii) Remaining B/R are sold to a debt collecting agency at 40% discount. (ii) Monu took over stock at an agreed value of Rs. 5,200 and agreed to pay off
(iv) Joint Life Policy is surrendered for Rs. 10,000; Furniture for Rs. 20,000; an Meera’s loan.
unrecorded Equipments Rs. 2,500. (iii) Expenses of realisation amounted to Rs. 200
(v) Y took stock at the book value and will also pay an unrecorded liability of (iv) Creditors allowed a discount of Rs. 300.
Rs.4,000 in respect of outstanding Expenses. (v) Assets realised as follows:
(vi) Z agrees to pay Bills payable and also dispose other assets and liabilities of Buildings Rs. 28,000, Machinery Rs. 13,000, Debtors Rs. 18,100.
the firm for his services he will be given Rs. 1,500 and he will bear all expenses Prepare the Realisation Account, Partners Capital Accounts and Bank Account for
himself. closing the books of the firm.
(vii) Expense of dissolution comes to Rs. 2,800. [Foreign 1996, Modified]
[Loss: Rs.92,000; X will receive Rs.38,200 and Z will receive Rs.27,100 (after adjusting Loan); [Profit: 5,100; Sonu will get: 29,700; Monu will get: 22,500; Total of Cash: 70,100]
Y will pay Rs.19,800 (after adjusting Loan); Cash: 79,300]
8 Dissolution of Partnership Firm Practice in Accountancy 17

Q-12: The following is the Balance Sheet of A and B as on 30.06.2012, sharing

profits and losses in the ratio of 3 : 2. CA. Naresh Aggarwal’s
Balance Sheet
ACADEMY of ACCOUNTS
Liabilities Amount Assets Amount Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
Creditors 38,000 Bank 11,500 West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
Mrs. A’s Loan 10,000 Stock 6,000
Mrs. B’s Loan 15,000 Debtors 19,000
Capitals : Stock 60,000
Reserve 5,000 Furniture 4,000
K 1,05,000 Debtors 36,000
Capitals Plant 28,000
L 42,000 1,47,000 M’s capital 25,000
A 10,000 Investment 10,000
B 8,000 18,000 Profit and Loss Account 7,500 2,84,000 2,84,000
86,000 86,000 (a) They appointed L to realise the assets and pay the liabilities. For this purpose,
he was to be paid Rs. 5,000.
The firm was dissolved on 30.06.2012, on the following terms:
(b) Joint Life Policy was surrendered for Rs. 20,000. Bad debts amounted to Rs.
(i) B will dispose off the assets and pay the liabilities. For which he will get a
5,000. Stock realised Rs. 40,000 and Machinery realised Rs. 80,000.
remuneration of Rs.600.
(c) There was an unrecorded asset which was sold for Rs. 3,000.
(ii) A agreed to take the investments at Rs. 8,000 and to pay off Mrs. A’s Loan.
(d) One of the creditors took over the investments at Rs. 23,000 and remaining
(iii) Other assets were realised as follows:
creditors were paid at a discount of Rs. 4,000.
Stock Rs. 5,000, Debtors Rs. 18,500, Furniture Rs. 4,500, Plant Rs. 25,000.
Prepare Realisation account, Capital accounts and Cash account.
(iv) Expenses on realisation amounted to Rs. 1,000.
[Delhi 2000C]
(v) Creditors agreed to accept Rs. 37,000.
[Loss: 51,000; K will get: 84,600; B will get: 26,600; C will bring: 35,200; Total of Cash: 2,09,200]
You are required to prepare Realisation A/c, Partners’ Capital A/cs and Bank A/c.
[All India 1996, 2001]
Q-25: A, B and C are three partners sharing profits in the ratio of 3 : 1 : 1. On 31st
[Loss: 6,600; A will get: 6,540; B will get: 4,960; Total of Bank: 64,500]
March, 2012, they decided to dissolve their firm. On that date their balance sheet
was as under :
Q-13: Following is the Balance Sheet of Rahul and Rohit as on 30th June,
Balance Sheet
2012.
Balance Sheet Liabilities Amount Assets Amount
Liabilities Amount Assets Amount Creditors 6,000 Cash 3,200
Loan 1,500 Debtors 24,200
Sundry Creditors 20,000 Goodwill 10,000
Capitals : Less : Provision 1,200 23,000
Bills Payable 20,000 Buildings 25,000
A 27,500 Stock-in-trade 7,800
Bank Overdraft 10,000 Plant & Machinery 25,000
B 10,000 Furniture 1,000
Mrs. Rahul’s Loan 20,000 Investments 15,300
C 7,000 44,500 Sundry Assets 17,000
Rohit’s Loan 10,000 Stock 8,700
General Reserve 2,000 Bills Receivable 10,000 52,000 52,000
Investment Fluctuation Fund 2,800 Debtors 17,000
It is agreed that:
Employees Provident Fund 1,200 Less: Provision 2,000 15,000
(i) A is to take over Furniture at Rs.800 and Debtors amounting to Rs.20,000 at
Capitals: Cash at Bank 13,000
Rs.17,200. The Creditors of Rs.6,000 to be paid by him at this figure.
Rahul 20,000 Profit and Loss Account 4,000
(ii) B is to take over all the Stock-in-trade at Rs.7,000 and some of the Sundry
Rohit 20,000 40,000
Assets at Rs.7,200 (being 10 % less than book value).
1,26,000 1,26,000 (iii) C is to take over the remaining Sundry Assets at 90 % of the book value, less
16 Dissolution of Partnership Firm Practice in Accountancy 9

