t,.

50
DISSOLlJTION OFA PAJ t,·
CCO lJNl. - NER.slilh.. J?i
~ ,l11l 1·110N OF A PA RTNE
- ,
~~
•K A - -RSHI
- -P FIRM
BAN
pl' 32
Dr
•/ll I {tJI l
,
7 000 B R or Part11:11/ars
• y c isation (8/P)
Cr
1,1I
g·s .L•l~llnl on Ca pital
''1"1 ,1 1ct pro fit
- -
,000
3,200
I _6.5)

ro Bal b d 795 By l 's Capital N e I 0,000 I

4,995 1
I (1 ,r, Cap1wl Al° 4
,8s0 ,, •
-

7,CJ40 45,200
I 1, \ 's L'Jp11al Ne /<''' orawings 7,500
37,700 \
12,790 i t3p1tal . 16,000
( ~Jd Int. on Capital 1,600
.iJJ r-,Jcl Profi t 5,000
hLt,us
fl
riiriatr27. 22,600
and C start ed business on Ist April, 2017
1 . 2 I Thei .r combined capital .was t96, , sharing profit . th Drawi ngs 6,000
000 whic J,eS.I 16,600
. h was shared in pro s liin
it sh e . ratio Of
They arc enutled to 10% p.a. interest 1,67,100 1
on capitals. Profits for the ar111g rar10
Marc h, 20 18. before allowing interest
on capitals were ?39 ' 600 · Th ey
yeadrreending 31st• -
n,5 00 and f 6,000 respecti , cly during the
year . w f IO,IJOo
They decided to dissol,e the finn on J I or. Particulars
st March, 2018 . Their cred ' 0 Cr.
dale ,_.re I 50.000. In addition, A had gi,e '
n a loan of f 5,000 to the r,C::, " as on
liabilities amountin g to t I2,000, not show
n in the books. These are als o to
Iba,
be e .Were
· Ther
sundr)' A5se ts
To cash tvc (Liabilities paid)
To (Cred.
1,67,100 B I
YCreditors
12,000 I By Cash Ale
. Particulars
50,000
] '
Assets realised for ? 1,20 ,000. Creditors itors taken) 36,000 ' By Loss l 1,20,000
for NO,000 were taken Paod To i1
f36 ,000 . Balance oftl,e credilors were paid
at a discount of 5%.
To cash Ale (Cred.1tors paid)
. 9,500 , ~sferred to :
over by A fo, \ A s Capital Ale 27,)Q0 I
Prepare necessary accounts. B's Capita l Ale 18,200
C's Capital Ale 9,100 54,600
--
SOL--- --:
UTION
PROFfT & LOSS APPROPRIATION ACC
for 1he year ending J Isl March, 2018
OUNT
2,24,600
= 2,24,600

Dr A's LOAN ACCOUNT

Parhcufars Particulars Dr Cr.
Particulars Particulars
To Interest on Capitals :
A 4,800
By Balan ce bid
(Profi t for Lhe year 2018) 39,600
To cash Ale 5,000 By Bal. bid
_:::::::::.....
'
5,000

B 3,200
9,600 CAPITAL ACCOUNTS Cr.
C 1,600 Dr
To Profit transferre d to : B C Particulars A B C
Part1c11lars A
A's Capital Ale 316 15,00 0 t t t f f f
B's Capital Ne 216 10,000 By Bal. b/d 57,800 37,700 16,600
To Realisation
C's Capital Ale 116 5,000 30,000 27,300 18,200 9,100 By Realisation
(Loss)
(Creditors) 36,000 II ~
39,600 To Cash Ale
(Final
66,500 19,500 7,500
BALANCE SHEET payment) 93,800 37,700 l6ffeO
as al ] Isl March. 2018 93,800 37,70
- 0 ~ L =====-= =
liabilities \' Assets Cr.
t
~
~---
CASH ACCOUNT
Creditors 50,000 r Sundry Asse ts Dr. Particulars
,.J's Loan 5,000 (BnJru1cin g Figure) Particulars t 12.000
j J,67, I00 , o,000 By Realisation Ale .
12 . 9,500
A's Copitnl 48.000 1 To Realisatio n Ale By Realisation (Creditors paid)
1 1 s,ooo
Add Int on CapiLal 4,800 By A's Loan 66,500
·ldd Net Profit 15,000 By A's Capital Ale
67,800
1 I
u ss Drawmgs 10,000 57,8001
 u 1·10N OP A PARTNE.Rs1-n
p1ssOL p FIRM
B 36~ 00
----. .:. 900 ,000
I ~
_ ~ &,ooo

or REA~~A;-·
Part icul ars
~ ON ACcolJNT
dr)' Assets Ne
f O ~:k Afc (Credito rs paid) 1,18,00o By C: . PaniCtl/ars Cr.
fo nk Ale 20,0oo B Bredlt.ors N e
Ba t
(£xpenses on rea1·1sat1. on)
1"0
1 y ank Ale (As
3 000 By Loss on re 1· ~ realised) 20,000
' a isation . 1,00,000
A's Capital A/ 3 .
e5 12,600
-;--- :--_ 8' s Capital Ale ~
1,41,000 s 8,400

iiu srR ATION 26.

I A. B and C sharing profits equa\l .
= -
1,41,000
~---- --...
---.. :..

--21,000

. B l Sh
\Ii h
ich date their a ance eet was as Y , disso
"1 ll lved their. finn on 30th
0 ows : June 2018 on
Liab ilities t '
sundr) Creditors Assets
Reserve for cont inge ncy 3 l ,OOO Bank ~

Profit & Loss Ne l 8,00 0 Debtors 6,300

l 2,000 Stock S5,000
fs Wife Loan
·Bank Loan at l 2% I2,000 Furniture 81,000
20,000 Plant 20,000
Capital Acc oun ts : A
B 60,000 Current Account : C 53,700
50,000 22,000
C
20,000
c urrent Acc oun ts :
A 10,000
B
5,000
2,38 ,000
2,38,000
( l) There is a bill for t S,000 under discount. This
bill was received from ' R'.
R proved insolvent and 60% were received from
his estate.
(2) It was found that an investment not recorded
in the books is worth ~8,000. This
is taken over by one of the creditors at this valu
e.
(3) A agreed to accept furniture in full settleme
nt of his wife's loan .
(4) Bank Loan was repaid alongwith interest for
nine months.
(5) Assets realised as follows _: Debtors U4
,S00 ; Stock ~60,000; Plant n 8,000 .
Prepare necessary accounts .

SOLUTION :
Dr. REAL ISAT10N ACCOUNT Cr.
t Particula rs ~
Particulars
55,000 By Sundry Creditors 31,00 0
To Debtors
~~

Sl.000
Ol,SOLUTION_O_F
. . . .
By As Wife Loan
!- ~"!-l'NEl\s~
- - - .:..~ ~l~
l ... '
~ (11 L' I ,oN
Of A PAR1NER
s_~ P[RM
'fo Sto..-1, 111'' r•·s I oan has not been pa·~ :-- - - - -
l ll Furnirun· ,o 000
5
8) Bank Loan nt 12% 1,n.Th v,,, i; ·•,11 ry wi ll be passed " , in Cash. It h- - . - -- -
- ~.·JI){) , 20 ""11 c 1schargc oras'Wbe· c~ settled--by- . .
,or th d'
no t.:
lt11'l:mt . By Bank (Assl·t:s realised) 1 1 •Ooo 111
~,.,ur~.
1 6.55
,re sLoan. &Iving aWay furn,·i
r.:1 &ml Lr-'~me-nt tor
b1ll d1~"liun1t-d) ,;,ooo
By Bnnk Ne (Recovery froo, Btn • 2,so0
dishonoured) . ,~ -----
TJMT!ON 27. ~
T 1l B:iru. lra~ mt'n l (l l ByLoss tmnsferred to : 3,0oo 1iiUS Adi ti and Tarini were
CI\...Ji1,irs ~ J1.000 A ·s Cnpitnl Ne 27,0po 1,nca. ? t d' fi". Partners in a ti
l ·ss . ~R0OO) )
2i,OOO
B' s Cnp .1tttl N· c . ~ . 3 · - · 0 ue o I ierence of . inn Shari
21,800 27,0oo 0 of · · : A . OPtnion th . ng Profits
~ - 1 1n, , m.:n1of&mk Lo:lll
fo nUUHI', u-. C's CapitnJ Ne 27,0oo 1
r,111 .ffect from st pnl , 20 l 7, on Wh' h
cy decided to d' and loSSes in th
2.5Q,500 ~ ~.o.ovOv ,, 1Ul ~ JC date the Ii ' ISsolve the p .C
L ~n-.:-:-.... . \ll\\ s : inn s Balance artnership
CAP ITAL ACCOUNTS ~oo 101 BALANCE SHEET OF ER! Sheet Was as
Dr
-~-----:---;;B- - C ~ CA, ADITI AN

~
J'.;rtK'1J/,;n Pcrrticulars B . - - - . _ _a_s _a,_1_s,_Apri/, 20/7 D TARJN1
C Liabilities t
~ ~ q
To C's Current By Bal. bid 60,000 rn1rlo) C·es· Provident Fund Assets
so,ooo 20,000 ' dD Creditors 8,000 Bank
Ai, 21,000 By Partner's
I 0,000 ors
SUJl , ient Fluctuation Reserve
To Rdisation Current Ncs 10,000 1n1estn . 20.000
5,000 4,000 1Less : Prov. for did 22,000
A,c (Loss) n,OOO ;?.000 27,000 By Reserve fo r curr~nl Accounts .
To Bank A.Jc contingency 6,000 6,000
trica 8,000 Stock
I ~ 20,000
(Firul By P& L Nc 4,000 6,000 Aditi Plant and Machinery 12,000
4,000 l 0,000 18,000 I Land & Building 1•
payment) 53,000 38,000 By Bank Ne 4,ooo Capital Accounts : Jo,ooo
Erica 60,000 Investments 45,00Q
(Deficit brought
in) Aditi 40,000 Advertisement Suspense Ne 35,000
19,ooo I Current Account : 3,000
80,000 65,000 49.000 80,000
Tarini
~ 1,30,000 ' Tarini
~ ~
Dr. BANK ACCOUNT ~ 1~ 1 ~
Cr. ==:L_ - - I 1,10,000
Particulars Particulars The fo llowing additional information was given : -- -
To Balance bid 6,300 By Realisation N e (a) Plant & M~chi nery ~ost_ing ~20,000 was taken over by Erica at ~ and
To Realisation Ne (Bi ll discounted) the remammg machmenes realised t9,000. 16 '000
(Assets realised) 5,000
1,12,500 By Realisation N e (b) Land & Building realised ~42,000.
To Realisation Ne (Recovery (Creditors) 23,000 (c) lnvestments were taken over by Aditi at t28,000.
from BIR dishonoured) 3,000 By Realisation N e
To C's Capital Ne 19,000 (Bank Loan) 21,800 (d) Sundry debtors included a bad debt for tl ,000 and the amount was realised
By A's Capital Ne 53,000 from the good debtors subject to a cash discount of I0%.
By B's Capital N e 38,000 (e) A creditor for ~2,000 was untraceable and other creditors accepted payments
1,40,800 I J,40,800 allowi ng I 0% discount. II ~

(/) Erica was allowed to retain the whole of_the st~ck as her remuneration for
\ott, : t 11 The firm has to pay ~ 5,000 to the bank for the dishonour of the discounte~ bill,
of which 60% i.e. ~3.000 has been received from R. Following entries will be passed for it : services rendered by her in the course of d1ssolut1on of the firm.

