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11/5/24, 11:23 AM TS Grewal Solution Class 12 Chapter 8 Dissolution of a Partnership Firm

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TS Grewal Solution Class 12 Chapter 8 Dissolution of a Partnership Firm

Read TS Grewal Accountancy Class 12 Solution Chapter 8 Dissolution of a Partnership Firm 2023 2024. Students should study TS Grewal Solutions Class 12 (https://www.studiestoday.com/ts-grewal-solutions)
Accountancy available on Studiestoday.com with solved questions and answers. These chapter-wise answers for Class 12 Accountancy have been prepared by expert teachers of Grade 12. These TS Grewal Class 12
Solutions have been designed as per the latest accountancy TS Grewal Book for Class 12 and if practiced thoroughly can help you to score good marks in standard 12 Accounts class tests and examinations.
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Class 12 Accounts Chapter 8 Dissolution of a Partnership Firm TS Grewal Solutions

TS Grewal Solutions for Chapter 8 Dissolution of a Partnership Firm Class 12 Accounts have been provided below based on the latest TS Grewal Class 12 book. The answers have been prepared based on the latest 2023
2024 book for the current academic year. TS Grewal Solutions Class 12 will help students to improve their concepts and easily solve accountancy questions for Class 12. Class 12 Grewal solutions should be revised
regularly as more practice will help you get a better rank and easily solve more questions.

Chapter 8 Dissolution of a Partnership Firm TS Grewal Class 12 Solutions

About this chapter: TS Grewal Class 12 Chapter 8 Dissolution of a Partnership Firm explains the accounting concepts relating to selling of assets, paying off liabilities, distribution of remaining amount among the partners in
their profit sharing ratio, payment to creditors and finally closing the books. Students will also understand that the dissolution can take place in different ways, such as by mutual consent, by insolvency, by court order, and by
the expiration of a partnership. You will be able to understand all concepts relating to accounting treatment of these different types of dissolution of a partnership firm.

You will be able to learn the accounting entries to be posted in the books of accounts while going through the process of dissolution of partnership firm. As there are lot of numerical problems also given in the chapter. The
students will be able to solve the questions and practice for the Class 12 Board Exams. We have also provided detailed step by step solutions for all questions given in the chapter which will help you in upcoming exams

Solutions for TS Grewal's Double Entry Book Keeping:

Accounting for Not for Profit Organizations and Partnership Firms (Vol.1)
Textbook for CBSE Class 12
TS Grewal Solutions Class 12 Accountancy
Chapter 8
Dissolution of a Partnership Firm

Very Short Answer Type Questions

Question 1. What is meant by Dissolution?

Answer:

Question 2. What is dissolution of a firm?

Answer:
Dissolution of a firm means the dissolution of partnership among all the partners of the firm and the firm’s business is closed.
Question 3. Distinguish between Dissolution of Partnership and Dissolution of Partnership Firm on the basis of closure of books.

Answer:

Question 4. Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership Firm' on the basis of Court’s intervention.

Answer:

Question 5. Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership Firm' on the basis of Economic Relationship’.

Answer:

Question 6. Differentiate between 'Dissolution of Partnership and Dissolution of the Partnership Firm' on the basis of 'Continuity of Business’.

Answer:

Question 7. Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership Firm' on the basis of settlement of assets and liabilities.

Answer:

Question 8. Give any one difference between reconstitution of a firm and dissolution of a firm.

Answer:
Reconstitution of a firm refers to re-forming of the partnership due to change in profit sharing ratio, admission/ death/ retirement of partners, or any other changes in their partnership deed. But dissolution of the firm refers to
winding up of the business as well as partnership firm.

Question 9. In case of dissolution of a firm which liabilities are to be paid first?

Answer:
Firms property is applied first towards payment of firm’s debts then the surplus, if any, is applied towards payment of partner’s private debts to the extent the concerned partner is entitled to share in the surplus.

Question 10. All the partners want to dissolve the firm. Y, a partner, demands that his loan of 2,00,000 be paid before payment of capitals of the partners. But X, another partner, demands that capitals be paid
before payment of Y’s loan. Who is correct?

Answer:
X is correct. According to Section 48 of the Indian Partnership Act, 1932, outside party’s debts are paid before payment of partner’s loan.

Question 11. A and B are partners in a firm sharing profits in the ratio of 3:2. Mrs. A has given a loan of 20,000 to the firm and the firm also obtained a loan of 10,000 from B. The firm was dissolved and its
assets were red J. State the order of payment of Mrs. A's loan and B's loan with reason, if there were no creditors of the firm.

Answer:
According to the Section 48 of the Indian Partnership Act, 1932, Mrs. A’s loan of Rs. 20,000, being outside party’s debt will be paid before payment of B’s loan. B will be paid up to the available cash, i.e. Rs. 5,000.

Question 12. Give the Journal entry for the treatment of partner’s loan appearing on the asset side of the Balance Sheet, on dissolution of partnership firm.

Answer:
Partner’s loan is paid after outside liabilities have been paid bit before payment of capital.

Partner’s Loan A/c………………………. Dr.

To Bank/ Cash A/c

Question 13. What is Realisation Account?