Q-23: A, B and C were partners in a firm and sharing profits in the ratio of
3 : 2 : 1. On 31st December, 2012 their Balance Sheet was as follows: CA. Naresh Aggarwal’s
Balance Sheet
ACADEMY of ACCOUNTS
Liabilities Amount Assets Amount Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
Creditors 65,000 Cash 22,500 West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
Bills Payable 20,000 Debtors 52,300
Provident Fund 12,000 Stock 36,000
Investments Fluctuation Fund 6,000 Investments 15,000 The firm was dissolved on 30th June, 2012 and the following was agreed upon:
Advance Commission 8,000 Plant 91,200 (i) Debtors realised Rs.12,000
Capitals: Profit and Loss A/c 36,000 (ii) Rohit took away all Investments at Rs.12,000
A 80,000 Deferred Revenue Expenditure 18,000 (iii) Other assets realised as follows:
B 50,000 C’s Loan 10,000 Plant and Machinery 20,000
C 40,000 1,70,000 Buildings 50,000
Goodwill 6,000
2,81,000 2,81,000
(iv) Rahul agreed to pay off his wife’s Loan.
On this date the firm was dissolved. (v) Sundry Creditors and Bills Payable were settled at 5% discount.
(a) A was appointed to realise the assets and he was to receive 5% commission (vi) Rahul accepted stock at Rs 8,000 and Rohit took over Bills Receivable at 20%
on the sale of assets (except cash and partner’s loan) and was to bear all discount.
expenses of realisation. (vii) Realisation expenses amounted to Rs 2,000.
(b) A realised the assets as follows: Prepare Realisation Account, Partner’s Capital Accounts and Bank Account.
Debtors 30,000 [Profit: 9,800; Rahul will get: 35,900; Rohit will get: 13,900 (including Loan); Cash: 1,01,000]
Stock 26,000
Plant 42,750 Q-14: Following was the Balance Sheet of A, B and C on 31.12.2012:
Investments 75% of book value Balance Sheet
(c) Commission received in advance was returned after deducting Rs.3,000.
Liabilities Amount Assets Amount
(d) Firm had to pay Rs 7,200 for outstanding salary and Compensation to employees
amounted to Rs 9,800. These liabilities were not provided for in the above Creditors 50,000 Bank 20,000
Balance Sheet. Bills Payable 10,000 Debtors 30,000
(e) Rs 25,000 had to be paid for provident fund. B’s Loan 8,000 Stock 20,000
(f) Expenses of realisation were Rs 4,100. X’s Loan 12,000 Furniture 15,000
Prepare Realisation Account, Capital Accounts and Cash Account. General Reserve 20,000 Land and Building 2,45,000
[Loss: Rs.1,11,000; Cash: Rs.1,37,500; A’s Commission: Rs.5,500; A’s Capital 1,00,000 B’s Capital 20,000
A and C will get: Rs.3,000 and 2,500; B will pay: Rs.5,000] C’s Capital 1,50,000
3,50,000 3,50,000
Q-24: K, L and M were partners in a firm sharing profits and losses in the ratio of
2 : 2 : 1. They decided to dissolve the firm on 31.12.2012. The Balance Sheet of the The firm was dissolved on the above date on the following terms :
firm on the date of dissolution was as follows : (i) Debtors realised Rs. 28,000; and creditors and bills payable were paid at a
Balance Sheet discount of 10%.
(ii) Stock was taken over by C for Rs. 15,000 and furniture was sold to Y for
Liabilities Amount Assets Amount
Rs.12,000.
Creditors 1,07,000 Machinery 1,08,000 (iii) Land and Building was sold for Rs. 2,80,000.
Joint Life Policy Reserve 12,000 Joint Life Policy 30,000 (iv) X’s loan was paid by a cheque for the same amount.
Provident Fund 18,000 Investments 25,000 (v) The firm had a joint life policy for Rs. 5,00,000 with a surrender value of
10 Dissolution of Partnership Firm Practice in Accountancy 15

