Aim international school

Subject: Account Account

Standard: 12
Chapter: 7

Section - A
‣ Answer the following question in brief. (Each question
()
carries 3 Marks)
01. At the time of dissolution of partnership firm
following assets are appeared in the book :
Building Rs.2,00,000 Goodwill
Rs.20,000
Furniture Rs.40,000 Machinery
Rs.30,000
Realised Rs.2,20,000 from building, Rs.50,000 for
furniture and machinery at book value. No value is
realised for goodwill. Pass necessary journal entries.

Ans. Std = 12 A/c, Part – 1, ch – 7, Illustration 1

02. A partner Vijay has accepted responsibility for
dissolution procedure of the firm. A firm has decided
to pay remuneration of Rs.12,000 for this task. A firm
has paid him Rs.6000 for expense. Pass necessary
journal entries.
Ans. Std = 12 A/c, Part – 1, ch – 7, Illustration 1
03. At the time of dissolution of the firm debtors are of
Rs.80,000 and creditors of Rs.40,000. Partner Pratik
accepts debtors at 20 % less than book-value and paid
to creditors. Pass necessary journal entries.
Ans. Std = 12 A/c, Part – 1, ch – 7, Illustration 1
04. Partner Naresh accepts to pay Rs.30,000 for bills
payable. Pass necessary journal entries.
Ans. Std = 12 A/c, Part – 1, ch – 7, Illustration 1
05. At the time of dissolution of firm, the value of
machinery was of Rs.70,000. It is taken by’ one partner
for Rs.78,000. Pass journal entries.
Ans. Std = 12 A/c, Part – 1, ch – 7, Illustration 1
06. At the time of dissolution total assets of the firm are of
Rs.4,00,000. Out of that 40 % are current assets. Where
cash is included of Rs.20,000. 120 % of fixed assets are
realized 80% are realised from current assets. Pass
journal entries.
Ans. Std = 12 A/c, Part – 1, ch – 7, Illustration 1
07. Land-building Rs. 1,00,000 and investments 50,000 are
disclosed in the balance sheet at the time of
dissolution. Rs. 80,000 and Rs. 60,000 are realised
respectively from them. Pass journal entries.
Ans. Std = 12 A/c, Part – 1, ch – 7, Illustration 1
08. Pass journal entries for the following transactions of
firm in the case of firm’s dissolution : The profit-loss
sharing ratio between partners R, B and I is 3 : 2: 1.
Undertake the disposal of the following balances : (1)
General reserve Rs.18,000 (2) Debit balance of profit
and loss A/c Rs.12,000 (3) Workmen accident
compensation fund Rs.18.000.o.)
Ans. (1) General reserve A/c Dr
18.000
Workmen accident compensation fund A/c Dr
18.000
To R’s capital A/c
18.000
 To B’s capital A/c
12,000
To I’s capital A/c
6,000
(Being general reserve and workmen accident
compensation fund transferred to partners’ capital
accounts in their profit and loss ratio)
(2) R’s capital A/c Dr
6,000
B’s capital A/c Dr
4,000
I’s capital A/c Dr
2,000
To Profit and loss A/c
12,000
(Being debit balance of profit and loss account
transferred to partners’ capital accounts in their profit –
loss rati
09. Pass journal entries for the following transactions of
firm in the case of firm’s dissolution : There are
debtors of Rs.1,20,000 and creditors of Rs.60,000 at the
time of dissolution of firm. One partner has taken
debtors at 20 % less than book value and accepted to
pay creditors.
Ans. 1 Realisation A/c Dr
1,20,000
To Debtors A/c
1,20,000
(Being debtors accounts are transferred to Realisation
A/c.)
 2 Creditors A/c Dr 60.000
To Realisation A/c
60.000
(Being creditors accounts are transferred to Realisation
A c.)
3 ... partner’s capital current A/c Dr 96,000
To Realisation A/c
96,000
(Being. partner has taken debtors at Rs.2000 less than
book value.)
4 Realisation A/c Dr 60,000
To ... partner’s capital current A/c
60,000
(Being ... partner has paid to creditors.)
10. Total assets of the firm at the time of dissolution is
Rs.2,00,000. Out of which 40 % are current assets
(including cash Rs.10,000). 120 % realised for fixed
assets. While 80 % are realised of current asset. Pass
journal entries.
Ans. (1) Realisation A/c 1,90,000
To fixed assets A/c
1,20,000
To Current assets A/c
70,000
(2) Cash/Bank A/c 2,00,000
To Realisation A/c
2,00,000
11. State whether the following statements are true or
false. If statement is false write the true statement:
 (i)The dissolution expenses of the firm to be paid by
the firm itself. But if it is paid by any partner ,no
accounting treatment is required to record in the
books.
(ii)The realization account is opened to ascertain the
profit or loss of the firm.
(iii)Realisation account is one kind of nominal
account.
Ans. ( i ) False (ii) False (iii) False
12. State whether the following statements are true or
false . If statements is false write the true statement.
(i) If all partner become insolvent or business become
illegal then firm will be dissolved
(ii)The loan of partner’s wife from the women’s
personal wealth of possession is paid prior to any
payment towards the third party liability .
(iii)Workmen profit sharing fund is the accumulated
reserve for the firm.
Ans. (i)True (ii) False (lii) False
13. State whether the following statements are true or
false . If statements is false write the true statement.
(i) At the time of dissolution of a partnership firm,
unrecorded contingent liability is paid after debting to
the realisation account.
(ii)In the event of dissolution, goodwill shown in the
balance sheet is transferred to Capital A/c in profit -
loss ratio.
(iii )When no information is available, at the time of
dissolution. debts will be paid at book value.