Answer:
Realisation Account is opened on the dissolution of a firm. The object of preparing this account is to close the books of account of the dissolved firm and to determine gain (profit) or loss on the realisation of assets and
payment of liabilities.

Question 14. Give any two objects of preparing Realisation Account in the dissolution of a firm.

Answer:
(I) transferring all assets except Cash or Bank Account to the debit side of the account

(ii) transferring all liabilities except Partner’s Loan Account and Partners’ Capital Accounts to the credit of the account.

Question 15. State the ratio in which the partners share gain (profit) or loss on realisation of various assets and payment of various liabilities.

Answer:
Balance in the Realisation account is either gain or loss, which is transferred to the Capital Accounts of the Partners in their profit-sharing ratio.

Question 16. State any one occasion for the dissolution of the firm on court’s orders.

Answer:
Court may pass order for the dissolution of the firm when a partner becomes a person of unsound mind.

Question 17. List any two grounds on which a court may dissolve a firm.

Answer:
Court may pass order for the dissolution of the firm when:

(a) A partner becomes permanently incapable of preforming his duties as a partner.

(b) A partner is found guilty of misconduct, which is likely to adversely affect the business of the firm.

Answer:
No entry is passed.

Question 19. What Journal entry is passed when a partner agrees to pay the realisation expenses on behalf of the firm?

Answer:
Realisation A/c ……………………….. Dr.

To Partner’s Capital A/c

(Being the remuneration due to partner)

Question 20. What Journal entry is passed when the firm pays realisation expenses on behalf of a partner who has to bear the expenses?

Answer:
Concerned Partner’s Capital A/c ………………………. Dr.

To Cash/Bank A/c

(Being realisation expenses paid on behalf of the partner)

Question 21. If a loan from a partner appears on the liabilities side of the Balance Sheet of the firm and the Capital Account of such partner shows a debit balance, how is loan dealt with?

Answer:
Debit Balance in Partner’s Capital Account is less than the loan given by him. Hence, the amount of capital is transferred from his loan account to his capita account.

Question 22. Does the loan from an outside have priority over the loan from a partner as to repayment?

Answer:
Yes, the loan from an outside have priority over the loan from a partner as to repayment.

Short Answer Type Questions........................

Question 1. Explain the provisions of Section 48 of Partnership Act, 1932 dealing with the settlement of accounts at the time of dissolution of firm.

Answer:

Section 48 of the Indian Partnership Act, 1932 deals with the settlement of accounts when the firm is dissolved. It is discussed below:

Treatment of losses: Loss, including deficiencies of capital, is paid first out of profit, then out of capital and lastly, if necessary, by the partners individually in the proportion in which they share profits.

Application of Assets: Assets of the firm, including amount contributed by the partners to make up deficiencies of capital, are applied in the following order:

(a) In paying firm’s debts to the third parties,

(b) In paying to each partner rateably what is due to him an account of loans or advances;

(d) The residue, if any, is distributed among the partners in their profit- sharing ratio.

Question 2. Distinguish between dissolution of Partnership and dissolution of partnership firm.

Answer:

Question 3. Distinguish between firm’s debts and private debts.

Answer:

Question 4. Give two points of distinction between Revaluation Account and Realisation Account.

Answer:

Question 5. State any six situations in which the court may order to dissolve a partnership firm.

Answer:

Court may pass order for the dissolution of the firm when:

(a) A partner becomes a person of unsound mind;

(b) A partner becomes permanently incapable of preforming his duties as a partner.

(d) Partnership agreement is breached persistently by a partner or partners;

(e) Court finds dissolution of the firm justified;

(f) When the business of the firm cannot be carried on except at a loss.

Question 6. Explain dissolution of a firm by (i) Agreement and (ii) Notice.

Answer:

The modes by which a firm may be dissolved are:

1.) Agreement:- a firm may be dissolved when all the partners agree for its dissolution. A partnership firm is set up by an agreement, similarly, it can be dissolved by an agreement.

2.) Notice:- In case partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm.

EXERCISE ::------->

Question 1: Land and Building (book value) Rs. 1,60,000 sold for Rs. 3,00,000 through a broker who charged 2% commission on the deal. Journalise the transaction, at the time of dissolution of the firm.

Answer 1:

Working Note:-

Value of Land and Building = 3,00,000 – 6,000 = 2,94,000

Point of Knowledge:-

For Closing the Asset Accounts: All the recorded assets (including goodwill), except fictious assets, Cash in Hand or Bank Current Account (Dr. Balance)/Capital Account (Debit Balance) of partner, are transferred to the
Realisation Account at their book value. Since assets have debit Balance, Asset Account will be closed by crediting them.

Realisation A/c ………………………………………Dr.

To Various Assets A/c

Question 2: What journal entries would you pass in the following cases?

(a) Expenses of realisation Rs 1,500.

(b) Expenses of realisation Rs 600 but paid by Mohan, a partner.
(c) Mohan, one of the partners of the firm, was asked to look into the dissolution of the firm for which he was allowed a commission of Rs 2,000.
(d) Motor car of book value Rs 50,000 taken over by creditors of the book value of Rs 40,000 in full settlement.

Answer 2:

Point of Knowledge:-

I) Transferring all assets except Cash and Bank Account to the debit side of the account.