Rs.1,00,000. The policy was surrendered at its surrender value.

Prepare Realisation Account, Bank Account and Capital Accounts of A, B and C. CA. Naresh Aggarwal’s
[Profit: 1,31,000; A will get: 1,50,333; B will get: 30,333; C will get: 1,85,334; Total of Bank: 4,40,000]
ACADEMY of ACCOUNTS
Q-15: J, S, and R were in partnership sharing profits and losses in the ratio of Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
3 : 2 : 1. Their Balance Sheet as on 31st December, 2012 was as follows: West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
Balance Sheet

Liabilities Amount Assets Amount Rs.5,000 were provided in the books.

Capital Accounts Buildings 10,000 (f) Realisation expenses were amounted to Rs.4,000.
J 12,000 Plant 22,000 Prepare necessary ledger accounts to close the books of the firm.
S 8,600 Stock 6,000 [Loss: 77,000; Final Payment: A-91,200; B-41,200; C-50,600 (excluding loan); Total Cash: 3,23,000]
R 10,400 Joint Life Policy 6,200
Reserve Fund 3,000 Debtors 5,000 Q-22: Anju, Manju and Sanju were partners in a firm sharing profits in the ratio of
Employees Provident Fund 3,000 Accrued Interest 1,000 2 : 2 : 1. On 31.03.2012, their Balance Sheet was as follows :
Depreciation Reserve 5,000 Cash 2,800 Balance Sheet
Creditors 11,000 Liabilities Amount Assets Amount
53,000 53,000 Creditors 50,000 Cash 80,000
It, was agreed to dissolve the firm and the terms of dissolution were : Bank Loan 35,000 Debtors 75,000
(i) J took over buildings at book value and agreed to pay off creditors. Provident Fund 15,000 Stock 40,000
(ii) Accrued interest was not collected where as there was a contingent liability of Investment Fluctuation Fund 10,000 Investments 20,000
Rs 600 which was met. Advance Commission 8,000 Plant 30,000
(iii) Other assets realised Plant Rs 25,000, Stock 5,000, Debtors Rs 4,600. Capitals Profit & Loss A/c 3,000
(iv) J was appointed to dissolve the firm. For his services he will be given Rs.600 Anju 50,000 Sanju’s Loan 20,000
and he will bear realisation expenses, which came to Rs.800. Manju 50,000
Prepare Realisation Account, Capital Accounts and Cash Account. Sanju 50,000 1,50,000
[Profit: 4,400; J will get: 17,300; S will get: 11,067; R will get: 11,633; Cash: 43,600] 2,68,000 2,68,000
Hint: Joint life policy will realise at book value, in the absence of any information.
On this date, the firm was dissolved. Anju was appointed to realise the assets. Anju
Q-16: A, B and C are, partners sharing profits in the ratio of 5 : 3 : 2. was to receive 5% commission on the sale of assets (except cash and partner’s
Balance Sheet loan) and was to bear all expenses of realisation.
(a) Anju realised the assets as follows :
Liabilities Amount Assets Amount Debtors Rs. 60,000, Stock Rs. 35,500, Investments Rs. 16,000, Plant 90% of
A’s Capital 2,00,000 Bank 70,000 the book value.
.
B’s Capital 1,50,000 Debtors 50,000 (b) Commission received in advance was returned to the customers after deducting
C’s Capital 1,50,000 Stock 60,000 Rs. 1,000. Rs.20,000 had to be paid for provident fund.
A’s Current A/c 30,000 Furniture 25,000 (c) Firm had to pay Rs. 8,500 for outstanding salary and compensation paid to
B’s Current A/c 20,000 Patents 35,000 employees amounted to Rs. 17,000. These liabilities were not provided for in
P&L A/c 50,000 Machinery 1,50,000 the above Balance Sheet.
Trade Creditors 70,000 Buildings 3,20,000 (d) Expenses of realisation amounted to Rs. 7,500.
Provision for Depreciation 50,000 C’s Current A/c 10,000 Prepare Realisation Account, Capital Accounts of Partners and Cash Account.
[Loss: 52,925; Final Payments: Anju- 34,555; Manju- 27,630; Sanju- 18,815;
7,20,000 7,20,000 Total of Cash: 2,18,500; Anju’s Commission: 6,925]
14 Dissolution of Partnership Firm Practice in Accountancy 11