(,) Bank N e Dr. 3,000 You are requi red to prepare :

To Realisation Ne (i) Realisation Account.
3,000
(ii) Realisation Ne Dr. 5,000 (ii) Partners' Capital Accounts.
To Bank N e 5,000 (iii) Bank Account. (!SC Specimen Question Paper 20 /8)
2
1 J No separate entry will be passed for the Investments of t8,000, as these are taken over
by the Creditors. Creditors will be paid at the net figure of t3 l,OOO - t8,000 = t23,000.
 OISSOLU110N OF A PARlNcD" ~ c--l11
~' l 1-r10N o_FA PAR.2°~E~~I~ ~IR
- _M_
(,J2 - _ ~ Iii}) J:ih . 111- -, iculat1on of discount on Cred"t - - _
10,000 By Sundry Creditors - . ~1 la 1
1 . d. ors and Bills p b
To Invcsunen ts 20.000 By Bills Payable 30,00o , · Crc 1tors _ aya le 6JJ
30 ,000 x -1 x 6
To Debtors 20,000 By Mrs. A's Loan 8,11n. 12
To Plant 15,000 By Mrs. B's an
Lo
5
vU\l Bills Payable _ R,00O )( 1._ 10Q "' '1 50
To Building By Investment Fluctuation
•Ooo 12 x ioo
6 "' ' 40
4,000 I0,oOo
To Good\\111
,.,. usT;-,1 rioN-13.
Reserve
To ,4's Cap1tJI 5,000 By A's Capital (Stock in trade) DP .
I,ooo
(Mrs. A's loan)
By B's Capital (half of riL nowi ng 1s the Balance Sheet of X and Y
To Banh (Sundr: Creditors ) 4,ooo O
29,850 investments at I0% discount ) f 5 at 31st March, 20 13 : ' Who share profits d .
(Note I l 1f ~ I. a ---- an 1osses m the ratio
To Banh (Bills Payable) (Note l ) 7,960 By Bank : 4,soo t Liabilities t
To Bank (Mrs. B's Loan) Io,000 Debtors 19,ooo tll) creditors
Plant 8,000 Bank
To Profit u-ansfcrred to : 25,ooo sunk Q\ erdrafl
Building 6,000 Debtors
,rs Capital Ne 16-2-1 5 40,000 B:Jll ther's Loan
( , Bro 8,000
20,000
16.2-IS 32,490 Goodwill Less . 17,000
B's Capital Ne 6,000
Investments
·•5 Loan 3,000 Stock . Provision 2QQQ
4,S_QQ l ent Fluctuation Fund 15,000
By B' s Capital (unrecorded asset) 94 5 ln' cstrn S,000 Investmen ts 15,000
, 00
cap11al : Furniture 25,000
1,59,300 300 I
X
-- ~
S0,000 Buildings 6,000
- ~ 40,000 Goodwill 19,000
Dr PARTNE R'S CAPITAL ACCOUNTS
- - Profit and Loss Ne 10,000
B Particulars Cr.
Particulars A A 1,20,000 10,000
{ t B
t t 1,20,000
The finn was dissolved on the above date and th r
To Advertisement By Balance b/d 10,000 . 11
. - ·=
1,750 1,750 By General Reserve 10,000 decided upon . 10
e owmg arrangements were
Suspense Ne 5,000
To Realisation By Realisation s,ooo (i) X agreed to pay off his brother's Loan.
(Stock in trade) 4,000 (Mrs. A' s Loan) 5,000 (ii) Debtors of~ 5,000 proved bad.
To Realisatio n By Realisation (Profit) 16,245 16,245 (iii) Other assets realised - Investments 20% less; and Goodwill at 60%.
(Investme nts) 4,500
To Realisation (iv) One of the creditors of ~5,000 was paid only n ,000.
(Unrecorded asset) 300
To Bank (v) Buildings were auctioned for ~30,000 and the auctionee
30,495 24,695 r's commission
amounted to ~ 1,000.
36,245 31,245 36,245 31,245 (l'i) Y took over part of stock at ~4,000 (being 20% less than the
book value).
Balance stock realised 50%.
Dr. BANK ACCOUNT
Cr. (vii) Realisation expenses amounted to ~2,000.
Particulars t Particulars t Prepare :
To Balance bid
8,000 By Reali sation (Sundry Creditors) 29,850
To Cash (Cash balance deposited (i) Realisation Acount
By Realisation (Bills Payable) 7,960
into bank) (ii) Partner' s Capital Accounts, and
S00 By Real isation (Mrs. B's Loan) 10,000
To Realisatio n: {iii) Bank Account. (C.B.S.E. Sample Paper 2013)

,
1
By A' s Capital Ne 30,495
Debtors 19,000
Plant By B's Capital Ne 24,695
25,000 SOLUTION:
Building 40,000 D REALISATION ACCOUNT Cr.
Goodwill r· .
- - - - - - ~~ ~~~:.:_:_priJ;j;;;- - -~
6,000
Particulars
t Particulars
Investments
4,500 94,500 To Debtors 17,000 By Provision for doubtful debts !:~~~
1,03,000 To Stock l 5,000 By Sundry Creditors
-=
 --
DISSOLUllON OF A PARTNER.Slirp
6.56 --- --~
..... ,
~oiuri&,;. Rf.ALISA TION ACCOUNT or Particulars
6.57
Dr. t Particulars eal3J1Ce bid Cr.
fur: • • !an
'fo alisation Ne 20,000 By R . Parr/cufars
?" 000 By Employee 's Provident Fund caiisation A/
To l)et,tors u:ooo By Sundry Creditors 8,000 T0 Re ets realised)
(ASS 69,900 B (L'. abilities Pai~)
To Stock J0,0OO By Lnvestment Fluctuation 10,000 YEnca's Ca .
To Pbnt & M~ne~ By Ad' ·, Pita! N e 15,200
45,000 Reserve iti s Capital A/
To L:wd & Bllllding 39,850
)S.O00 Bv Provision for Doubtful Debts 4,ooo ;;-:-_ By Tafini's C . e
To 1n, ~sonents
To B:mk A c (Payments) : .
,._ Creditors 900 o ot
B~ Erica's Capital Ale
(Plant & Machinery taken over)
2,ooo
, 1, • There
-~ 89,900

will be no entry for stock tak-

ap1tal Ne
I
14,710
20,1 40
89,900
Sur.w: 7 ?00 By Aditi's Capital Ale 16,ooo .1 1
- - - - - -
en over b E . ...__
t 10.000 - ~.OOO) - .. - 'RATION 28. Y nea for her rem •
(Investments taken over) ILLUST unera11on.
Emplo~ ee.s Prondent 28,ooo
8,000 l S.200 By Bank Ale (Assets realised) : RaJTl, Shyam and Mohan ~hared profits in the .
Fund
Machinery 9,000 Balance Sheet on the date of dissolution : ra110 of 2 : 2 : 1. Following is their
Land & Building 42,000 Liabilities --~ t
Debtors 90% of
creditors -- Assets
(22,000 - 1,000) 40,000 ICash at Bank
69,900 Bills Payable . . 2,600 Debtors
By Loss on Realisation . ·ion for Deprec1at1on 44,000 j·
transferred to :
prov1s
Raill's Loan
I
15,000 Stock 15,000
Erica's Capital Ale 10,650 40,000 Plant 50,000
Capital Accounts :
Aditi 's Capital Ale 6,390 Patents 75,000
Ram
Tarini 's Capital Ale 4,260 1,3 5,000 l00Shares in XCo. 20,000
21,300 Shyam .I t
30,000 300 Shares in y Co. 5,000
Mohan

CAPITAL ACCOUNTS
-D9}oo ~
l 0,000 Goodwill
Advertisement Suspense Ale
18,000
15,600
Dr 30,000
Cr. 2,n,600 I
PaniculaTS Erica Aditi Tarini Parriculars Erica Aditi Tarini
l == 2,72,600
1- -
( ( ( ( ( ( I . Ram takes over Debtors at ~ I 0,000; Stock at a 20% less value; and Plant at
To Currenr Ale 5,000 By Bal . b/d 60,000 40,000 30,000
no,ooo.
To Advertise- By Current 2. One of the Creditors took some of the patents whose book value was t 8,000, at
ment Sus- Ales 8,000 10,000 a valuation of ~4,800. Balance of the creditors were paid at a discount of t 1,200.
pense 1,500 900 600
3. There was an unrecorded asset of~ 15,000 (not mentioned in the Balance Sheet)
To Realisation
which was taken over by Ram at ~ I0,000 in part payment of his loan.
Ale {Plant
& Machi- 4. Shares in X Co. were agreed to be taken over by Shyam at noper share.
nery 16,000 s. Shares in Y Co. were valued at ~ 12,000. All partners divided these shares in
To Realisation their profit sharing ratio.
Ale 6. Balance of the Patents realised 70% of thei r book value.
(Investment) 28,000 Prepare necessary ledger accounts.
To Realisation
Ale (Loss)
To Bank Ale
10,650 6,390 4,260 -----:
-SOLUTION
(Final Dr. REALISATION ACCOUNT Cr.
Payment) Parli!'ulars ~
39,&50 14,710 20,1 40 Particulars
IS.OOO By Creditors 40.000
68.000 50,000 To Debtors
30,000 68,000 50,000 30,000 2,600
To Stock 50,000 By Bills Payable
 DISSOLUTION OF A PAR'I'NEI\

. .
' . ,·or Depreeiatton
7, 000 By Prov1S1on
- _s~ Fllh.
- .:'\l\t I
T
. . . -. . . : pt ~sot
u-r10 N C?_F
. A/
_A!
AR_!NERs1;1 '
- - - -p -PlflM
__
'~44ililll~
Plant 1 - - --
I ll
li> l':itt'.nlS
20'000 By Rum's Cnpitnl Ale I IS,ooo 511yaJ11 'S Cap'.ta C IS 480 1-

fo I00 Sh.m·s
• Ill \" Co s'ooo (10,000 + 40,000 + 30,000) I ]tl t,,1ohaJ1 'SCap1talA/c 11~40nByRarn·s Lo,~ -
- _ _ ___6.59
1&,OOO Io y '""'' ...., Ne
D- _ • Cap; Ale
' By Rrun's Loru, N e 80•0Oo
l 11 100 Sh.m·s Ill r Co (Unrecorded asset)
ts, 600 01 30,000
] l, lr1ll~\\ l ll .
34,000 By Shy:im ·s Cupitnl Ale (Shares) I0,ooo ~I
111 lllll\.. \1'3~ mcnt to l'~d1tors)
12,520
3,00o ~
2,600 By Ram 's Capita.I Ale (Shares)
1,, B.m\.. tR1' p.ud)
8
} 00 . I. Net amount paid to Creditors . ------ _ 79,'i2o
· ~40,000 H _ , , . ~
By Shyarn's Capi_ta.t Ale (Shares)
By Mohnn's Capital Ale (Shares) ,800 v 11 ''' • z Entry for Ram 's Loan :
2 4'800OH 1,200 "' ?34,000.
8Aoo
By Bank Ale (Patents) Ram's Loan Ale
.400 To Realisation Ale Dr. ,
By Loss transferred to :
Ram's Capita.I Ale 25,680 To Bank Ale 40 000
Shyarn's Capita.I Ale 25,680 _- - - - - 10,000
Mohan 's Capital Ale .!3.&40 /-L-LUSTRATION 29. 30,000
q
- 64,200
~ Girija and Ganesh were Partners in ti
~.
2,35,200 a inn shann
,35,200 M h 20 I
, . l On 31sl. .an: , 7 lhei, Balance Sheet Was asg P<ofis .
and losses . the ratio
Dr RA - - .. foll of
M'S LOAN ACCOUNT ows : 111

.-~------
Cr. L10b1lilles AmOUnt
Purticulars Particulars
~
To Realisation .A.Jc (Asset t:lken) 10,000 By Balance bid
40,ooo
< Amount 1'
creditors
To &nkA c 30,000
sank Overdraft I
80,000 Cash at Bank
40,000 so,ooo Debtors
~ Girija 's Brother's loan
77,ooo less ·. PrOVJs1
.. ss,oooI
20,000
~ Ganesh's loan on for
CAPITAL ACCOUNTS 28
Dr
Cr. [nvestment Fluctuation Fund ,OOO I Doubtful Debts p
Pam,-,,Jars Ram Shyam .\ foha11 Particulars Ram 15,000 IStock ~ 53,000
Shyam Mohan Capitals :
Investments 78,000
< < < < < < Girija
1,50,000 Buildings 89,000
To Adverti..-e- By Bal. bid 1,35,000 30,000 Ganesh
10,000 1,00,000 2,50,000 I Profit and Loss A/ 2,50,000
ment Sus- By Bank Ne 15,480
pense Ac 12,000 12,000 6,000 11 ,240 -:----- 1
5,00,000 C _ 10,00Q
To Realisa-
tion Ac 80,000
=
On the above date the firm was dissolved Th .
5,00,000

To Re:tlisa- . off as follows :

liabilities were paid · e assets were realized and the
tion Ac 3,000
(a) Debtors of t 6,000 were proved bad.
To Realisa-
tion Ac (b) Gi rija agreed to pay off her brother's Loan.
(Shares of r 4,800 4,800 2.400
Co.) (c) One of the creditors for< I0,000 was paid only <3 ,000 in full settlement of his
To RealisJ- 25,680 ~5,680 account. ,, -0
12,840
tion (Loss I
To Bank A c (d) Buildings were auctioned for i I,80,000 and the auctioneer's commission
12-520 amounted to t8,000.
~ 45,430 21,240
{e) Ganesh took over part of stock at {4,000 (being 20% less than the book
value). Balance of the Stock was handed over to the remaining creditors in full
_ KACCOUN T
_r_· ---~-- --.--._ _ _B_AN
D settlement of their account.
Cr.
ParticuJan
ToBalance ~d - - - ~
f - .- -s- -- - -,- -
-Particula,: (f) Lnvestments realized i9,000 less.