II) Amount realised on sale of assets is credited to the account.

Question 3: Pass journal entries for the following:

(a) Realisation expenses of Rs 15,000 were to be met by Rahul, a partner, but were paid by the firm.
(b) Ramesh, a partner, was paid remuneration of Rs 25,000 and he was to meet all expenses.
(c) Anuj, a partner, was paid remuneration of Rs 20,000 and he was to meet all expenses. Firm paid an expense of Rs 5,000.

Answer 3:

Question 4: Pass journal entries for the following:

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

Answer 4:

Question 5: Record necessary journal entries in the following cases:

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

Answer 5:

Question 6: Pass journal entries for the following at the time of dissolution of a firm:

(a) Sale of Assets——Rs 50,000.

(b) Payment of Liabilities——Rs 10,000.
(c) A commission of 5% allowed to Mr . X , a partner, on sale of assets.
(d) Realisation expenses amounted to Rs 15,000 . The firm had agreed with Amrit , a partner, to reimburse him up to Rs 10,000.
(e) Z, an old customer , whose account for Rs 6,000 was written off as bad in the previous year , paid 60% f the amount written off.
(f) Investment (Book Value Rs 10,000) realised at 150%

Answer 6:

Point of Knowledge:-

I) Transferring all assets except Cash and Bank Account to the debit side of the account.

Question 7: Pass journal entries for the following transactions at the time of dissolution of the firm :

(a) Loan of Rs 10,000 advanced by a partner to the firm was refunded.

(b) X, a partner, takes over an unrecorded asset (Typewriter) at Rs 300.
(c) Undistributed balance (Debit) of Profit and Loss Account Rs 30,000 . The firm has three partners X, Y and Z.
(d) 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 the same.
(f) Creditors are paid Rs 28,000 in full settlement of their account of Rs 30,000.

Answer 7:

Question 8: Pass necessary journal entries for the following transactions on the dissolution of the firm P and Q after the various assets (other than cash) and outside liabilities have been transferred to
Realisation Account :

(a) Bank Loan Rs 12,000 was paid.

(b) Stock worth Rs 16,000 was taken over by partner Q.
(c) Partner P paid a creditor Rs 4,000.

Answer 8:

Question 9: X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1 respectively. The firm was dissolved on 1st March, 2013. After transferring assets (other than cash) and third party liabilities
to the 'Realisation Account' you are provided with the following information:

(a) There was a balance of Rs 18,000 in the firm's Profit and Loss Account.

(b) There was an unrecorded bike of Rs 50,000 which was taken over by X.

(c) Creditors of Rs 5,000 were paid Rs 4,000 in full settlement of accounts. Pass necessary journal entries for the above at the time of dissolution of firm.

Answer 9:

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 Rs 3,000.

(b) Ashish, an old customer whose account for Rs 1,000 was written off as bad in the previous year, paid 60%, of the amount.

(d) There was an old typewriter which had been written off completely from the books. It was estimated to realise Rs 400. It was taken by Priya at an estimated price less 25%.

(e) There were 100 shares of Rs 10 each in Star Limited acquired at a cost of Rs 2,000 which had been written-off completely from the books. These shares are valued @ Rs 6 each and divided among the
partners in their profit-sharing ratio.

Answer 10:

(a) There was furniture worth Rs 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 Rs 15,000 on the date of dissolution.

(c) Harsh's loan of Rs 6,000 was discharged at Rs 6,200.

(d) The firm paid realisation expenses amounting to Rs 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 Rs 6,000, accepted stock of Rs 5,000 at a discount of 5% and the balance in cash.

Answer 11:

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 Rs 6,000.

(b) Total Creditors of the firm were Rs 40,000. Creditors worth Rs 10,000 were given a piece of furniture costing Rs 8,000 in full and final settlement. Remaining Creditors allowed a discount of 10%. (c) Rohit
had given a loan of Rs 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 Rs 3,000, whereas its expected value was Rs 5,000.

(e) The firm had a debit balance of Rs 15,000 in the Profit and Loss Account on the date of dissolution.

Answer 12:

Question 13: Book value of assets (other than cash and bank) transferred to Realisation Account is Rs 1,00,000. 50% of the assets are taken over by a partner Atul, at a discount of 20%; 40% of the remaining
assets are sold at a profit f 30% on cost; 5% of the balance being obsolete, realised nothing and remaining assets are handed over to a Creditor , in full settlement of his claim.

You are required to record the journal entries for realisation of assets.

Answer 13:

Question 14: Lal and Pal were partners in a firm sharing profits in the ratio of 3 : 7 . On 1st April, 2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to
Realisation Account, you are given the following information:

(a) A creditor of Rs 3,60,000 accepted machinery valued at Rs 5,00,000 and paid to the firm Rs 1,40,000.

(b) A second creditor for Rs 50,000 accepted stock Rs 45,000 in full settlement of his claim. (c) A third creditor amounting to Rs 90,000 accepted Rs 45,000 in cash and investments worth Rs 43,000 in full
settlement of his claim.

(d) Loss on dissolution was Rs 15,000.

Pass necessary journal entries for the above transactions in the books of firm assuming that all payments were made by cheque.