Mrs. A’s loan 10,000 Debtors 9,300

Creditors 18,500 Less : Provision 600 8,700 CA. Naresh Aggarwal’s
Joint Life Policy Reserve
Investment Fluctuation Fund
14,000 Cash in hand
6,000
16,920
ACADEMY of ACCOUNTS
Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
1,08,500 1,08,500
West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
(a) The Joint life policy was surrendered for Rs. 12,000.
(b) The investments were taken over by A for Rs. 17,500. A agreed to discharge
Partners decided to dissolve the firm and the following transactions took place at the
his wife’s loan.
time of dissolution:
(c) B took over the stock at Rs. 7,000 and debtors amounting to Rs. 5,000 at
(a) B took over stock Rs 55,000 and C took over Buildings for Rs 4,00,000.
Rs.4,000.
(b) Other assets realised as follows:
(d) Machinery was sold for Rs. 55,000. The remaining debtors realised 50% of
Debtors Rs 48,000, Furniture Rs 17,000 and Machinery Rs 80,000.
book value. An investment not recorded in the books was sold for Rs. 8,000.
(c) Patents didn’t realise anything and trade creditors were settled in full by paying
(e) During the course of dissolution, a liability was settled for Rs.7,500 for which
them Rs 65,000.
only Rs.2,500 were provided in the books.
(d) Realisation expenses were to be fully borne by A for which he is to get a credit
(f) The expenses of realisation amounted to Rs. 600.
of Rs 10,000. Actual realisation expenses paid out of firm, Bank A/c, amounted
Prepare Realisation A/c, Partners’ Capital A/c and Bank A/c.
to Rs 12,000.
[Profit: 28,470; A will get: 23,888; B will get: 20,388; C will get: 25,694; Total of Cash: 94,070]
Prepare Realisation A/c, Partner’s Capital A/cs and Bank A/c.
[Profit: Rs.5,000; A will get: Rs.2,55,500; B will get: Rs.1,31,500;
Q-21: A, B and C were partners sharing profits in the ratio of 2 : 2 : 1. They decided
C will pay: Rs.2,49,000; Total of Bank: Rs.4,64,000]
to dissolve their firm on 31.12.2012, when their Balance Sheet was as follows:
Balance Sheet
Q-17: A, B and C were in partnership whose Balance Sheet as on 31.12.2012,
Liabilities Amount Assets Amount stood as follows :
Balance Sheet
Creditors 40,000 Cash 40,000
Bills Payable 46,000 Debtors 70,000 Liabilities Amount Assets Amount
Employees’ Provident Fund 32,000 Less : Provision 6,000 64,000
Creditors 16,000 Land & Buildings 70,000
Mrs. A’s Loan 38,000 Stock 50,000
Bills Payable 19,000 Investments 30,000
C’s Loan 30,000 Investments 60,000
Capital Accounts Sundry Debtors 10,000
Investment Fluctuation Fund 16,000 Furniture 42,000
A 28,000 Stock 15,000
Capitals Machinery 1,36,000
B 37,000 Bank 30,000
A 1,20,000 Land 1,00,000
C 44,000 1,09,000
B 1,00,000 Goodwill 30,000
Currents Accounts
C 1,00,000 3,20,000
A 2,000
5,22,000 5,22,000 B 3,000
C 6,000 11,000
Following transactions were took place :
(a) A took over stock at Rs. 36,000. He also took over his wife’s loan. 1,55,000 1,55,000
(b) B took over half of debtors at Rs. 28,000.
The firm was dissolved on the above date on the following terms :
(c) C took over investments at Rs. 54,000 and half of creditors at their book value.
(a) C will take the investments on an agreed value of Rs. 29,000.
(d) Remaining debtors realised 60% of their book value. Furniture sold for
(b) Other assets to be disposed off as follows :
Rs.30,000; Machinery Rs.82,000 and Land Rs.1,20,000. Joint Life Policy was
Land & Buildings: Rs.80,000; Debtors: Rs.9,000; Stock: Rs.14,000.
surrendered for Rs.30,000.
(c) The creditors to be paid Rs. 15,000 in full settlement of account.
(e) During the course of dissolution, a liability was settled for Rs.13,000 against
12 Dissolution of Partnership Firm Practice in Accountancy 13

(d) Bills payable were paid in full.

