Dissolution of Partnership firm -Accountancy-Class XII- Assignment

Q1)Is Partner’s Spouse’s Loan treated as Partner’s Loan?

Q2)How goodwill is treated in case of dissolution if it appears in the Balance Sheet?

Q3)At what price asset and liabilities are transferred to Realisation Account from the Balance Sheet?

Q4)X and Y are partners in a firm sharing profits and losses equally. On December 31, 2010, they decided to dissolve the firm. Balance Sheet on that date is as under:

Balance Sheet as on December 31, 2010
Liabilities			Amount Rs	Assets	Amount Rs
Creditors			50,000	Furniture	20,000
Investment Fluctuation Fund			10,000	Investment	30,000
Mr. X’s Loan			20,000	Debtors	40,000
Mrs. Y’s Loan			25,000	Stock	30,000
Mr. Z’s Loan			10,000	Bills Receivable	15,000
Capital:				Cash	25,000
X		20,000
Y		25,000	45,000
			1,60,000		1,60,000

All assets (except cash) were realised at 10% less than their book value and all liabilities are paid at 5% discount. Realisation expenses of Rs 750 were paid by Mr. Y. Prepare Realisation Account.

Q5)

A, B, C were partners in a firm sharing profits and losses in the ratio of 3:2:1. On March 31, 2010, the firm was dissolved. The profit due to the dissolution was Rs 60,000. On the same date, A’s capital had a credit balance of Rs 20,000, B’s Capital had a debit balance of Rs 20,000 and C’s Capital had a debit balance of Rs 60,000. Prepare Partners Capital Account and Cash Account.

Q6)Guru and Abhishek are partners in a firm sharing profits and losses in the ratio of 7:5. After transferring assets and liabilities from the Balance Sheet to the Realisation Account the following transactions took place:

 a) Pretam, a creditor to whom the firm owed Rs 3,00,000, took over a building of Rs 5,00,000 and the remaining amount after adjustment was returned by him.

 b) Dilip, a creditor to whom the firm owed Rs 3,00,000, accepted stock of Rs 1,00,000, debtors of Rs 50,000, vehicle Rs 1,00,000, and cash for the remaining balance.

 c) An unrecorded asset of Rs 1,20,000 was taken by both the partners in their profit sharing ratio.

Pass the necessary Journal entries.

Q7)Javed and Waseem were partners sharing profits and losses in the ratio of 4:5. Pass the necessary Journal entries for the following transactions at the time of the dissolution of the firm.

(a) Debit balance of Profit and Loss Account of Rs 9,000.

(b) Javed was paid commission Rs 10,000 for realising assets and expenses on realisation is to be borne by him. Actual expenditure amounted to Rs 12,000.

(c) Realisation expenses were borne by Waseem personally of Rs 500.

Q8)Amit, Babban and Roopesh are partners in a firm sharing profits and losses equally. On May 30, 2011, the following balances appeared in the Balance Sheet of the firm.

Particulars	Amount Rs
Creditors	30,000
Bills Payable	10,000
Amit’s Capital	1,00,000
Babban’s Capital	1,50,000
Roopesh’s Capital (Dr.)	50,000
Cash in Hand	30,000
Other Current Assets	20,000

They decided to dissolve the firm. Fixed assets were realised at Rs 2,30,000. Expenses of dissolution amounted to Rs 10,000. Prepare Realisation Account.

Q9)Pallavi, Payal, and Poonam are partners in a firm sharing profits and losses in the ratio of 3:3:2. Their Balance sheet as on March 31, 2010 is as follows:

Balance Sheet
Liabilities			Amount Rs	Assets	Amount Rs
Bank Overdraft			50,000	Cash at Bank	40,000
Creditors			30,000	Stock	40,000
Bills Payable			10,000	Debtors	80,000
Capital:				Bills Receivable	20,000
Pallavi		1,20,000		Investment	50,000
Payal		80,000		Plant and Machinery	80,000
Poonam		40,000	2,40,000	Joint Life Policy (Surrender Value)	20,000
			3,30,000		3,30,000

Poonam died on that date, and the other two partners decided to dissolve the firm on the following terms:-

a) Pallavi took Investment and Plant and Machinery at 10% less than the book value and agreed to accept Creditors and Bills Payable at 5% discount.

b) Payal took Stock, Debtors and Bills Receivable at 20% discount and agreed to pay Bank overdraft.

c) Insurance company paid Rs 1,00,000 for Joint Life Policy.

d) Realisation Expenses were Rs 1,000.