Answer 14:

Question 15: Pass the journal entries for the following transactions on the dissolution of the firm of P and Q after various assets (other than cash) and outside liabilities have been transferred to Realisation
Account:

(a) Stock Rs 2,00,000. 'P' took over 50% of stock at a discount of 10%. Remaining stock was sold at a profit of 25% on cost.

(d) Machinery (Book value Rs 6,00,000) was handed over to a creditor at a discount of 10%. (e) Investment (Book value Rs 60,000) realised at 125%.

(f) Goodwill of Rs 75,000 and prepaid fire insurance of Rs 10,000.

(g) There was an old furniture in the firm which had been written off completely in the books. This was sold for Rs 10,000.

(h) 'Z' an old customer whose account for Rs 20,000 was written off as bad in the previous year, paid 60%.

(i) 'P' undertook to pay Mrs. P's loan of Rs 50,000.

(j) Trade creditors Rs 1,60,000. Half of the trade creditors accepted Plant and Machinery at an agreed valuation of Rs 54,000 and cash in full settlement of their claims after allowing a discount of Rs 16,000.

Remaining trade creditors were paid 90% in final settlement.

Answer 15:

Question 16: What journal entries would be passed for discharge of following unrecorded liabilities on the dissolution of a firm of partners A and B:

(a) There was a contingent liability in respect of bills discounted but not matured of Rs 18,500. An acceptor of one bill of Rs 2,500 became insolvent and fifty paise in a rupee was recovered. The liability of the
firm on account of this bill discounted and dishonoured has not so far been recorded.
(b) There was a contingent liability in respect of a claim from damages for Rs 75,000 , such liability was settled for Rs 50,000 and paid by the partner A .
(c) Firm will have to pay Rs 10,000 as compensation to an injured employee, which was a contingent liability not accepted by the firm .
(d) Rs 5,000 for damages claimed by a customer has been disputed by the firm . It was settled at 70% by a compromise between the customer and the firm.

Answer 16:

Question 17: Pass necessary journal entries on the dissolution of a firm in the following cases:

(a) Dharam, a partner, was appointed to look after the process of dissolution at a remuneration of Rs 12,000 and he had to bear the dissolution expenses. Dissolution expenses Rs 11,000 were paid by
Dharam.

(b) Jay, a partner, was appointed to look after the process of dissolution and was allowed a remuneration of Rs 15,000. Jay agreed to bear dissolution expenses. Actual dissolution expenses Rs 16,000 were
paid by Vijay, another partner on behalf of Jay.

(c) Deepa, a partner, was to look after the process of dissolution and for this work she was allowed a remuneration of Rs 7,000. Deepa agreed to bear dissolution expenses. Actual dissolution expenses Rs
6,000 were paid from the firm's bank account.

(d) Dev, a partner, agreed to do the work of dissolution for Rs 7,5000. He took away stock of the same amount as his commission. The stock had already been transferred to Realisation Account.

(e) Jeev, a partner, agreed to do the work of dissolution for which he was allowed a commission of Rs 10,000. He agreed to bear the dissolution expenses. Actual dissolution expenses paid by Jeev were Rs
12,000. These expenses were paid by Jeev by drawing cash from the firm.

(f) A debtor of Rs 8,000 already transferred to Realisation Account agreed to pay the realisation expenses of Rs 7,800 in full settlement of his account.

Answer 17:

Realisation Account

On the above date the firm was dissolved.

(a) Ramesh took over 50% of stock at Rs 10,000 less than the book value. The remaining stock was sold at a loss of Rs 15,000. Debtors were realised at a discount of 5%.
(b) Furniture was taken over by Umesh for Rs 50,000 and machinery was sold for Rs 4,50,000.
(c) Creditors were paid in full.
(d) There was an unrecorded bill for repairs for Rs 1,60,000 which was settled at Rs.1,40,000.
Prepare Realisation Account.

Answer 18:

Question 19: Pradeep and Rajesh were partners in a firm sharing profits and losses in the ratio of 3:2. They decided to dissolve their partnership firm on 31st March, 2018. Pradeep was deputed to realise the
assets and to pay off the liabilities. He was paid Rs. 1,000 as commission for his services. The financial position of the firm on 31st March, 2018 was as follows:

Following terms and conditions were agreed upon:

(a) Pradeep agreed to pay off his wife's loan.
(b) Half of the debtors realised Rs. 12,000 and remaining debtors were used to pay off 25% of the creditors.
(c) Investment sold to Rajesh for Rs. 27,000.
(d) Building realised Rs. 1,52,000.
(e) Remaining creditors were to be paid after two months, they were paid immediately at 10% p.a. discount.

Answer 19:

Working Note:-

Calculation of Creditors:-

Amount paid to Creditors = Rs. 80,000 × 75/100 = Rs. 60,000

Discount received = Rs. 60,000 × 10/100 × 2/12 = Rs. 1,000

Amount Paid to creditors = Rs. 60,000 – Rs. 1,000 = Rs. 59,000

Realisation Account, Partners’ Capital Accounts and Bank/Cash Account

Question 20: Balance Sheet of a firm as at 31st March, 2020, when it was decided to dissolve the same, was:

Rs. 19,500 were realised from all assets except Cash at Bank. The cost of winding up came to Rs 440. X and Y shared profits in the ratio of 2 : 1 respectively.
Prepare Realisation Account and Capital Accounts of Partners.