(e) Expenses of realisation amounting to Rs. 2,000 were met by A. CA. Naresh Aggarwal’s
You are required to give journal entries and ledger accounts to close the books.
[All India 1996 C]
ACADEMY of ACCOUNTS
[Profit: 6,000; A will get: 34,000; B will get: 42,000; C will get: 23,000; Total of Bank: 1,33,000] Accounts • Costing • Tax • FM • Maths • Stats • English • E conomics
West Patel Nagar, New Delhi. Ph:8010444896. Website: www.academyofaccounts.org
Q-18: X, Y and Z were partners in a firm sharing profits in the ratio of 2 : 1 : 1. Their
Balance Sheet on 31st December, 2012 was as follows:
Balance Sheet
Balance Sheet
Liabilities Amount Assets Amount
Liabilities Amount Assets Amount
Capital Accounts Machinery 1,21,500
Accounts Payable 10,000 Land & Buildings 30,000
M 1,20,000 Stock 22,650
Bank Overdraft 15,000 Office Equipments 5,000
N 60,000 1,80,000 Investments 44,490
Y’s Loan 25,000 Stock 20,000
Creditors 55,500 Debtors 27,900
J.L.P. Reserve 15,000 Accounts Receivable 30,000
Joint Life Policy Fund 42,000 Less: Provision 1,800 26,100
Capitals Joint Life Insurance Policy 15,000
Mrs. M’s Loan 30,000 Joint Life Policy 42,000
X 20,000 Bank 5,000
O’s capital 34,500
Y 10,000
Cash at Bank 16,260
Z 10,000 40,000
3,07,500 3,07,500
1,05,000 1,05,000
(a) The Life Policy is surrendered for Rs 36,000.
Partners agreed to dissolve the firm on that date. You are given the following
(b) The Investments are taken over by M for Rs.52,500 and agrees to discharge
informations about dissolution:
the loan of his wife.
(a) Y was given responsibility to dispose off the assets and pay the liabilities. For
(c) N takes over all the stock at Rs. 21,000 and debtors amounting to Rs.15,000 at
which he will get a remuneration of Rs.800.
Rs.12,000.
(b) Office Equipment was accepted by a creditor for Rs. 3,000. Remaining creditors
(d) Machinery is sold for Rs.1,65,000. The remaining debtors realise 50% of their
were paid in full by cheques.
book value.
(c) Assets were realised as follows:
(e) The Investments of the value of Rs 9,000 were not recorded in the books.
Land & Buildings Rs.1,50,000; Stock Rs.15,000; Accounts Receivable
These were taken over by the creditors.
Rs.23,000.
(f) The expenses of realisation amounted to Rs 1,800.
(d) The Joint Life Insurance Policy was surrendered for Rs. 10,000.
Prepare the Realisation A/c, Bank Account and Partner’s Capital accounts to close
(e) Other liabilities were paid in full.
the books of the firm.
(f) A Bills Receivable of Rs.5,000 discounted from the bank was dishonored due
[Profit: 85,410; M will get: 1,40,205; N will get: 55,470; O will bring: 20,265; Bank: 2,43,975]
to insolvency of the customer, who could pay only Rs.2,000.
(g) Dissolution expenses amounted to Rs. 1,200.
Q-20: A, B and C sharing profits in the proportion of 2 : 2 : 1 agreed to dissolve of
You are required to prepare Realisation Account, Bank Account and Capital
the firm on 31.12.2012, on which date their Balance Sheet was as under:
Accounts of the Partners.
Balance Sheet
[Foreign 1996, Modified]
[Profit: 1,11,000; Final payments: X-75,500; Y-38,550 (excluding loan); Z-37,750; Bank: 2,05,000] Liabilities Amount Assets Amount
Capital Accounts Machinery 40,500
Q-19: M, N and O were partners in a firm sharing profits and losses in the ratio of
A 20,000 Stock in trade 7,550
3 : 2 : 1 respectively. They agreed to dissolve their firm on 31st December 2012.
B 20,000 Investments 20,830
On which date, their Balance Sheet was as under:
C 20,000 60,000 Joint Life Policy 14,000