Prepare necessary ledger accounts to close the books 

10)A, B and C were partners sharing profits or losses in the ratio 3:2:1. On March 31, 2010 they decided to dissolve the firm. On the date of dissolution Goodwill appeared in the books for Rs 60,000.

Use the above given information to pass the Journal entries in each of the following cases at the time of dissolution of the firm:

a) When nothing is realised for goodwill.

b) When goodwill is taken over at book value by A, B in their profit sharing ratio.

c) When goodwill appears in the books is realised at 20% above the book value. (1+1+1)

Q11)A, B and C are partners and having profits and losses in the ratio 3:2:1. The following are the different situation for JLP. Pass the necessary Journal entries for these situations at the time of dissolution of the firm. (1+1+1)

a) If JLP appears on the Assets side at Rs 35,000 and JLP Fund appears on the Liabilities side of the Balance Sheet at Rs 35,000.

b) If JLP appears on the Assets side at Rs 40,000 and JLP Fund appears on the Liabilities side of the Balance Sheet at Rs 40,000. The surrender value received from the insurance company Rs 18,000.

c) If only JLP Reserve appears on the Liabilities side of the Balance Sheet at Rs 54,000, but no JLP is shown on the Assets side. 

Q12)K, L and M were partners in a business. Their Balance Sheet as on March 31, 2000 was:

Balance Sheet as on March 31, 2000
Liabilities		Amount Rs	Assets			Amount Rs
Capital A/c’s: K	66,500		Machinery Less: Provision for Depreciation		60,000 6,000	54,000
L M	66,500 66,500	1,99,500	Loose Tools Mr. B’s Loan			4,000 30,000
Mr. A’s Loan Investment Fluctuation Reserve Profit and Loss		25,000 3,000 6,000	Goodwill Debtors Less: Provisions for Doubtful Debt	75,000 (5,000)		40,000 70,000
			Advertisement Suspense Prepaid Expenses Cash in Hand Furniture			4,500 4,000 10,000 17,000
		2,33,500				2,33,500

On March 31, 2000, they dissolved their partnership business. The assets and liabilities were dissolved in the following manner:

Adjustments:

1) Half of the goodwill was realised at 60% of the book value.

2) Debtors Rs 7,000 was proved bad.

3) L took over 40% of the Loose Tools at 60% discount and nothing was realised for the remaining Loose Tools.

4) M agreed to pay Mr. A’s Loan.

5) Machinery and Furniture were sold for Rs 81,000.

6) Rs 32,000 realised against loan and interest from Mr. B.

7) Nothing was recovered for expenses paid in advance.

Prepare Revalution Account, Partners’ Capital Account and Cash Accoun

Q13)Pass the necessary Journal entries for the following Transactions. (10 × 0.5)

a) Realisation expenses Rs 3,000 was paid firm’s account that is to be borne by partners, A and B personally in the ratio 2:1.

b) Mr. A (one of the partner) received Rs 2,000 remuneration for realizing assets and he actually incurred Rs 10,000 for realizing the assets.

c) Mr. A paid realization expenses Rs 15,000. This is to be borne by the firm and A in the ratio 1:2.

d) Mr. A paid the realisation expenses of Rs 5,000 on behalf of the firm.

e) Mr. A paid Rs 5,000 as realization expenses on his own behalf.

f) Mr. A agreed a remuneration of Rs 10,000 for carrying out the dissolution work. Besides remuneration to Mr. A, expenses amounted to Rs 15,000 was paid and borne by the firm.

g) The realization expenses amounts to Rs 15,000.

h) A B/R received from Satish of Rs 10,000 was discounted from the bank. The bill got dishonoured and Satish became insolvent paying only 45 paise in a rupee to us.

i) Stock appeared in the Balance Sheet at Rs 40,000. Mr. A (a partner) acquired the 40% of the stock at Rs 14,400 which is 10% less than the book value and the remaining stock was accepted by one of the creditors to whom the firm owed Rs 30,000 in full settlement of his claim.

j) An unrecorded typewriter worth Rs 230, was taken over by Mohit (a creditor).