Answer 20:

Question 21: Achal and Vichal were partners in a firm sharing profits in the ratio of 3 : 5 . On 31st March, 2018 their Balance Sheet was as follows:

The firm was dissolved on 1st April,2018 and the Assets and Liabilities were settled as follows :
(a) Land and Building b realised Rs 4,30,000.
(b) Debtors realised Rs 2,25,000 (with interest) and Rs 1,000 were recovered for Bad Debts written off last year.
(c) There was an Unrecorded Investment which was sold for Rs 25,000.
(d) Vichal took over Machinery at Rs 2,80,000 for cash.
(e) 50% of the Creditors were paid Rs 4,000 less in full settlement and the remaining Creditors were paid full amount .
Pass necessary journal entries for dissolution of the firm.

Answer 21:

Question 22: Bale and Yale are equal partners of a firm. They decide to dissolve their partnership on 31st March,2019 at which date their Balance Sheet stood as:

(a) The assets realised were:

Stock Rs 22,000; Debtors Rs 7,500; Machinery Rs 16,000; Building Rs 35,000.
(b) Yale took over the Furniture at Rs 9,000.
(c) Bale agreed to accept Rs 2,500 in full settlement of his Loan Account .
(d) Dissolution Expenses amounted to Rs 2,500.

Answer 22:

Question 23: Shilpa, Meena and Nanda decided to dissolve their partnership on 31st March, 2018. Their profit-sharing ratio was 3 : 2 : 1 and their Balance Sheet was as under:

It is agreed as follows:

The stock of value of Rs 41,660 are taken over by Shilpa for Rs 35,000 and she agreed to discharge bank loan. The remaining stock was sold at Rs 14,000 and debtors amounting to Rs 10,000 realised Rs
8,000. Land is sold for Rs 1,10,000. The remaining debtors realised 50% at their book value. Cost of realisation amounted to Rs 1,200. There was a typewriter not recorded in the books worth of Rs 6,000 which
were taken over by one of the Creditors at this value. Prepare Realisation Account, Partners' Capital Accounts, and Cash Account to close the books of the firm.

Answer 23:

Question 24: A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2 . On 31st March, 2018, their Balance Sheet was as follows:

The firm was dissolved on 31st March, 2018 and both the partners agreed to the following:
(a) A took Investments at an agreed value of Rs 8,000. He also agreed to settle Mrs. A's Loan.
(b) Other assets realised as : Stock——Rs 5,000; Debtors——Rs 18,500; Furniture——Rs 4,500; Plant——Rs 25,000.
(c) Expenses of realisation came to Rs 1,600.
(d) Creditors agreed to accept Rs 37,000 in full settlement of their claims .
Prepare Realisation Account, Partners' Capital Accounts and Bank Account .

Answer 24:

Question 25: Balance Sheet of P, Q and R as at 31st March, 2019, who were sharing profits in the ratio of 5 : 3 : 1 , was:

The partners dissolved the business. Assets realised——Stock Rs 23,400; Debtors 50%; Fixed Assets 10% less than their book value. Bills Payable were settled for Rs 32,000. There was an Outstanding Bill of
Electricity Rs 800 which was paid off. Realisation expenses Rs 1,250 were also paid.

Prepare Realisation Account, Partner's Capital Accounts and Bank Account .

Answer 25:

Question 26: Vinod, Vijay and Venkat are partners sharing profits and losses in the ratio of 3 : 2 : 1 . They decided to dissolve their firm on 31st March, 2018 , the date on which their Balance Sheet stood as:

The following additional information is given:

(a) The Investments are taken over by Vinod for Rs 5,000
(b)
Assets realised as follows: Rs.
Stock 17,500

(c) Expenses on realisation amounted to Rs 2,000.

Close the books of the firm giving relevant Ledger Accounts.
Answer 26:

Question 27: P, Q and R were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2 . They agreed to dissolve their partnership firm on 31st March, 2018. P was deputed to realise the assets and
pay the liabilities. He as paid Rs 1,000 as commission for his services. The financial position of the firm was:

P took over Investments for Rs 12,500. Stock and Debtors realised Rs 11,500. Plant and Machinery were sold to Q for Rs 22,500 for cash. Unrecorded assets realised Rs 1,500. Realisation expenses paid
amounted to Rs 900.
Prepare necessary Ledger Accounts to close the books of the firm.

Answer 27:

Question 28: Ashu and Harish are partners sharing profits and losses as 3 : 2 . They decided to dissolve the firm on 31st March, 2018. Their Balance Sheet on the above date was:

Ashu is to take over the building at Rs 95,000 and Machinery and Furniture is taken over by Harish at value of Rs 80,000. Ashu agreed to pay Creditor and Harish agreed to meet Bank overdraft. Stock and
Investments are taken by both partner in profit-sharing ratio. Debtors realised for Rs 46,000, expenses of realisation amounted to Rs 3,000. Prepare necessary Ledger Accounts.