44,000 By Realisation Ne (Creditors) 34,000 (g) Realisation expenses amounte d to ", 17•000 and were paid by- Ganesh.
To Realisation Ale (Patents) 8,400 By Realisation Ne (BIP) 2,600 . C -ta! Accounts and Bank Account.
Prepare Realisation Account, Partners api rc ss:;. J~,'/4·7[i~'f"•)..g' • 11.~
L :!J.!:l'"-'!. I :; J'l!J
 fN ER srflp f·I¾
U I 1, "" ' <JI A I' A- R'
., I - •
.. s r i lA T fO N 30.
ofits in ,L
'I[ ) and C shared pr uie r- · of 3 : .
' B se the <11>se1s. A . atio
I d A w re ali IS to (pr ,,.• 2 . l , ·,hey dis">lv
• Pen, . "" ''> e 5%
,r ,n , hi and ,s to bear all ex Ses of rear ' ' ""rnrn;, ,ion On the ed the f10n ••""•
IC
le ...
,,pt ,a.s 'sation ·11.. _
. "" Pos''",on of thesafill)Jof
W ""as""a,"
,~c.. t
,Jlo • , L1ahll11,e ,
crdrafr
jJf'
IO "
25,0oo Cash . Asret,
,editor., d 60,000 " - in Hand t
Jeni I un 12 vebtors
1 1
, 1 f- Juctuat
ra•srmcn ion .Fun.cf ,Ooo Stock 22.s<JO
.
Advance 6,000 Invest 52JOo
fl\e on Re ce iv ed in
,f1l/11J SSI
8,000 Plant Jnerus 36,00o
aP
,[.i!]s
1 15,00o q
90,00o Profit & loss Ale 91.20()
B
60,000 54,00o
C
10,000
2~
=- ~
2Ji:ooo
1. A realised the assets ?30,00o=; S~ -
ts t 75 as 2,follo
7so w , ._
_ De bto rs
"v al ue; Plant at
0/ t4
26,000; Jn vestmen a · ExPense, of reaHo -
"t·
ion rnet by
unted to N , I 00ce, vanc e is
, s1. on re iv . ed in, ad
,m7oComm1s retUJned to the 'UStorners •Iler dedlJcting
-.0
00 ::,:
J,
, fo r work done . , 7,200 for outstanding . I I
3. Firm had to pa y
paid by th
1
fisa anes' not prov,u -~~cu.. for earlier.
4 em pl oy ee s
Com pensat1. 0n to nn "'°
0 llnted to ?9,800. This Liab
ility
35 e abov e ba lance ,h ;/
n~t provided fo r in thpa id for Provident Fund.
5. r2 5, 00 0 ha d to be
e ne ce ss ar y accounts
.
Prepar

0LUTION :
T
REALISATION ACCOlJN
Particulars Cr.
Panicu/ars f
Debtors
By Bank Overdraft(] )
0
52,300 25,000
o Stock By Credjtors
36,000
o Investm ents 60,000
15,000 By Provident Fund 12,000
o Plant nd I b
91,200 By Investment Fluctuation Fu 6,000
oA's Capital N e nce
By Commission Recd. in adva 8.000
(5% on f 1, I 0,000) 5,5 00 By Bank Ale :
o Bank N e (Advance Debto rs 30,000
Co mmissio n re turned) 5.000 Stock 26,000
o Bank N e (Outstand
ing I □vestmen ts 11.250
salari es paid) 7,200 Plant 42,750 l.I0.000
oBank N e By Loss transferred lo ·
(Compensation paid ) 9,800 A· s Capital Ale 55,500
ft 37.000
oBank N e (Bank Overdra s·s Capital Ale
paid) .,, 000 C s Capital Ne 18,500 'h.i ~ I ~@
 r:
o.61
'" ''' "u11 0 N
- OF -A -PA-RT
- Nr
- ~~I-Irr,
- llj~\i,
T' pl
,,, ii l I I< ,N pl ' A rA RTNE
(
R SH IP l'IRM
B.11U' Afc (Credito
rs and ;,S.000 40 ,000
/'TO ,;dcnt fund ) 2.20.000 P
3.32.000 '
Crepaid I·
,, I tt
------- -- --- -
CAPI I ,\I j\(.'
I CO UN TS 2,76°;soo ash at ,Xpcn 1,.1,J
~-:_::~ C- --: Bank ~,
Dr __ _ __ ftJ::
Ttic
--ul~ar~s :: ;: --A
, , -- :- -~ -.~ 1, c.Jcci c.lcd to 2,1 /l}(J
,
c: . 11
1 di ssolve th fi
par1 ,-.;f.trs B 9.0 8, ,11 ' t,:l
• ·f 11,.) at th e
fo ll owin 11
rs.000 00 8)' B:il. bid C 1
,.,,11 ,, ,,, " de • g valuc at1rm
· •s . agrccin
90 ,0 00 i 60,000 pr ed ot ion of ion g to tak 2~ !JIJO

To p& L A, c
By Re:ilisn
JS.500 Af c( co tion
ission) nm>- 5,500
I t
IO,OOo
'0'01,101 pa tcn ts at
t i 0· ire . .
book va lue· S
20'1, . ·
od, Free
'° '<nh, h"
2., r,' SO•)

To Re;tlis3- I I than ,ts bo ok va , un ry Oho ld Pr

J7.00o By Bank A/, sif
. "i11.l""r~ C, s loan lu e and th smcss (except
tioll (LoSS ) ,,; 500 ebtors atop~en ,
3 Y at
,i00o ,.ooo I Ewas to be repaid an«e m aJ ni
d l he C ng half 5,000 ,soooo- .
t1
To Bank Ac 1:il-~o o> " bY ; d' at soo,, o (Nct),.' Ha • Good
. -x
Close the book pemres of di s,olufion came less th lf the .Stwi ocllk ,i
27,500 95,soo l 17 s of " no ~ at

----
t,0:000 - th e finn and w ere pro ved an
~- 60 000 1 ,soo prepare thetoBafl 1,000
Jh , ho oh aI ue.
~
' 2::;:;--:--...7 50LUTIO N : at
BANK AC CO UN . n 2,o oo and w I\
T er e
Dr t or ancc Sheet of A
- -p-==-~- n'·c._ul_a_
famcufars ::, 50 0 By Re al
isatio n (C omm
:-r'S-======~-
~ Pa rticulars REA LI SATION
AC
To Cash A., c (dep ~ CO UN T
asited) By Realisation . returned) -
~ '."'J fo plafll
50,000 Particulars Cr .
To Rea1is:Iri 0 0 Af 1,1 0.000 5,00o freehol d Property
c (O ut sta By Provision ~
nd 10 1,12,0 00 By Su
(J\SSt'!S realised
To C s Capital A,
c
) 17.500 By Real
ing sa lary)
isa tion (Compe
By Realisation nsation)
7,200
9 fo
pa
10 tents
swck
6,000 B
nd or_Doubtful Debts
ry Creditors
y Mrs. C' s Loan
1,500 '
(B an k Overdra ,800 40,000 24.500
By Realisa tion ft) SUJldr)' Debtors By A' s Capital Ne
(C redito rs and 25,00 0 10 40 ,000 20,000
prepaid Expe nses Plant
Provident Fund 10 2,000
) fo Bank (Mrs . C Freehold Property 40 ,000
By A's Ca pital 85,00o 's Loan) 20,000 I_ I
Al e Ba 1,5 0,000
By B' s Capital 13,000 10 nk (E xpenses) 1,000
Goodwill
pro 10,000
Al e
5,000 10 fit on reali sation : Paten ts
1,50,000 Sund ry Debtors 6,000
I 1,50,00Q ,,J's Ca pital N e ½ 15 ,000 35,000
,o r(~ . I. There Stock
will be no entr)' I = 36,000
for the expenses
of reali sation,
as these are me s·s Ca pital N e½ 10 ,000 Less : Creditors
2,77,000
perso2.nally. t by A
Following entry wi 22,000 2,55,000
ll be passed for Co
mmissio n pa ya
bl e to A on the Cs Ca pit. al N c I 5,000
Realisation ;Ve sale of assets : 6 30 ,000
To A 's Capiral ;V Dr .
e 5,500
J. Bank Overdraf
t will be first rra 3,01 ,000
nsfe rred to Cr. of 5,500
----- --- ---
ILLUSTRA
A, Band TIO 31 .
C arN
Reali sa tion Al
e and then paid
off.
Dr.
Particulars
A B
CA PI TAL ACCO
C
UNTS
Partic11/ars A
=
Cr.
e pa rtners in a firm t t B C
sharing
profits and loss To Rea lisation 2, t t 1b
: I : l . On 31st March
l es in the ratio of 55,000 By Balance
(
2018 thei.r Balanc To Bank
236 e Sheet was as
fol low
94 ,00 0 47,000 bid 1,00,000 80,000
s: -10 .000
- - - -- Liabilities
Sundry Creditors
Mrs. C's Loan
Workmen Compen
24,500 Plan t
20,000 Freehold
Assets

Property
- - -~ i7
50,000
1,12,000
By Workmen
Co mpen·
satio n
Reserve 6,000 4,000 2,000
sation Reserve 12,000 Patents By Reali satio n
C-api ral Accounts : 6,000
(Profit) 15,000 l 0,000 5,000
A Stock 40,000
1,00,000 By Bank 1,3-1,000
B
Sundry Debto rs 40,000
80,000 l ess : Provision 2,55,000 94 ,000 2,55,000 94,000 47,000
38,500
I,5 00 I =
 ,, l I tf tll fl
., ,, I ,: 1>. l H.l(l fh \ l

,,,H · 1'-l rl < ·• I 1..•.111 I• ' II 111k

,l 1 ,J I. U .( X ll l lh Ne
R .c :1 ll ~ l , ,,. ,,1 11
1,, 1 ·, t• r' -3 ' '"
ll 'll 11" , p,
.·11-.c~) I 11 pJ 1d to r
ha h, li t'u:, ,
'· w~ c: .1 r1t.1 I
ti , < ·, Car11 I /\ .: 11 i111, 1 1 Nc
al ·\ ,· I , , I , l ,1p
1WI N ~
I t,.,2.000 , ,,11111 11
,~ 10 0 .t ll ow
~ ,. 1100 S, 00 0)cd lt'
J\ \ I \ '\ l .l
,I ll I I l1
r t
A
(«
2
~•''" f20 .r~, '"
.1 ,' ,r ,r.1
1,h _·01 ~ 400
f
fl H '. lf
T/I) S jJ°iATION-
33
, , ;.. ..1.nd L "... e .
;.. :. (} (
1J \\ ti I . re -p ar tn e rs i
:. ~ , .0 0 0 I
( t "'