Ans. (i ) True (Ii) False (iii) True
14. One partner accepts to pay loan of his wife Rs.40,000.
Pass necessary journal entries.
Ans. Std = 12 A/c, Part – 1, ch – 7, Illustration 1
15. Pass journal entries for the following transactions,
when realisation account is prepared : Book value of
sundry assets is Rs.2,70,000 and realised Rs.2.27,000.
Ans. (1) Realisation A/c Dr 2,70,000
To Sundry assets A/c
2,70,000
(Being sundry assets account are closed and transferred
to Realisation A/c.)
(2) Cash/Bank A/c Dr 2.27,000
To Realisation A/c
2.27,000
(Being realised Rs.2,27,000 from sales of sundry assets.)
16. Pass journal entries for the following transactions,
when realisation account is prepared : Partner Bimal
has accepted to pay bills payable of Rs.15,000.
Ans. (1) Bills payable A/c Dr 15,000
To Realisation A/c 15,000
(Being transfer of bills payable account to Bealisation
A/c.)
(2) Realisation A/c Dr 15,000
To Bimal’s capital A/c 15,000
(Being partner Bimal has accepted to pay bills payable.)
17. Pass journal entries for the following transactions,
when realisation account is prepared : Book value of
machine is Rs.50,000; which is taken over by partner
Darshan for Rs.55,000.
Ans. Realisation A/c Dr 50,000
To Machine A/c 50,000
 (Being at the time of dissolution, machine account is
closed and transferred to Realisation A/c
Darshan’s capital A/c Dr 55,000
To Realisation A/c 55,000
(Being at the time of dissolution, partner Darshan has
taken machine for 55.000.)
18. Pass journal entries for the following transactions of
firm in the case of firm’s dissolution : One partner has
accepted responsibility to undertake dissolution
procedure. In the return of it, decided to pay
remuneration of Rs.20,000. On account of expense firm
has paid him Rs.12,000.
Ans. Realisation A/c Dr 20,000
To partners capital/current A/c 8,000
To Cash Bank A/c 12,000
(Being dissolution expense paid and remaining
dissolution expense becomes payable.)
19. Pass journal entries for the following transactions of
firm in the case of firm’s dissolution : Machine is
disclosed in the book at the time of dissolution for
2,00,000. Book value is realised.
Ans. (1)Realisation A/c Dr 2,00,000
To Machine A/c
2,00,000
(Being machine account is closed and transferred to
Realisation A/c.)
(2) Cash Bank A/c Dr 2,00,000
To Realisation A/c
2,00,000
 (Being machine realized at its book value.)
20. Pass journal entries for the following transactions of
firm in the case of firm’s dissolution : The value of
laptop is Rs.35,000. One partner has taken it for
Rs.25,000.
Ans. (1) Realisation A/c Dr 35,000
To Laptop A/c 35,000
(Being laptop account is closed and transferred to
Realisation A/c.)
(2) partners capital A/c Dr 25,000
To Realisation A/c 25,000
21. Pass journal entries for the following transactions of
firm in the case of firm’s dissolution : Total assets of
the firm are Rs.2,00,000 out of which 40% are current
assets (including cash of Rs.10,000). Book value is
realised.
Ans. (1) Realisation A/c 1,90,000
To Fixed assets A/c 1,20,000
To Current assets A/c 70,000
(being fixed and current assets accounts are closed and
transferred to Realisation A/c.)
2 Cash/Bank A/c 1,90,000
To Realisation A/c 1,90,000
(Being book value realised from assets)
22. Pass journal entries for the following transactions of
firm in the case of firm’s dissolution : In the balance
sheet land-building Rs.8,00,000 and investments of
Rs.2,00,000 are disclosed. Respectively Rs.9,00,000 and
Rs.1,50,000 are realised from them.
Ans. (1) Realisation A/c Dr 10,00,000
To Land-building A/c
8,00,000
To Investments A/c
2,00,000
(Being land-building and investments accounts are
closed and transferred to Realisation A/c.)
(2) Cash/Bank A/c 10,50,000
To Realisation
A/c 10,50,000
(Being amount realised from sale of land-building and
investments)
23. Pass journal entries for the following transactions of
firm in the case of firm’s dissolution : At the time of
dissolution the book value of goodwill is Rs.56,000. No
amount is realised.
Ans. (1) Realisation A/c Dr 56,000
To Goodwill A/c 56,000
(Being goodwill account is closed and transferred to
Realisation A c.
(2) No entry is made for its realisation.
24. State whether the followine are true or false, Correct
the false statement and rewrite them
(i ) To pay the liablities of partnership firm, the
personal assets of partner cannot be used.
(ii) Workmen accident compensation fund is
distributed amongst partner in their profit - loss
sharing ratio’.
Ans. (i)False (ii)True
25. State whether the following statements are true or
false. Correct the false statements and rewrite them
( i ) In a partnership firm, the liabilities of all partners
are confined to their capital only.
(ii) To pay dissolution expenses is responsibility of the
firm.
Ans. (i)False (ii)True
26. State whether the following statements are true or
false. Correct the false statements and rewrite them:
(i ) Workmen profit sharing fund is distributed
amongst partners in their profit - loss sharing ratio.
(ii) When a single (one) partner of a firm retires, the
firm gets dissolved.
Ans. (l)False (ll)False
27. State whether the following statements are true or
false. Correct the false statements and rewrite them
(i)The court can interfere with regard to any matter of
dissolution of a partnership firm.
(ii) At the time of dissolution. bad debts recovery
(return) is not required to be recorded in the books.
Ans. (i)True (ii)False