Answer 28:

Question 29: A, B and C were equal partners. On 31st March,2018, their Balance Sheet stood as:

The firm was dissolved on the above date on the following terms:
(a) For the purpose of dissolution, Investments were valued at Rs 18,000 and A took over the Investments at this value.
(b) Fixed Assets realised Rs 29,700 whereas Stock and Debtors realised Rs 80,000.
(c) Expenses of realisation amounted to Rs 1,300.

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11/5/24, 11:23 AM TS Grewal Solution Class 12 Chapter 8 Dissolution of a Partnership Firm
(d) Creditors allowed a discount of Rs 800.
(e) One Bill receivable for Rs 1,500 under discount was dishonoured as the acceptor had become insolvent and was unable to pay anything and hence the bill had to be met by the firm .
Prepare Realisation Account , Partner's Capital Accounts and Cash Account showing how the accounts would finally be settled among the partners.

Answer 29:

Question 30: Yogesh and Naresh were partners sharing profit equally. They dissolved the firm on 1st April, 2019. Naresh was assigned the responsibility to realise the assets and pay the liabilities at a
remuneration of Rs. 10,000 including expenses. Balance Sheet of the firm as on that date was as follows:

The firm was dissolved on following terms:

(a) Yogesh was to pay his wife’s loan.
(b) Debtors realised Rs. 30,000.
(c) Naresh was to take investment at an agreed value of Rs. 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 Debtors previously written off as Bad Debts paid Rs. 15,000.
(g) An unrecorded asset realised Rs. 10,000.
Prepare Realisation Account, Partner’s Capital Account, Partner’s Loan Account and Cash/ Bank Account.

Answer 30:

Question 31: A, B and C are in partnership sharing profits and losses in the proportions of 1/2, 1/3 and 1/6 respectively. On 31st March, 2018, they decided to dissolve the partnership and the position of the
firm on this date is represented by the following Balance Sheet:

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

Answer 31:

Question 32: A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1 . On 31st March, 2018 , their Balance Sheet was:

On that date, the partners decide to dissolve the firm. A took over Investments at an agreed valuation of Rs 35,000. Other assets were realised as follows:
Sundry Debtors: Full amount. The firm could realise Stock at 15% less and Furniture at 20% less than the book value. Building was sold at Rs 1,00,000.
Compensation to employees paid by the firm amounted to Rs 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 32:

Question 33: 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,2018 when the Balance Sheet of the firm as
under:

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

Answer 33:

Question 34: X, Y and Z carrying on business as merchants and sharing profits and losses in the ratio of 2 : 2 : 1 ,dissolved their firm as at 31st March, 2019 on which date their Balance Sheet was as follows:

A bill for Rs 5,000 received from Mohan discounted from bank is not met on maturity.
The assets except Cash at Bank and Investments were sold to a company which paid Rs 3,25,000 in cash. The Investments were sold and Rs 56,500 were received. Mohan proved insolvent and a dividend of
50% was received from his estate. Sundry Creditors (including Bills Payable) were paid Rs 57,500 in full settlement. Realisation Expenses amounted to Rs 15,000.
Prepare Realisation Account , Partners' Capital Accounts and Bank Account .

Answer 34:

Question 35: Mrs. Rita chowdhary and Miss Sobha are partners in a firm, Fancy Garments Exports, sharing profits and losses equally . On 1st April, 2019, the Balance Sheet of the firm was:

The firm was dissolved on the date given above. The following transactions took place:
(a) Mrs. Rita Chowdhary undertook to pay Mr.Chowdhary's Loan and took over 50% of the Stock at a discount of 20%.
(b) Book Debts realised Rs 54,000; balance of the Stock was sold off at a profit of 30% on cost.
(c) Sundry Creditors were paid out at a discount of 10%. Bills Payable were paid in full.
(d) Plant and Machinery realised Rs 75,000. Land and Building Rs 1,20,000.
(e) Mrs. Rita Chowdhary took over the goodwill of the firm at a valuation of Rs 30,000.
(f) An unrecorded asset of Rs 6,900 was handed over to an unrecorded liability of Rs 6,000 in full settlement.
(g) Realisation expenses were Rs 5,250.
Show Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.

Answer 35:

Question 36: Following is the Balance Sheet of Arvind and Balbir as at 31st March,2019:

The firm was dissolved on the above date under the following arrangement:
(a) Arvind promised to pay off Mrs. Arvind's Loan and took Stock at Rs 6,000.
(b) Balbir took half the Investments @ 10% discount.
(c) Book Debts realised Rs 28,500.
(d) Trade Creditors and Bills Payable were due on average basis of one month after 31st March, but were paid immediately on 31st March @ 2% discount per annum.
(e) Plant realised Rs 37,500; Building Rs 60,000; Goodwill Rs 9,000 and remaining Investments Rs 6,750.
(f) An old typewriter, written off completely from the firm's books, now estimated to realise Rs 450. It was taken by Balbir at this estimated price.
(g) Realisation expenses were Rs 1,500.
Show Realisation Account, Capital Accounts of Partners and Bank Account.