n..-chold P
ro p e rt )
'
I 0,fJ<l(,
' .1
i,.1t ·"
.::n
.,-.' :c.: Lit . ~~ I • 3➔
,, h I 8 th ei r ft rm
0 0 0 . w as d '
n a firm
.
l'l.l.111 I ,S!J,ur.lCJ c.t, t, .: co u nt . B
• m d eb tors is so lv edsharO
ing pr Ii
Patents o th the acco account · n thiso da ,1g in t'- --
t ,,.; ratio of q
40 ,()(1() ,c , , · 3 ,111 .1cco un un ts werand a e the , .
Stoel... J · t. t4 ,0 0 0 ba lanc c of t I B• alance .. ) I (
1r,irlI l ih111c:in o n d1ssol . o f th deb e clos ed
~
6.fir l e S'''-= >. 31d st3
--' sho..>n
S un dr;, Deb ut.10n . K agre t bY
tor... 4 0 ,0 00 16,fJ()IJ ,11•"' ,J ' ,c m ed to ors b ec tn .ns<-. ,()(JO in
~~~
- - - rm bod
" '' 'h he w.s uneratoon o f • I 6,000 ok ft am e\Vd- U., and emthng
/, c o P ro v is io n lo
5 ,0 0 0 a ll o w ed a lu K a i th ei r ""
'- I2l1
35,0()cJ " '" (6.5 0 0 m ps um . a " !h e d; sso1 ,, :: ' ng CC5 to
an also c,,W d be
2,77,ooo
O
wunte d to t d !h
3 7 ,0 0 0 .
e sa me wer e ag re
:;.r.m;m
ed to
nf '4 ,000 . A
be ,, '."°'' •~
fo, •l ue h he"
1""1
"'
hLi·\.siR
·'- e-.n
\reio
c ess3~ JO
n p ,, s n ec
. es sa ry jo u rn al en
rom the firm ca~
' s
•s•,;i,• n " "' ""
,h. l.ooo ,s 00 " r,
issohnion .CXn<~ -. ,--.
,, ' " ' 2. u rr u J en tn eS its d1 sso lu u.o tries , >m:#<1.
( ., , • in e a c h o f th n. or th e abov
R a lu ;, t, o n e fo ll o w in g
e<-penses :u a lt e rn at i v e 00
c transactions m e books d" "' ooo
,, , Re.,1 ,n u n o u n ie d 10 c ·(CthB o f th1o
e fir m
o n ,xpen..'-" t 500 . ases · S E 1019. K I •
' p ,i d b} (he .erala i
1 10 b<3T ,h
"" , • o e n ,:
n e f ,h e,1p.,arau o n ,xpenses.
fi rm a m o u n
ie d to t SOO a n
d (h e p ar tnec
· soiurioir-
tn er s " ·as 10 h
"-4:,.,; g h en a b ea r al l (h e JOU RN AL
1 O comino ssoo n o re a li sa t io n Date
r,:a1,sed rrom
assets " " ' 0 f~ % of net c
,. 0 0 0 a n d c
a sh re a h se
e x p e n ses f
d fr o ":' _d is
whi ch
so lu ti o n Cas
• °' ~ 201 8
Particulcm
IF Dr ? v~,
a sh paod fo h
r h a b 1 h u es March 3 1
~5.000 am o u n ied "
(a )

s. o-L-
B ank N e
T o ReaJ isat io Dr. 1.30,000
C T !O N· n Ne
(A m o u n t re l \ Q 000
JO U R N A L alised from~
r s)
(h ) Rea li sa tion
/) a. ~ p o rt u :u f( D L .F. Dr. (( J Ne Dr 16 ,000
Cr. ((J T o K's Ca pi
tal N e
(,,Re.ilISarion A
ToBank /vC
(Pa) rnent o f
c

realisation ex
penses)
Dr. 500
500 (c )
(Re mun erat
Rea li sa tio n
K's C api ta l A
Ne
le
---
ion fo r diss ol
utio n work \

Dr
4 {'(XI
~ _.;( l
It- Q\IO
t b

(u} Partner
's Capital A,c Dr. 500 T o Bank Ale Dr t>,'00
To B an 500 (Dis so lu tio n
k
(Payment of re Ne expe ns es part
l) borne b~ l\l
alisation expen
ses by the firm (d) J' s C apital A Dr. 1-tt-tlO
the pa.rm.er) o n be h a lf o le
f K' s C apital A D r. \ t-. ' Oi.
(uf) Bank le ,.,co
A le 2 5, 0 0 0 l) r
L 's C ap ital
To Realisati 25 ,000 T o Real is A fc r.ooo
(A ro ou n l re
on Ne Dr. ation Ale .
alised on sa /R ,..,,1;.,,,, d p rt n" !S . C
;,-,n ln " . l 1:, 0··
,1p1H
 . . . 11"
l>f\R.l'NER.s1-
· - - 'fRXTTot.."§7. e fo ll owing trans
actions t1..
"' d;
I I \() N O F/ \
I •- -
- _ -.,· ....,lllR_,.
for e. (1). lr--.
1v1

sh) andss o1llti,.,"" t' I L th

m"l ··ntries for th sc1s (o ih c, than 'U }I~ '
jo urna entries
k' fi
•
L USti 10 0 " •
" ~" ". . J Siu-, afic, O, . c Va rioo, as 011
ou~;de I
.,,. Ir) . . ') ...,,, t,, or I --
' "• Ac co unt , ,1 m a m g •na( Pay 1 Oss lo \L
1,.1,
tlw
Pa.,.;s ,1 Sodh,, '"ns f·m
~l "lt 10 al;sa lto " '" : " " " (u _p
t,.,,,, tra , ,d Rc ticn1 to ,L, "e ' .
sband s lo an ~
_ "', an
'" '"om
' the ' lu>e' _ 19 ,ooo . _ _ '''SI "" 'uac or the7
~
r1n~r.-
n, -..
I,) Sodha,s ,It p:i, off her hu
t
0 ' ·

.000 was \\'n tten on

II) th e bo
oks P""1' ct , 7,so .'"
I. - -
./ /,UT/ON '
'..,(
-~
1
% RN,'' l 1•,N°l'I{"'
p. ,,,,, ,,, ,, ' I,,
'•·

~9 " ''l,
hto, " '°" •• de bt or ' i()\
tu ) A deM :f' s Ca pi talAJe
fo((I\, ) tlement at ~ 13,300. 0
\ l.•1rt h
I)-
) all 111\'cstments B's Capi tal N
e
. Sh . too~ o, er
(11 1
ou nt.
LI\: I l, _,
•
( 11') Sunur: . 'd t ) = ~Io 000 \\ ere
paid at 9% di sc To Realisa tion Al
e Dr _
.,
h she "'as •Ho. ,"l s on tcar,s . Dr. Is.ooo
by Sud ha fo, Whic
1 (T ra ns fer of los
.400 " ece .pa.id at,on) -- -- -- -
t, Rc,hs a1to<> expenses n •v . , l A' s Ca pital Al e 1s.000
'3 ,000. Sudha anct s "1.. a •n 3 B's Ca pital Ale
L 1
~9 -W O wa s d1v 1 ded be twee n
10 . ""tion ·
.....,.,,1 ·M 1 To Bank N e Dr_
(, , 1rJt"." on "" lll.ade top~ ... Dr. 5,00<J q
(Final pa yment
~,ners) 1s.000 -- _
JO URNAL -. - l_-- -- -- "· "" '
,:;·- o1)-=r-- ~. : ..
,. )-.
N-36- -- -- -- - -
. p/)'·clr';"l1•i,c•,11,{l'nar:-~,s
l.f. F
iLLUsTR-A-rio
--
anct Kartik Were Pa rt .
Realisatio n-A~ Anki t, Bobby ng P .., .
~
c
~eors tn a finn sh~,.;
1
( 1
19,ooo '
Ca pit al v c Dr. wa s di ss olve d 011 31 -,s.<:,,~. "'J ·• •~ ~ ratio
To Sudh a·s
Sudh a) . , . 3. The finn va i; Us
3 8·pass the nece
·· •) en tries for I.
Loan tnken over b:,, l9,o00 ' ns after
ac tio 0 ~y urna1 d hi
ets (oth th an cash and0 b~n'·)
(Sudha ·s Husband ., , follow in g trans
, art d to Rass1. . er Unt :
db ns fe rre _. , "' t "'
(11) Ban~ Ac
To Realisation \Jc
Dr.
7,soo
tliL \ liab1 .

Th
ht1 es a
.

e
-

fin
h
n ha d
ee n tra
Stock of ~80 Ooo ea """°"
An L • Ace 0
er so o;. f
diseoua,
P .
(i) 20 ' . . l.111(\l Look ov • 0 ~" lo ck "a
(Debtors Realised) h"l h ,o ¾ oa " •·
7,soo 0/
t e "'" 'ai ni ng siock
. d off at a P" fi t of ,
Capital Ale of '" w le c a suit fo, damwas sol ,, "« le ,t "
(u i) %1 \ :i ' s
To alisation A'c
Dr.
13 ,300
(;,J A Iiability tmde
a;n s, on ly l 13 oo o P:g a'"'
es 1"'1ot ia ''editon w
Tala) ,~ton of
cn ~,
Re l l 2,000 as ag ov, e,\ '" ~, books. .
over by Shiva) . '
(lm estme nts taken De. 13,300
1 finn wy'ersesis t 50 ,0 00 0o w,, Pllid ff
n Al e ;;,J Bobb tec• s loan of t20,0
(fl •) ReaJ;s ,oo settled " l I0 1oag '~•h '" ''"" or n .ooo
To B ~ AJc 9,100
Uv) Kan,k s Lo
an of t 12 ,000 w,, a
00 paid at 9% disc
ount)
9, 100 • , 1oum.A L 2 500 (C. B.S.£. 20 /9, M.P.)
(C redi tors for i I0,0 De.
riON-: ·
e SODaiu •
(,) Realis,tfoa Al pita] Ale 3,o oo
te
Particulars
To Su dh a's Ca
dha) Ankit 's Capital
Ne Dr /~1 Cr ff /
(Realisation ex pe nses allo\\e d to Su De. 3,ooo (i)
Dr.
L.F
Bank N e 32.000
a) Ale
(,·,] Sodha's Ca pit De. To Reali sation Al
e Dr. 52,000
5,640 ll
Shiva •, Ca pital Ale e ec by l\nk;t,_..m,ffi
iag SO)d~ Dr.
84,000
To Real isation Al 3, 760
(ii) (Stoek ~
fetred lo Pnnnec•s
Capita l Realisation N e

-niu-sfW-Xrio-1tfs: - 9,400 69,000

(Lo,s
Accounoats)rea tisati oa To Bank. N e
,ooo + 07,000) 6() ,000
(Paymen t~na~ e to creditors i n
N e
(iii) Reali satio Dr. 22.000
n was To Bank N e 22.00 0
ually , Thei, fin int erestl _ _
finn shan ng P< ofits and losses eq . O n that da te the obby ' s si~ s loa
n paid along with
nner,; in a of f 30,0oo (B
_ A and B were Pa , 20 I8, which <esohed in a loss • credit lance
ba (iv)
Karti k's loan N e Dr. 12,000
dissolved on I5th
Macch t2 0, ooo and that of B
balance of
quired to pass the Real isation N e Dr 500
capn•I accoanr of
A showed a C<edit ?2 0,000. You are re 12 500
a balan ce of To Bank N e
sh accoanr had
of ?Jo,ooo. The ca (Kartik ' s ~settl
ed)
 LJ( . !')
Cr. ~) D
(1) Bank Ac Dr. 111 Realisation Ne t
I ,63,000 r.
To Realisation N e (al To Ravi's Capital Ne 23,ooo
(Amount received from debtors) 1,63,ooo
(Remuneration allowed to Ravi to carry out 23,000
(u) Realisation Ne Dr. dissolution~. ~
3,500
To Bank Ne (ii) Ravi ' s Capital Ne Dr.
(Payment made to cr: ditors) 3,500 To Cash Ne 10.000
(ii,) Realisation Ne Dr. (Realisatio n expenses paid by the finn and 10.000
2,000 borne by Ravi)
To Bank N e
(Discounted bill dishonoured) 2,000 Bank Ne
lb)
Dr. 54.000
(ill) Realisation N e To Realisation Ne
Dr. 6,000 I 54.000
To Ravi's Capital Ne (Amount recovered from debtor earlier
To Shankar's Capital Ne 4,200 written off as bad debts)
To Madhur's Capital Ne
I 1,200 I b
(c) No entry
600
(Profit on Realisation transferred to partners capital (d) Bank Ne
accounts) Dr. 2,94.000
I To Realisation Ne
(Amount realised from land and building after
2,Q.J,000

ILLUSTR-----
----- -
ATION 38.
(e)
deducting commission)
Anita's Capital N e Dr. 15.000
Give the necessary journal entries for the following transactions on dissolution of Ravi's Capital N e Dr. 10.000
the firm of Anita and Ravi on J Ist March 2016 after the various assets (other than . Anita
25,000
To Realisation Ne
been tran~ferred to Realisation Account. They
cash) and the third party liabilities have 2. of t 50 each transferred to .