Q14)Mohan, Rohan and Sohan are partners, sharing in the ratio . They decided to dissolve the firm on March 31, 2011.

Balance Sheet as on March 31, 2011
Dr.			Cr.
Liabilities		Amount Rs	Assets	Amount Rs
Prov. for Bad Debt Invest Fluctuation Fund JLP Reserve Contingency Reserve General Reserve Workmen Compensation Fund Mohan’s Loan Johan’s Loan Creditors		5,000 15,000 30,000 6,000 10,000 25,000 10,000 25,000 21,000	JLP Bank Investments Goodwill Debtors Car Deferred Revenue Expenditure	30,000 25,000 40,000 30,000 50,000 20,000 15,000
Capitals: Mohan Rohan Sohan	33,000 17,000 13,000	63,000
		2,10,000		2,10,000

The dissolution is based on the following terms.

1) JLP was surrendered at 60%.

2) Mohan took over investments at 30% above the book value. He sold 60% of the investments for Rs 15,000 and the rest he kept with himself.

3) Rohan took over 80% of the debtors at Rs 35,000 and remaining was realised for Rs 3,500.

4) Due to an accident at the site, a labour was hospitalized. The hospital bills amounted to Rs 10,000, which was paid from the workman compensation fund.

5) Received discount of 9% on payment to creditors.

6) Johan accepted car against his loan.

Prepare Realisation Account, Partners’ Capital Account and Cash Account.

Q15)Mrs. X, Mrs. Y, and Mrs. Z are partners sharing profits and losses in the ratio of 2:2:1. On March 31, 2011, they decided to dissolve the firm. The Balance Sheet on the date of dissolution is as follows:

Balance Sheet  as on March 31, 2011
Dr.			Cr.
Liabilities		Amount Rs	Assets		Amount Rs
Creditors Mr. X’s Loan Machinery Replacement Reserve		70,000 36,000 10,000	Cash at Bank Cash in Hand Furniture		6,000 10,000 40,000
General Reserve Mrs. Z’s loan		30,000 40,000	Plant and Machinery (–) Provision for Depreciation	80,000 (8,000)	72,000
Workmen Compensation Fund Bills Payable Capitals: Mrs. Y Mrs. Z	40,000 20,000	25,000 60,000 60,000	Stock Investments Land and Building Debtors Less: Provisions for Doubtful Debt	20,000 3,000	60,000 50,000 20,000 17,000
			Mrs. X’s Capital		40,000
			Deferred Revenue Expenditure		6,000
			Profit and Loss A/c		10,000
		3,31,000			3,31,000

The firm was dissolved on the following terms:

1) Realisation of Assets: Plant and Machinery Rs 60,000 Furniture for Rs 40,000, Land and Building for Rs 14,000, Stock Rs 48,000 and Debtors at 20% discount.

2) The claim for workmen paid for Rs 7,000.

3) Mrs. Y took over charge of dissolution for which she will get Rs 3,500. She incurred Rs 7,000 of her own pocket.

4) Mrs. Y took over 20% of the investment at Rs 8,000 and the remaining was accepted by 70% of the creditors in full settlement.

5) Mrs. Z agreed to pay the remaining creditors at their book value and her loan was paid in cash at 10% discount.

6) Old magazines, newspapers and some broken chairs (not shown in the above Balance Sheet) were sold off for cash of Rs 450.

Prepare Realisation Account, Partners’ Capital Account, Partners’ Loan Account and Bank Account.