Answer 36:

Question 37: Anju, Manju and Sanju were partners in a firm sharing profits in the ratio of 2 : 2 : 1 . On 31st March, 2018, their Balance Sheet was:

On this date, the firm was dissolved. Anju was appointed to realise the assets. Anju was to receive 5% commission on the sale of assets (except cash) and was to bear all expenses of realisation. Anju
realised the assets as follows: Debtors Rs 60,000; Stock Rs 35,500; Investments Rs 16,000; Plant 90% of the book value. Expenses of Realisation amounted to Rs 7,500. Commission received in advance was
returned to customers after deducting Rs 3,000. Firm had to pay Rs 8,500 for Outstanding Salary, not provided for earlier, Compensation paid to employees amounted to Rs 17,000. This liability was not

Answer 37:

Question 38: A, B and C were in partnership sharing profits in the ratio of 7 : 2 : 1 and the Balance Sheet of the firm as at 31st March, 2018 was:

It was agreed to dissolve the partnership as on 31st March, 2018 and the terms of dissolution were-
(a) A to take over the Building at an agreed amount of Rs 31,500;
(b) B who was to carry on the business , to take over the Goodwill, Stock and Debtors at book value , the Patents at Rs 30,000 and Plant at Rs 30,000 and Plant at Rs 5,000. He was also to pay the Creditors;
(c) C to take over shares in X Ltd. at Rs 15 each and
(d) The shares in Y Ltd.to be divided in the profit-sharing ratio.
Show Ledger Accounts recording the dissolution in the books of the firm.

Answer 38:

Question 39: Srijan, Raman and Manan were partners in a firm

Answer 39:

Question 40: A, B and C were partners sharing profits in the ratio of 2 : 2 : 1 . They decided to dissolve their firm on 31st March, 2018 when the Balance Sheet was:

Following transactions took place:

(a) A took over Stock at Rs 36,000. He also took over his wife's loan.
(b) B took over half of Debtors at Rs 28,000.
(c) C took over Investments at Rs 54,000 and half of Creditors at their book value.
(d) Remaining Debtors realised 60% of their book value. Furniture sold for Rs 30,000;
Machinery Rs 82,000 and Land Rs 1,20,000.
(e) An unrecorded asset was sold for Rs 22,000.
(f) Realisation expenses amounted to Rs 4,000.
Prepare necessary Ledger Accounts to close the books of the firm.

Answer 40:

Question 41: Krishna and Arjun are partners in a firm. They share profits in the ratio of 4 : 1 . They decided to dissolve the firm on 31st March, 2018 at which date their Balance Sheet stood as:

The realisation shows the following results:

(a) Goodwill was sold for Rs 1,000.
(b) Debtors were realised at book value less 10%.
(c) Trademarks were realised for Rs 800.
(d) Machinery and Stock-in-Trade were taken over by Krishna for Rs 14,400 and Rs 3,600 respectively.
(e) An unrecorded asset estimated at Rs 500 was sold for Rs 200.
(f) Creditors for goods were settled at a discount of Rs 80 . The expenses on realisation were Rs 800.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer 41:

Preparation of Memorandum Balance Sheet

Question 42:
There are two partners X and Y in a firm and their capitals are Rs 50,000 and Rs 40,000. The creditors are Rs 30,000. The assets of the firm realise Rs 1,00,000. How much will X and Y receive?

Answer 42:

Question 43: A, B and C were partners sharing profits int he ratio of 5 : 3 : 2 . On 31st March, 2018, A's Capital and B's Capital were Rs 30,000 and Rs 20,000 respectively but C owed Rs 5,000 to the firm. the
liabilities were Rs 20,000. The assets of the firm realised Rs 50,000.
Prepare Realisation Account , Partner's Capital Accounts and Bank Account.

Answer 43:

Question 44: A and B were partners sharing profits and losses as to 7/11th to A and 4/11th to B. They dissolved the partnership on 30th May, 2018. As on that date their capitals were: A Rs 7,000 and B Rs
4,000. There were also due on Loan A/c to A Rs 4,500 and to B Rs. 750. The other liabilities amounted to Rs 5,000. The assets proved to have been undervalued in the last Balance Sheet and actually realised
Rs 24,000.
Prepare necessary accounts showing the final settlement between partners.

Answer 44:
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11/5/24, 11:23 AM TS Grewal Solution Class 12 Chapter 8 Dissolution of a Partnership Firm

Question 45: A and B dissolve their partnership. Their position as at 31st March, 2019 was:

The balance of A's Loan Account to the firm stood at Rs 10,000. The realisation expenses amounted to Rs 350. Stock realised Rs 20,000 and Debtors Rs 25,000. B took a machine at the agreed valuation of Rs
7,500.
You are required to close the books of the firm.

Answer 45:

Question 46: Ashok and Kishore were in partnership sharing profits in the ratio of 3 : 1 . They agreed to dissolve the firm. The assets (other than cash of Rs 2,000) of the firm realised Rs 1,10,000. The
liabilities and other particulars on that date were:

You are required to close the books of the firm.

Answer 46:

Question 47: X, Y and Z entered into a partnership and contributed Rs 9,000; Rs 6,000 and Rs 3,000 respectively. They agreed to share profits and losses equally. The business lost heavily during the very first
year and they decided to dissolve the firm. After realising all assets and paying off liabilities, there remained a cash balance of Rs 6,000.
Prepare Realisation Account and Partner's Capital Accounts.