shared profits and losses in the ratio 3 : (500 Shares
Ravi in 3 : 2)

~ ])Jl(IJ (l@IJ
 tkal1\.Jl11•n .\ ,
n 1sso1 UTI ON

Dr.
-,
I l
or- A Pt-.1t·rN ~i• ,
4S,ooo
T ,N"'
'-'i-li11 .
l-111~1 ,"
ii l I 11
I ,, 11111 11 Ne
A J'A RTNElts JJ, ~
·ll~tv,

Vl 11
..,,,rthuk' s Capital Ne
I,, <\nllJ ·~ L1Jlillll \ ' 11 1(<"·
,
11, lt n 1·, Capital Al' ! '"
l(,·lll ll
•
ncr..1tio11 due to Saru,ak) 6 71
. ,... .
311,:.1tilln transfcm't.l to Anita and I5,1)/JQ
(Pn1!11 l>n"
R .l\l III l 2l
1ora l Cn.:d ilor~
. . . 111 Sett led agai nst f' .
'L1Xsfi41fo:\:-39. . l hey dec ided lo ct 1·sso1 '
11 / ('-'·' · urnnure
~
1 ,, nd S:.irtJiak are partners in• a I1m1.
lhn I 0% Di scount
wmg aHer va riou s asse tS (O tl Ve 'It
·
KL•hrt. tr-.lJJl :J ,m Le.1.1 40,00o
P3~~ ssar., Joumal entries for, the. .follo
• ' .-
lnTI
.• n<.' l~
lirty have been Lran sfcrrect l lcr
. ~n
lh ~
. J 8 kl and the tJiird part ) lrab o ,,ea1
O
1Sa lion
30,000
Jsh an an · 3,00o
\ccount
' . off hi s wife 's loan of
~6,0 00 . , ,::iiATION-4Q 27Jioo
(a ) Kunu.1 "e'~ ed 10 pa,
n l •>nn>
'[L: :i d i) · k Part . ~

e ~40 ,000 . Credi tors Worth t 10 /l' 1. paya l an .nya..n a are ners l h
(bl Total Credi tors of the fim1 wer ' 0OQ Were
pJru
journal entri es 1or the. fo llow ·ingalter .
ey decided t .
Od1sso1ve th e1r.
ing ~8,000 in full and final setlle.,., finn p
11.iwn a piece of furniture cost ••,ent. 0
0
.,,,JI J . d
pa
rt
Y
1·
ra
b'I•
I rtr es have be Vanous a
. ass
~ aining Creditors allowed a d.1scount o / o.
f I 00/ 1, • d the thrr en trans~ ssets (other than cash and
Rem o~l an of ~76 00 erred to Rear .
fhe re were total deb tors 1sat1on Ace ount
(c) Roh!I had giw n a loan of no
,ooo to the fim1 whj ch was duly paid . ~J
1,1) . , OA
~ · Prov ision of b
over b I<. also stood 111 the books at ~6 000
(d) A machine ,,hich \\':lS not
recorded in the books was taken ' 12,0oo debtors Pro:~:d doubtful debts
e was ~5 ,000 .
y una1 at the amo unt due . bad and rest pai.d
~3.000. whereas its expected valu s Acc oun b) Parul agreed to pay off her
husband'
and Los
(e) The firm had a debit balance of ~ 15,000 in the Profit l onlh e .
1
s oan of O 000 .
I . ' at a discount of 5'½•·
date of drss .
. oluuon. ) A mac hme which was not reco rd ed .tn the bo ks
fund . expected valu O was taken ov b
enses of~ 16,000 out of hi s pri vate (c n
000, whereas its er y Paya! at
(/) Sartbak pai d the realisation exp d.
. g 1ssolutio n proc es, Who , . . .. e was t 5,000 .
f - 000 "',or comp Ietm 1lrty (not prov ided for) of
was to get a remuneration o ~I ), 1· .on expenses. ss and (dl A contmge nt lrab
was resp ~ onsible to bear all the rea 1sat1 it balance of ~27 000 .
~4,000 was al so d'1scharged.
I') The firm had a deb , Ln the ProfiIt and Loss Account on the
(C B.S E. Sam ple Pap er, 20201 ' . · ·
date of d1 ssolut1on.
--- -- --
SOL UTION : JOURNAL ENTRIES (/) Priyanka paid the realisation expe
nses oft
15 0 Oout of ?er pocket and she
of ~ 18 ~O
Datt Part iculars L.F. Dr. {r) was to get a fixed remuneration 000
Cr. (f 1 ' or completrn g the dissolution
(a) Realisation N e Dr. 6,000 ' process.
(CB.SE. 2012 CJ
To Kunal 's Capital N e
(Kuna! agreed to pay off his wife loan
)
1
6,000
~
soiurioN
Real isation Ne Dr. JOURNAL

~
(b) 27,000
To Bank N e 27,000 Date Particulars L.F
I) Dr l~l Cr ({ J
(Payment mad e 10 Creditors ) (Note Bank N e (76,000 - 12,000) Dr.
(a) 64,000
(c) Rohit's Loan N e Dr. 70,000 To Realisation Ne 64.000
To Bank Ne 70,000 (Debtors realised)
(Rohirs loan paid off) (b) Realisation Ne (7,000 - 350) Dr. 6,650
(d) Kunal 's Capi tal Ne Dr. 3,000 To ParuJ 's Capital Ne 6,650
at ~discount of 5%)
To Realisation N e 3,000 (Husband's loan taken over by Parul
Kuna!) Dr. 3,000
r (Unrecorded machine taken over by le) Paya l's Capital Ne
Dr. 3.000
(e) Rohi1 's Capital Ne 5,000 To Realisation N e
Dr. Paya!)
Kuna.l 's Capi tal Ne 5,000 (Unrecorded machine taken over by
Dr. Dr. 4.000
Sarthak •s Capita.I Ne 5,000 (d) Realisation Ne 4,000
To Pro.tit and Loss N e 15,000 To Bank Ne
er~)
ed losses distribute d among tlie nartn continQe nt liability)
 o1ssoL:1·~~N_O!~~A!iNER.sa T 11v1 1uN nrA~"._R! "_E."5_1:1 1_PPIRM -~ 11
~ B
- --- -
- •1)J
~ 1i1~
l
pl~- ... --:; jr10N 43. - - - - .. _
o - - -
11l1~t "c',s'fdJV'
9 ' . . .,1:
1

r...,.1 ~ f;\,ito.lAN,c ,ooo - - -

D 9,0oo t) we re pa rtners in a firn, J> • -
- _6.7J
D /' Jl l ~ f h fi "'· ass J
p ,31 \ t':ipital c 9,0oo .,oJ ut ion o _t e_ irm afler variou _ourna1 entric
rm,ll\\-.1·s L'.1p1tal N e ,d 10 Real1sallon Ne : s assets . s for the~O11
1 J 1~ and ex owing l
·1 Profit and Loss Ale 27 111 ,~rr~ lctnal liabil' . ransactions
. b f profit and loss account) ,Oo0 ri" \' an unrecorded creditor oft IO Illes have be
0
( r..in~fcr of debit _:1~ cc O _ 33,0oo '
1
(I) • ' oo/ ,ooo en
1 Dr. was . b
0 f 2 10 Paid
Rc.ili~tion N c · t Ale , }' an unreco rded credito Y Panncr p
{\ . . at a d1·scount
To Priyanka 's C3P1111 33,on,, (I·1 1 Balanc
' r of "25
e was paid by him 1• C ' ,000 1
o~r1sa11·on expenses oft 15,000 paid by p) n_yanka. now
rs.= vv
n ash ' Ook over
(reimbursed and RemWll!ration allowed to I nyanka 0 and a Yehi . I Computer at "30
cornru terShof ?25,00
b ' ,000.
f 18,000 also credited to hl!r occount ) trrr )
Balance eet ut no other add1t1on . . c e· of t I0,000
I
itcn1 5· . a Information w:e~: appearin g in the
·) A credi tor to whom ~Jo 'OOO Were to be g en regarding th
uiisfi i rioNii.
~S.00,00~; to_tal liabilities are ~ 1,00,000; amount realised
pi
f I5,00 m
O. full . paid ac cepted an unr
settlement of h'rs cla,rn
ese
1'
If total assets are 0
f assets is ~4.20.000 and reahsat1 on expenses are ~5,000 ,
what will be the nsa1e An un record ed asset of ns · ecorded asset of
Profit ) ' 00 0 w
. . ? or (l O. I . as given lo
oss on reahsauon . f 50,00 m sett ement of his cl aim of t30 0 an unreco d d
, 00 and th e baIancerwe creditor of
in cas h • .
as paid to him
§oiurioti: Realisat·ton Ace
.-) f's loan was appearing on th e 1.ta b'1!11. . •
Profit or loss on realisation may be calculated by preparing a (l l 1
0 He accepte a
d an unrecorded sseton 4000 es side of the 8 1 he t ,,.
. . aanceS
un1 , 0 at ~3S 000 e at ,)0,000.
..is follows : paid to hi m m Cash. the balance was
-- - ' and
REA LISATION ACCO UNT
Or
Purticulan
t Particulars
5,00,000 TBy Liabilities_ _ _ _ __
50[ur10N : i f

To Assets
To Bank (liabilities paid)
1,00,000 By Bank (Assets realised)
1,00,000
4,20,000 ~(i) Realisation Ale Dr.
5,000 By Capital Ales To P' s Capital Ale
To Bank (expenses of realisation)
(Loss on realisation) ss,ooo (U nrecord ed liability on' 1oOOOI k 8,000
discoun t of20%) ' a en over by Pa, a
~
=== (Ii) Bank Ale ~
Dr. 5,000
To Realisation Ale
ILLUSTRATION 42. (Cash rece iv~ from unrecorded creditor) I 5,000

s: ---- --1
Debtors appearing in the Balance Sheet of a fi rm were as follow (ui) No Entry
Liabilities Assets (lv) '-Jo Entry
Sundry Debtors 2,00,000 (v) Realisati on Ale Dr. I 20.000
Less : Provision Io 000 To Bank Ale 20.000 I II
~---- - - -= ==='=-L.:.'.''.:.::
90:::: 00
,0::,
(Pay ment made to unrecorded creditor)
On Dissolution bad debts were ns '000 and the remam . debtors were realised
. mg
P's Loan Ale ---- Dr. 50,000
at 50;. d' H, s?
(ri)
o iscotmt. ow much amount was realised fro m Debtor 35.000
To Realisa tion Ale
15.000
To Bank N e
soiuriON~ (P's loan settled by giving unrecorded asset or
t 0 5,000 and the balance in Cash)
Sundry Debtors 2,00,000
Less : Bad-deb ts 25,000 hiusiiXrION-44. their !inn. Pass
1,75,000 Aman and Harsh were partners in a firm. They decided to dissolve
lowing after various assets (other than Cash and
Less : Discount (5% of I 75 000) ~ necessary journal entries for the fol
Amount realised from D~bt~rs 1,66,250 ies have been transferr ed to Realisation Ale.
Bank )and thi rd party liabilit
 ~ ~1 LUTI O~O F~ p
· .\Rh ....
~
ta ~ w~ fa.....~
... -
\,or'..i < ,n.
.a', dJSCoeu, z..td w mm.t ru."1~
O(l(I
-
''<b
\ - -- .
nun took over SO¾ of- ....
lut"lJ ture sold a1 )Qo,.-11 ~
•

l.\ac
Profit <>ti~ ~
r,
'"t¾ u~
.._ :~ ,~

•'
'
,--.. , 11 ,,
~. i1 1,.,tinn Ne
1,, Bank Ne
l' ARTNF.11.s
. 1111> FJJt}.1

l.lr
.,"DJ:r
a credit balance of t IS .00() ~ , 1,..:~ .11.:ceptcd by Credi tors Ind
lhtba} ~ 7\
I Pr"' ' ad I c-~ ,_\._-cou:!I ,,:c, ~,n ng ii-J 1n<..t~h ) ~ In\.,_ _ I..21(J
I" '·--' . \.\i\jch . -..,,,,.
~ - J 1 ~ bt':",-ttn L"le p:,.nne-~.
Ne
1.1.._
~ . . al
, 111 _1n·, Capit l,2Sti
~6.2 00. Jl.,r-h'~ Cap11n 1Ne
( ,. 1u.,-n ·s I0!!1J cf l o,000 "~ dJsdurge d at l:
~ n.,:., .,... 1,, Realisation N e l>r
1J I Jbr fir.:, p;ud n.-~ 17..WOO C\pm 56 amounting to '° 5.000 00 be on reaJisati~ Dr .t £1;0
hair of ll I rJn.,fer of loss 4J,-,,
had LCl t,c-._; L11:5t e., ~n...c.es
\",ho
bill was rece · ~\
t t' l fht-re w:u J
t, ll lur t 1.200 under discount. .The IVerj fito k,<:,x,
.
d1v1dend of 25¾ W<>n 111 Soi-....
"ho mr.c d -..'1Slihen1 and a first and fin3J ·= rece·•vCd t~"'lll
t
h•s ~ t°lll VERY SiiORi AN
~6.000. accepted stock of t (Questions CarS'W£R Ql.JESTION S
{/J C~!o r,.., to \,horn the tinn o~,~d 5.0oo at ry1ng I 1,
dJ~ount of 5• o ;:."ld the b:tlance m cash . a -
- - - - - - - - ge~ '
'VJark)
, ,. ... nzben ng (Kno wled ~ d
- '
~ loss on ciY,-olulJon was t 8.000
. 1
(,RI 8,,ne
\\.'hat is meant by dissolutio f
n Partner-sh·1°
--- ---s:-
sou rno
lJ
, As per Indian Pannership Act " .
rartnership amongst all the p ' Dissol
P finn?
ution of fi
means tcnnma.
,.
JOU RNAL .nates and there is a artners of th e finn" nn lb tion of
firm tenrn n end to the lifi · Us, the busin
Part I. f. Dr rf) under wh· e of the firm ess of the
l I) 2 Give two circumstances
Dr. tch a Partne rshi . .
(0) A=: ! I u:p:zal A, C 22,500 " r ofth fi Pfirm 1s dissolved.
.. Dr. 32,500 \n'- (i) When all ~r all but one Partne !•
11!.'l\A, ess of the finn be e nn becom e insolve t
(,i) When busin comes unlawful. n.
To R~ • onltfc ss,ooo . .
.
the t by disso lution ofpar tn
(liJlJf of the funuure Ull.1.'Tl m,er by Aman and 11 l What 1s mean
v· ·
e~~ ~

:enwr.mg b:lll re-.:lisi:d in Cash ) h .

\n,. Dissolution ofr:partnership refe~ to th e c ange m th . .
Dr. 15,000 The ,inn continues its busine e existing relations of the
l'rofil :md Loss A I; partners. ss,
I o Amrm 's Citpita.l A c hi . .
7,500 () ..t Give two circumstances w1der which a part ners P1s dissolved.
To fl:m.h's Cap1wJ A c 7,500 . .
to the ,\n, (i) When there is a change in profit sharing rat'10 of an ex1stm g panner
rfl:i!:).ru:e 01 Profit and Lo~ Acco unt credited .. . . n/ . ment or death of a panne r. ·
sh:iring ratio) On adm1ss10 retire
(u)
panners m their profit
ds received from the sale of assets
(< J Hursh· s Lo:in Ac Dr. 6,000 1 (). 5. On disso lution of a finn , out of the procee
Dr. 200
1
who will be paid first of all.
Re.1Jisation Ale
the finn will be paid.
To O:i.nJ.. Ale An,. First of all , outside (Third-party) debts of
) I fl
(l lnrsh •s Loan of t 6,000 discharged at ?6,200 ds received from the sale of assets
I
Q. 6. On di ssolution of a finn, out of the procee
(rl) llursh's CoplL11Ne 0r.7 s,OOO 1
5,000
who wi 11 be paid last of all?
To Bnnh Ne Ans. Partner' s Capital.
(Realisation expenses paid on behalf of!J
arsh J I Q. 7. Why is Realisation Account prepared?
.
(l' ) R~li so11on Ne Dr.1 1,200
d on dissolution ofa pannc,:rs,_·hhip/:.; : to tmd
f'o Bank N e
1,200 .\n,. A •Reali sation Account, is opene pwment o i.1 t t t .
(Payment made 10 the bnnk from whom the bill
was
. . f assets and
out the profit or loss on reahsauon ' '· °
, assets sho\llt in the balance sheet
disco un ted) Q. 8. On disso lution of a fim1, where are '
I
I

Bunk Ne Dr. 300

JOO lransfen-ed?
fo Realisut1on Ale ·\ n,. On the Debit side of Realisation Account.
ishon oured bill recovered)
 ,,,, .. - ~
1
'ljI
J ~ •
6

11 .
.
. l)U llll ll llf ,I
,'>. q. (.)n J ,~, 1
s1 ,·,
-
flrT ll,

, , dn ult' p_.t:111 J ,1-Cr,h \l., ,,u nl

•·
PISSP I lrr tt) N
"hL·n· ,s r.1!,h 111

, ht· ~ .in· g,·111:ral

OF A Pi\RTNt:
h:u1d truns fom..'Ci'!
ilSHii, 1·1~\
I
,.,,,ii \
,, 1 1111
1It 1N l

, ,, 111 1111
1
.,
II A l'AHTNERS
. II
d1 " ulu t1on, pn tcn .ts 11' 1'11\ M
UP J>l:ari 1
1g 111 fl al,111<:c
n·s ,·n ,·s :u1d u, nu nul itc ,di s:1111111 Acco unt.
., I, (_). I II. In c:i.sc ,11th'-''' 1011 ' 10· '
lo~,-~ 1j.U'l5t,•m. 1
at ' d \hcct arc 1ran, fcrr d
, 11
.-<l ( Prori , t ,,, c thc 3o urnu l C II) IOth tch
•

~ ~
• 1 · l .\ •n1unt:- 111 tli.·ir . . , . Cll ll)'
lls ,1 ,,c
• . t, sHk of the IJ·tlun
\II ' If
, 1hc P.1 f1I lt'r ~ "J I'' .1 '
1 pm lll sh .m ng r
.
.lli o . 1
, or thc lrcatmc
. J . full ccSheet, o nt ol P"<lfl • •
J 11 In t.h,· e,
,•nt ,11 N~ ' ' 111., 11 f .1 pJrtnl·r--hip I.in11. "h en : is the p n d,s,01
<. JouMtul Jd •ts trJJlS . Ulion ofncr ' loan
a part a~pca nn
k'rl'\'J rov,sion ll(r.Jup firm g oo the
• - ' r tdt' tif Rt•.11 JO lJ RNI\ I
, , tln the l
n--ut ' ts;itit1n :\l.",l1u
nt. for Pan/r:u/urs f( 13 S !·. 2f1/ f) R
11 -
<...' ~- ()n J,~ f .1 ntrU.lt'r.;hip tim . 1 . pr . l':.Lrtm:r's Capital · a;u.,tha,11
..•Iuu,1n o . "h ,~ 1s oltt or loss on Ne
1 ,-
U"Jnsr~rn·J ' I o Partn er' s Loan
real isatio Ne
•. C.1pir.1 I .\ ...,ounts . . ( Partner's Asset side Dr
111 thrtr profit Account) loan tm .
,,
\n •. In shanng ratio .
On d1.ssuluoot'rn.~ \\ fur '
the PJ!Ul n
1 nslerrcd lo his c
(). · · enti: ,s p.JSseJ if :i opual
1 .
,,f J fj 3 t, 11tr~ or t.he t1m • ,
1.
partner undertakes
to make Pay
ll'le nt "', ... fcr
LIl l ',ta nd in g :
- ---------
\ n., . Rt'JhSJUL'l
l ..\. ,· . ~ . Dr .
ro PJrtOer s C3p1uI A L. ", 1 -~ ~ 110w is disso lution of pa n
l.SSOlutJ()n of firm .
Jinn'?
. ners h'tp difli
(). l-1 . ,, hJt en [0 1s passed for pa erent froCm d' . .
()n d \Jl In case of . tssolut1on of panner
yment 01· an unre . disso lution of partn sh1p
liJbd i~ ' ,, 1th a change d agree h'
ers 1p th ti ( B.S E Sa mple Pape 7
corded me nt. r rii~
. In case ' . e trrn con
ct:. ases to exist, the of tinue s to d0 b . . - ,,,
\ n~- Rahs:ilton
A.::
Dr . h
disc arge d. assets of th r: d1ssol t" usmess but
To Cash B:mk Ac u
e 11 rm arc of ton
(). _On diss.., luu I' partnership fiirrn, th ti
on of firm . whJt p3 rea ised and its liabilit c mn
yment is made fi rst ies are
15 from the pe rso nal Q. 2-' - Disti ng uis h
3 p:irtner' ' assets of . F.betw, een ' Disso luf
Partners 1p 1rm of. Partner5h.1 ,
\o ,. Pri, 3te debt5 of \ 11 , . h on the basis of!On cl
thJt partner. osu re of books P(Cand 'Dissolution of
(). _ On dissoluu · · B.SE 2019. Kera/
on of a firm. \\h a/
111 at en try is passed on Basis
realisation expenses making payment Dissolution O Partners
by a partner? of hi Dissolutwn of Parmen#J
Closure of Books I~does not req uir !R Frrm
e clo
.\I I\. Rea lisati
on A;c s111ce the business is notsure of books It requires closure of all boo
To Panner ·s Capital Dr . ten nin ated . accounts since ks of
Ale the business is
Q. 1~. Ho " will the terminated .
Realisation Accoun
t closed, if it disclo (). ,5 _Disting uis h
Ans. It is closed by ses a loss? betwee n ' Di sso lut
tranSferring to the ion of Partnership '
debit side of partn Partnership Firm ' and •Di ssolution of
!heir profit sharing rat er 's capital ac coun t5 on the basis of Co urt
io. in 's intervention .
Q. 18. On firm· s disso (C B.SE. ! 019 . .1/. P
lution , which accoun ,1 11~- I
t sh ould be prepare I ll
d at the last?
Ans. Cash/Bank Ac Basis _ _.D_ . is__so'""l..,
ut...io;.;..n..,o.....Pa
count. ..;;.,.rt....ner
=-: sm..o___,_ f),ssolwiot12£l'a
Q. 19. On firm 's dis
solution , what entry
wi ll be made on
Court 's intervention
There is no intervent
since the partnership ion by court IA firm can be dis
rmc:rsh1 • f ITlf' I
which was shown in
Ans. Cash/Bank Al
e
Balance Sheet?
rea lisation ·o f goodwi
ll
__.-J,._____ - -
by mutual agreemenL
is dissolved withou1 the
!or by c~ ·s Order.
soh
inu:rventtoneullf eith
coun
er

To Realisation Ale Dr. · p

01 Q· 26 . Disting ui sh between ' t· ·
Q. 20. fim.t 's dissolution, r · Disso lution ol _artn 11 and ·Di ssolut ion of
what entry will be
passed when a pa a . ' the
P rt ners h.1p irm on . basis of ' Econorn1c Rdat1on sh1.p ..
ers P
gives his personal ass rtn er voluntarily
et to firm 's creditor rCB.S. f .:V/6. Oe/111.
as pa yment? 1
Am. Realisation Al . . 1· and Di sso lution of
e An s. Diffe re nce be P:inn ers
To Partner 's Ca pital Dr . tw ee n Disso lut t0n of Partne hip
Ale rs up
Firm:
 pl :-..' '-) 1 Ll 77 0N
OF A PA .R TN
I I JI, ..... l ,, /I
-- -- -
l}u-:.<
-Ol
-,,,,
l'/ \R TN I- R.'il
'~
- .,.1
~1/,
- - - ERS . Ill' 1111~
1
h'O llOO\I C \•
rd . ·
J13l1llCl"S comes to 4 ,,,

an ~, n

l1u!> a
Jdm1ss ...1ocoum "
n, ftlt n:' . ~ C <
p:i rtnc r !
tnciu n: ~ Oie -° " ·'-: .. -
c,1 , f ~
()n J1,:-o lution. w ~cf.· ~
, , 1u.:d t 10
hat ent ~f~aic
-
15
1 .000 at t 6,006?
p.i.rtncr·s Capital Pilssc d if a
Ne
., ~ 11:r n.--::i ~ To Realisa tion N
· Dartncrlaks 1"t - t·
.JCS tlS In tlu s c:i sc . .
C D
continue its bth~ e finn , \\'h.:n ::in as set 1s tak r 6f.J(XJ ;m ill1 tt of the
fire.
. does not l..
1 en ov b .,