Question 48: A, B and C started business on 1st April, 2016 with capitals of Rs 1,00,000; Rs 80,000 and Rs 60,000 respectively sharing profits (losses) in the ratio of 4 : 3 : 3 . For the year ended 31st March,
2017, the firm suffered a loss of Rs 50,000. Each of the partners withdrew Rs 10,000 during the year.
On 31st March, 2017, the firm was dissolved, the creditors of the firm stood at Rs 24,000 on that date and Cash in Hand was Rs 4,000. The assets realised Rs 3,00,000 and Creditors were paid Rs 23,500 in full
settlement of their claims.
Prepare Realisation Account and show your workings clearly.

Answer 48:

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11/5/24, 11:23 AM TS Grewal Solution Class 12 Chapter 8 Dissolution of a Partnership Firm
Question 49: A, B and C were in partnership sharing profits and losses in the ratio of 2 : 1 : 1. They decided to dissolve the partnership. On that date of dissolution, Sundry Assets (including cash Rs 5,000)
amounted to Rs 88,000, assets realised Rs 80,000 (including an unrecorded asset which realised Rs 4,000). A contingent liability on account of bills discounted Rs 8,000 was paid by the firm. The Capital
Accounts of A, B and C showed a balance of Rs 20,000 each.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account.

Answer 49:

Question 50: On 1st April, 2018, A, B and C commenced business in partnership sharing profits and losses in proportion of 1/2,1/3 and 1/6 respectively. They paid into their Bank A/c as their capitals Rs
22,000; Rs 10,000 by A, Rs 7,000 by B and Rs 5,000 by C. During the year, they drew Rs 5,000; being Rs 1,900 by A, Rs 1,700 by B and Rs 1,400 by C .
On 31st March, 2018, they dissolved their partnership, A taking up Stock at an agreed valuation of Rs 5,000, B taking up Furniture at Rs 2,000 and C taking up Debtors at Rs 3,000. After paying up their
Creditors, there remained a balance of Rs 1,000 at Bank. Prepare necessary accounts showing the distribution of the cash at the Bank and of the further cash brought in by any partner or partners as the case
required.

Answer 50:

Question 51: The partnership between A and B was dissolved on 31st March, 2019. On that date the respective credits to the capitals were A—Rs. 1,70,000 and B—Rs. 30,000. Rs. 20,000 were owed by B to the
firm; Rs 1,00,000 were owed by the firm to A and Rs. 2,00,000 were due to the Trade Creditors. Profits and losses were shared in the proportions of 2/3 to A, 1/3 to B.
The assets represented by the above stated net liabilities realise Rs. 4,50,000 exclusives of Rs. 20,000 owed by B. The liabilities were settled at book figures. Prepare Realisation Account, Partners' Capital
Accounts and Cash Account showing the distribution to the partners.

Answer 51:

Question 52: X and Y were partners sharing profits and losses in the ratio of 3 : 2. They decided to dissolve the firm on 31st March,2018 . On that date, their Capitals were X——Rs. 40,000 and Y ——Rs 30,000.
Creditors amounted to Rs 24,000. Assets were realised for Rs 88,500. Creditors of Rs 16,000 were taken over by X at Rs 14,000. Remaining Creditors were paid at Rs 76,500. The cost of realisation came to Rs
500.
Prepare necessary accounts.

Answer 52:

Question 53: P, Q and R are three partners sharing profits and losses in the ratio of 3:3:2 respectively. Their respective capitals are in their profit-sharing proportions. On 1st April, 2018, the total capital of the
firm and the balance of General Reserve are Rs 80,000 and Rs 20,000 respectively. During the year 2018-19 the firm made a profit of Rs 28,000 before charging interest on capital @ 5%. The drawings of the
partners are P——Rs 8,000; Q——Rs 7,000; and R——Rs 5,000. On 31st March, 2018 their liabilities were Rs 18,000.
On this date, they decided to dissolve the firm. The assets realised Rs 1,08,600 and realisation expenses amounted to Rs 1,800.
Prepare necessary Ledger Accounts to close the books of the firm.

Answer 53:

Question 54: X, Y and Z entered into partnership on 1st April, 2016. They contributed capital Rs 40,000, Rs 30,000 and Rs 20,000 respectively and agreed to share profits in the ratio of 3 : 2 : 1 . Interest on
capital was to be allowed @ 15% p.a. and interest on drawing was to be charged at an average rate of 5%. During the two years ended 31st March, 2018, the firm made profit of Rs 21,600 and Rs 25,140
respectively before allowing or charging interest on capital and drawings. The drawings of each partner were Rs 6,000 per year.
On 31st March,2018 the partners decided to dissolve the partnership due to difference of opinion. On that date, the creditors amounted to Rs 20,000. The assets, other than cash Rs 2,000 realised Rs 1,21,000.
Expenses of dissolution amounted to Rs 760.
Draw up necessary Ledger Account to close the books of the firm.

Answer 54:

Points of Knowledge :
Divisible profit for first year ending 31st March, 2013 = 21,600 – 6,000 – 4,500 – 3,000 + 150 + 150 + 150 = 8,550
Divisible profit for the second year ending 31st March, 2014 = 25,140 – 6,619 – 4,680 – 2,741 + 150 + 150 + 150 = 11,,550

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