\\ '}1.:n ::in asse t er ya ·
_ .. .-h 1- ,,n •~ n
·l)ts...-o lu!JOn of is taken Pa
Di_st :I ov rtner. \l'hv is h.
- +l= ' c... .. - [b Partnersh ip · an tK•caus c the cl
ai m of Ca pi taler b .
p~.1 .►., ft',,.i".' •, on e 1:, ~ ol• se
35 1 ttlem ent of Ass d 'Dissoluti· -
-- t.iJ.-cn ov er .
·
) a !)artner. his 1s·. C ·
6.000 ,'
ets and Li. abili
•
s on of . .. . Account is red Ca apnal Accouru debited"
( C.B .S.E. 20tie
19 , - \1/}1e n a
habiln y 1s to be pua.I Account
UCcd b,,
. · Kerafa) the
_:':ir:. . _ - - - ~~~==::-:;~ l cr.:di ted9
ct· !SCharo db
·
Li
value of the
dcb:ltd

- l)zJ~
;;;;;;:;;;- - oDis~,o~/u;;tton of Partn
';lti;;'n

;;;;;,~::;:er=-sh77, ,,.. Wh.:n a habthty

. .. .
1s lo be ct·
"'e Ya pann
er, wh ) ts his
asset

,, Assets are "'

Pr ir, n .
cred1te d because isc ha
~rtlem---nf o· are paid of freal ised and liabT
. arnount of liabilit the claim of th rged. bY a Capital Accoum
and !Ya.lance if y assumed e Pa Partner hi
I \,sS etS st:<
l di stributed amon i LU~ . rtner against th~ ti s .
1.d· : es g all th; p:U:~~~ V Do you th mn C?3
ts pn
incalreaAcsedcobunt ts
ink that the loan
at th e. tim
. e of di ssolution o f: b
;trm
~. eWrhvis? transferred 10 ' >he
, Doe, ;);e ,1un No, 1l 1s not trans R,ca 1isa
. t1o. n Acco
gc profit shanng ra aIle r th e pay men ferre d to R .
ea1.isallo unt
tio result in to t of all outside .nA • ,
0· 1 p:irmership rir 10
dissol ution of . b. .
m? Gi\ e reason in the
ia 1 1tJ. escc
1 1 . oum because its ""'
su pport of your (.) . - Do you thin >"" 1D
-' em b. made
answ(C er . S E. k that
· the loan by a p
A ~- No. Chan B. 2017, Comptt.) . A ccow 1l at e tim an ne r ,s rel .
ati
ge in profit shar . . th _ e of di ssolut ion f ve ·15•
partn ership firm as in g ratio does r Yes, 1t 1 . o a 1IT r.
Tl1? \% y? transferred to Realisat
not result into 1, ·~
it results in a chan dissolution of . s transfe rred to Re 10n
ge in the existin alisation A
g agreement le /\ I w.hich ccount because it is
th c: reconsuwuon ading to ( • va lue the assets an outside liabilit,
of the firm . Re alisation Acc agai nst ,.,h ' ·ic h pro v1.s1o
t}. .lil. Chan ge ount? . ns e:-.1. •t
,n Profit Shar
mg Ratio amou Assets agai nst w · ~ an: tnnsit-:rred ·
partnershi p firm ? nts to dissol utio hich provisio ns ex 10
Give reason in su n o f partnership gross va Iue . ist are transl·cm
pport of your an or · ,ct to Reali~ . t1o. n -\c.:o um JI
sw
(Cer .
. B.S.E. 2017, Co
Aos. Change in Pr mptt.) <) What is the treat
ofit Sharin g Ratio m ent of provision · ·
di ssolut ion of lin amounts LO Disso s against assets on 1
n as th e ex istin g luti on of partnership an Prov is ions agai diss 1lution nf J iimi"
agreement co m d not nst asse ts are cred
co ntinues under the es to an end an ited to Re alis..11i1111
nev. agreement. d the finn !). · Whal en
try is passed whe Ac
(). 3J. Give one n an asset is gi,"t.'.11
distinction betwee to a (rt'd1tl1r in t"ull
n recons titution his dues? ~t 'ltk @ ·nt ot
firm . of a fi rm and
dissolution of a ~ ''· No Entry.
Ans. In case of di
ssolution of a pa I) J Stale th
e reason why a
co ntinue s, while rtnership (i .e., re par1.11c r's \\ ik loa
in case of di ssolut constit ution o f n i~ 1r.1n~t~m•d 111 Ke 1111
i on of a firm , its a firm) the finn .i\J,ati .\ c"
Q. 32. Write one di business is disc ''' \ Wife Loan
stinction between ontinued. (I l WI
is an outs ide lia
bi lity .
Reva luatio n Acc {• -· 1y partn ·
ount and Realis er ' s loan 1 s not tmns 1·em:•d Ill l) "tlis·1ti1111 .-\ c''
ation Accoun t. ,L , -·
\ rh . Partners'
Loan is not an ou
tside li:ibil il~ ·
 __ _, ,_ -

I .._s;::
- - - -
a 4\
_
. \\n t n J Ln-J L1
11,,r . . er
!..
.
t'' ,)\ 111
P l:-.'l"'l U TI O
:i:-.."-·i "h,,..,_c
,·a
N

lu
- - O-F -A -PA-R T N r
t· is less than th e
- _:Rs 1-!1p
ii l I
'll iN , ,F /\ l'/
\ RTNERs1-t
'-!!' ... {h.i:- ,1:i in1 . wh: - - - ~lt\1 - - -
•
[I) h10l 10
,· II ,t' rt l,'J
llt 'tl l ,, it entr)' shall be 111',l
11..: basis of follo - - IP Pllltv\
() -,;I Ji 1. 11lut. win - .: - - _
II • JXISSed? llnloUn ' 01
t tJ .. ~ 51 wn w·11 be g ua
.\a.-. :-,:,, c-111:0
,
•
"~ ),:bil ha Iance1of rnaue7 ta, how rn-Uc- - -
• -:. fil Capital A h r,1 - ...
Q .u. H,'" 1s \ ,11-mcn L 1l n1 1, 0 1 , n R~c::rn · sho\\1 Z' .u .o : ..irm ,
1
. \ , : - 1 in tJ1 e Balance Sh 00 I s asse t lak ccou na1Pay
lllen1- t - - _ _ _ -
f'-1l't11 cr·sh ir 11n11. ~ Jl t -d .I, 1 th,· time or..its d'1sso 1un•on•.)
a
6 1
-i QOO en ov .Ill ~ 14•00O - - _g
, . R •,t•n (l. S. c. 20 eet \ 11' t 1-, ·
er by h' " si.'lill. 0 a panner
Ii
, c:: to tJw t:c\1t:nt or on 1rrn-:-
.\IU- w nrl-.n
. 1en t • 01rnc:•• nsJ.1nllll c. o I
• .
ha b1
. .
It ty is C 13 ,. 201 a ,, ,- tnl asse •rn for~ 17'C0~ r his. Pr s
Rc..tl1s;100n .\ ' :in u, .1 .. n.-ni.u ni
nf . ts are n ,oo,oo ofit on rear .
. t :u no w ll ot W red1tA-' 6J ll· =--· 1 1,.:10 of as o-
Rcscn t' >. crt' J1k-d tt' 1h.c PJ r1J!t'r ·s Cnp1. wl A lcs . thor.kmen Con ~-1 se ts is ~ ' O.
1
II l.h c·n.:· I ~ n,, T , ,,n .-cowit • , m e1r profit sh e1,~~"\I. to11
1() tht: profi. t or lo I' 75•OOO an' to d tal lia bi l'1t· isa11an
ot \\ orJ...,nen . ._t10 I ss on re al i . . ics ar
. c---ri1i.1-dt>i1uti_P.1
3 salton?rea hsat io n c f4
C om pe nsation an t 28,000
.lfl1,, un 11, 1-'-1 1
• ,
rtn t·r s l :iptiw ·. - 1 A le thng ta lto .
. \II '• . cxpe o'ooo-, am
nscs are f3 ,00ou
0 55 nt .
c • , E
ip !o, c•t·s Pro' 1d :;. ' e entj 0 rea h~d on
(}. -,~ . ' ,uJ J , ,,u rn::i · ,,
H 0 11 1 ' , n . en1 F W d
l s hown re 111 th e Ba lance Sh
ofro.f:1m."<'sh· .1. ., amt' l
1 ( diss olunon o
. f on th e liab·t· (}- ='· · Do ubtfu l Debts ap eet Total
• what will
be
• . _
t"c't. .11 u,,
Pr o ·d en ! Fund is :i 1t: . . partnership .
fir m and whI ny s·c1 t · f b d pe ar at ~ De bt
~ di
AD E.mp !o 1t "t ', .
ib1hty IO the em Debtors, I a d 1 or s ap pe
S- .. _:_~ thei 1ere-di! si dt' ,,( e ? ebts amount t,soo H
ployees. y_ ' scount of 5% . ow archat tso ooo
naon A ccounr d . Hence it . 0 ~IO ,oooarnu
..
!r.Ub I01 = 10 Rt'::ihs
an wi ll be pa , Will i.. . t3 8, 000 nd ~ OUn't Willand Prov · .
id off remain ing d b be real'sedl I ston for
JpjiiJ;ii;'n i;s-;J .
VI:
\ll'·
, , There was a e tors are rea
from
lised at
d ... Q :,-t co nt in
Q. 4o. On d1~bo1 •on of th e tin n. p::irtner A
, ge nt
· di scounted . Jiabi·1·ty c
shoul e uu dem . with the bank 1 1o
A h rB{R
parmers Ban P31'd be fo re pa\'menr of Cap ands that his loan of r 1 00 0 were rece ived
fr om hi s es.tat: Hok be recei ve d fr
d C demand ~: • itals of the partne rs . came insol ve;~ A
:ir Capitals shou ~h ' OO Re alisation Acc . ow mu dshok fo ~U0,000
• . ount ? h
-r sl0.111 - Sl3tt' I.he order ld be paid '
befo re th e pa
ym
ereas
ent of .\( 1\, Deb
c amount wian ll be
75 pa1 . and
. n.>r section ➔s of payment. it ~20,000 and de .ted
bi se/crm a rupee
of the Indian Partn Credit ~ I S,OOO . edited to
.\n ..\ ~ t -
· s. .be ership Act , 19
···
~:;. How muc
.r
fo re the P3) men
! of partner's C . I 32, partne r' s
loan is pa i· d Q · h am ou
creditors are no nt will be paid t
.J and Bare
Q. · ~iH~n a lo
parmers in 3 fin ap 1ta
n sharing prof
s.
less am ount ?. t to be paid and the Cred.. ° .
remammrsg ~ord'US,000 if ts
ito
its in the
~ o00 0 from B. no.ooo ro the firm and the fin ratio o f 3 : 2. Mrs . A has
:in of
. ere itors agree ,ooo of th e
Th n .\O~- il 9, 000 d lo accept 5%
(215.'ooo. State the oredefinn was dissolved and its asalsesotsobwtaerined a loan of Q. 56. P, a part
r of payment e realised for ne r, is to bear
re:ison. if there of Mrs . A's L n ,OOO . P ha all expenses of
Ans. As per Se
no.ooo will be paid
were no credito
elion ➔8 of th
e Indi
rs of the firm .
an Partnerslu
oan an d B 's
Loan with be debited to
d to pay real isation
Realisation Acc expense O
ount? s
;;t
reali .
.
fo r which he is to
,)OO. How much am
be paid
M rs. ~ 's Loan
first and after ~ Act, 193_2 , .\ns. n ,ooo ount ,,~II
that B s Loan of
a\'ailable amou will be paid Q. 5;, ~ow muc
Q. 48. On dissolut nt of t S,000. up to th e h amo_unt_will
ion of a firm, hi s share of re be paid to A, if his
Total Ca pital (4 ilS Balance Sh ah sat1on profit opening capital is
8,000; Cas h Bal eet revealed amounts to ~ I0,0 n,00.0
ance ~3 ,000. to ta l creditors
~50,000; val uing n s ,0
00 fr om th e firm 00 and he has taken 00 and
less. What will Its assets wer ? over assets
be loss on realis e realised at
ation? 12% An~. t 1,85,000
Ans. rn ,400 Q. 58. Total cred
Q. 49. On dissol ito rs amounted to
utio n of a firm , Su not shown in t S,00 ,000. In vestm
th e bo oks. One ents
of the creditors too Yalued no o,ooo were
ndry Creditors
paid at a discou am ou nted to full sa tisfacti on
nt of 5%. Wha
t entry wi ll be
~8 ,000. These of hi s debt of n k over the se inves
tments in
passed ? were ,2 0,000. Remainin
Ans. Realisa tio discount. Pass gcreditors were pa
n Ale entry fo r paym id at 5%
To Cash/Bank A Dr. 7, 600 ent.
le An,. Realisat io
~- 50. On dissolut n Ale Dr. 2,66,000
ion of a finn, th
ere was an Unr 7,600 To Cash/Bank 2.66,000
taken over by
a partner at f ec orded as se
t
Ne
2,500. What entr o f t2 ,000 whi Q. 59. If creditor . 1 . t I 50 000 an d
ch was ca sh balance is ~
\ ns. Partner 's Ca y will be pa ss s ar e t 25 ,000
pita l Ale ed ? what wi II be th e , ca pi ta 1s , I0,000.
9• '
To Realisa tion Dr. 2, 500 amount of sundry
Ale ass<IS ·
Ans f 1,65,000
2,500
:; ; :;J 1:lC : :) i!:-1
• •, • • )J
 ♦ (.) I' ,\ PA RTNER .sH1p l'"IR.M
PISSC2L UT101':__0!_° ~
,-.J
!::_~: ._~~IP I')~ ,1 I J ll' .
~
,...,
1 r · 00.000 . B < -. 00000 - , "~1
an d C t I 0o . ," •ni ngcap 1talsof partncrsa.n::,1 ~
r c i or"'.
• 2 -00 .00o 8 ~3
n g t c Year arc ,1 ~
3
· ..in:_\ . rso.ooo. B t4o.oo
, 1 r.JJ1I1<•r., , n·.ir
o llnd •OoQ II wings dun
l )p<' 1 d h 83
r,ta1, • ,00,l)OQ and C Y 4 ()Q I)()()
1,.s.,
C ts ,ooo per ITI0nlh anu C . 3-OOo per rnonu, 8
l
J tlK r rn ~4 . •
(}. tJ).
1
·
Io ux•!f
p,.·nm;! cJ
JrJ\\ ,n,;: (}()(). \\
JUflng
an: 't><J.
tJw .
h.:JC ' \\ 11 1 1-.c the amoun t ot assets o the ftl'lli3'>. •vvu
L'
,,
.,n ,th and
n::o,toni arc t go N\n ' .{)()() per
..1,..,J
J cn:d.1,..i~ nil''
3
O
f assets of the !inn·, •'JU\J, "'hat wilt be the

~
,uount
t~. 36.000
•

.,,,
0
. ,.,oo 000 and weal liabilit . o c , \11i.it
. ....ies are.~2.4o,
hare profits ,n u,e ratio ot their00
\ l
•,.J nv, -: . ·
. /i nn .i.re ' ap ~
~
:,
I..'
\t'"- ' · ·
,,1 IIW wJ JS:it'lS ol .l F Q.Jn d
_ io.l.st1i R., I t ,they s
1
dissolu tion of a !inn, its Balanc e Sh
,\111 I.be cap g rallO IS I - .
l ~n ,ral Reserv e ~2.00, ooo, Creditors ,.' I Oeet revealed capital S•00 •000·•
rise d at 60 0 00o cl.nd
arid prolit sh;lnn; ;_.:0.000. R f~_S0.0 00 . ' (,e nt:
sets were rea % . What Will ~ , ~ h balance Uo,ooo .
10Ss on realisation..,·
P
. a1 · 0. dPanne
Crediw rs are <70.00 "' r s capi tal is t\0 S _12.000
<• 1• oOJ)()(I. Q ,t. 3 t1rm.
re 1se ' 1' 50 ,0oo. \.ln..
,,.,_ _
of d.JSSo/U!JOn lis <I 0. 000. Other assets
? ·• •iat
U. , 2 .\1 r.be um<= Balance
>

~ -o (){](}. Cash . r.h ,afisa tion accoun t . the basis of the follow, ng data how m h
• ,:1~i-~ r.he Profit Loss en e re

<17 000 were shown in the Balanc e Sh,.,,

(! - O~ner on firm 's dissolu tion? uc final tlaYment will be made to a
~ ,edi< bal=c e, of Capital Account '50,000; Sh.,,
. . .'
'
\m. Los, lJO.O()() O
I ooo· Firm s ltab1hty taken over by hi ,. ,. of loss on realisation
~
- Ivent. 70¾ We ~"t
debtors
-became ba d. One
, deblOr becam e inso re , tn ,or ,&,ooo .
o t l_ On wsso
.,, Ju1.1on of 0a hnn. '
~48,00 0
_ Full amoun t was recove red from th
f thls <:2.00 5 000 . . e \fl'
•·
Out o h. out at < . . ·11 be th I
e oss IJ1 realisation
of this item, what Wl .
from· On accoun in a finn in the ratio of 4 . 3 . On "li nt\ , S ct·\SSQ\\Illo
I
reco"ered
balance de blOrs JJIJ
" >' and z are partne rs "'70 . · 2 · Rea1· .. n.,
accounl'' 1,
() -,·· /\firm's total assets are, ,000, creditors are ~IS
e t2 100 . Asset s rea1.tsed l 5% more than the book 000
, - \ 1sat1on ·
C edi expens es
r tors ~'were
,,, / · '3 .500
,,_ '-( On •
d1ssolu u·on
artnec' , caphal accou n, · "'9 000 H
°
fa firm. afi P . realisa tion accou nt 1s
h
, , . e has paid
·11 6
has a c,ed; t balance of a ·
ar .id 2% more . For
pdebi ted/cr edited
. with
.
profit/
how
loss
much
on realisat
amoun t?
ion
·.,
Y's -vaUue.
cap· al
accoun t w u ue
\ 1... -

< . 5 hare of pro ii ill t e w1 nally get?

Nl,000
firm 's realisa1 _ expens.es i~-', 000. How much amoun
. His 10n \0" }"s Accou nt will be credite d with n ,100.
· · A
<5--1.000. \3 . According, to the
~J. The firm of Ra:i and Mohan was dissolved on 31.3.20
J .
fSO 000 are transfe rre d to Reali sationors ccoun t. What tion wmk fo, an agreed
· . are not to be agreem e nt, Rav, had agreed to undert ake the dissolu
f). 6:. Creditors amoun ting t~L
·11 be made on UJe,r. '
pay ment if r Jo ' 000 of the credit Q
es. Dissol ution
realisat ion expens
. mg ere ditors aoreed to accep t 20% less amo un t? remun eratio n of t2,000 and bear all fmn .
expen ses were t l ,500 and the same were paid by the
w1 the remam
entryand
paid . er

56,00 0 tion expenses.

Ac,. Realisa tion Ne Dr. Pass neces sary Journa l Entry for the payme nt of dissolu
To Cash/Bank Ne 56,00 0 (C.B.S.E. 2013 , C1
f I 1,80,0 ·
h · 00, what Ar·.
(). IJ6. If rota/ assets o a r.Im! are f6 • 00 • 000 and total liabili ties are (
. ·
wi/· I tJ1e cap,·1a1 s o fP. Q and R if they share profits m the ratio oft eir capital s Dale Particular~
and profit sharing ratio is 5 : 4 : 3. Cr \.i)
(1) Real isa ti on N e Dr.
A n~. p r I, 75, 000; Q r1,40,000; R r1,05,000 To Ravi' s Capital Ne
2.00()

ent will be made to a (Remu nerati o n due to Ravi) _ _ _ __

Q. 67. On the basis of followi ng data, how much final paym . . -- - -
partner on firm 's dissolu tion? {ii) Ravi' s Capita l Ne Dr. l.50()
Debit balance of Capita/ Account ~5. 000; Share of his
profit on realisation To Bank Ne \.500
( 28, 000; Firm 's asset taken over by him for r6,00 0.
( Rea lisatio n expen ses paid ~ n behalf ofRavi ) _ _ _
~ _ . L __ _ _ _ _ _

A" ~· f 17,000 .

liabililies are f2 ,00,00 0; amou nt realised on . firm Their fmn was dissolved on
l), (,H. /(total asset, arc t 5, 00,000; Iola/ Q. 74. Moha n and Kanw ar are. partnethrs m a, ~f dissolution. For
this work Mohan
and realisation expenses are ~2, 000 what will be
is n. 10.000lion
sale of assetsloss .
I . 1.2013. Mohan was assigned e :"ork t1on s of ~400 from his own
llJe profit or on rea /isa '?
. 11 .d d1sso\u d ~ ex:pense ') .
th was to be paid ~500 . Mo an pai ~'400 paid by Mohan . H yes,
A . Loss ? I, 92, 000. (CB.S.E. 201 3. CJ
pocket. Will any Journal Entry be passe or
pass the entry . If no, give reason .
 f>i ~OLUTION OF
A PARlN ~
- _!'. R.S!tu, : ~ p~
- - P(b
I'' ' ,1 I
"~I t1 I l~RSH11• P10 ,,
o.u
LF /),- ("
,)
, :, 1 ( Jn l 1sso·Iut1.on, lhc , ""'
( ,un
Rc.1hs:i11,,n \, ·H>o c,.f"1 ·1\ cC ll lill.t IS '{ j ' oo ooo ount
, 25oo ul th cr cm ai • . 40 '1/. or Sunu
To ~ft, hJl ·l' ('·1• p1w l \ .:
tal-.~n over • b . ni ng Wereoof thc - . ry t\SScts
(Di:-:;lllutit>rl <-,pen~<': ,,id 1,) t-1oh:JJ1 on ti m1's t-chuJJ)
.
y V1kas (a SOid :n<1Ssc1s. rcaJi'.l<:d tran.,t ~~s
' I" Ba nk Ne Partner) 12 erred to R
a dis
,orr ~toh.1n IIJ $ not , t'l:~r tin: d,ssol
uti(,n c:xp.:nsc: s. \ii '
. at boo k couni or 2fJO 0% or lh . ca risatio .
n
i1Jt>k t, ;.O
l o Reali sation Ne and re boo
eir k val .
(). • ~ ( ~ s Capt 1:11d··-\ c,•t)L1111 II•J.S •,1 "''·•dtl tial:u1n: of. t _,0
• . Val ue p
' . • . ue.
" td:in cc: t,f t-W 0,000; C s Loa (Assets of book val ¾I entries. main1ng v.erc
sho " ing J u,t .000. Bank Bal an
t . ce is t 3,00,00Q n A '" 48 . 000 and assets UCof~4Q Dr
, un·nl l,( t .. s I o.u ccount i Z 15,000 sold for ha . . 60 ,ooo
\r .
(Tl :3 l
Cs L' .1r1t:1l ,\ l •
1 :\ ' . Sh ow s . , ~ 12 vin g bo,OO o.I
ok v: d at
Dr. 40 0 the ,00 0) 60,000

,
V1 kas s Capital Ne Uc of
To t ~s I 0.111 .: ' 00
(C s L(l..111 1r.rnstt:rA, ,. • .
n.'d 10 ( s Cap11aJ AJ_ To Reali sation N
. ~) 40,ooo (Asse ts taken over e
Q· -b Pn.n 1,10n 1. D•prec iati 0 n t65.000; Prov1 . b y·
Dr
• or s1
-
3Ild Pro\1.den Fu <:
nd ~ 1 .:;o 000 has on fo r Doubtfu l Debts ~, Fix ed Y
Asse ts appear in th tkas at par)
4S,OOO

.
I . ·- . . . been trans fierred ,., 0 ,,_ •
_, . . , ,•. uni fo to the Crec1 · "30 O · at a loss of 4% on e8
ReJ.11:;:ioon -"'~ ''1 r\, h tch item paym . . It , Oo - net colle .alancc Sh 4).000 '
',, I
ent 1s 10 be made
· by the fi Side of, . eet of a fi
..\ . Pro\ idenl Fu
nd . · 1rrn?
\O' Ir net co ll ec
.• t1on is t l 00 Cl1on. Stat th lrin at ~ 52 000 -n. .
-- , dn (ft 'ill l01 1oss wi.ll be e~ e am oun t coll · 11

(J1. '$ C. 50.000 an be Z I 04. As such 4 and he ected fro·m suc n:Yrealised
5un . . d Bi lls Payable f 35,0 00 net am h
assets.
.r." ""'un
= ·
l
_
IO th e C .. i:t ,ide ol ReaJ153uo
. . ha
n A1..:counl Sun drv C d. ve been trans"
, re !tors were
t5 2, 00 0 = t S0,00
0
' ou nt rea lised f nee boo k val ue of
assets must
w. ,..v of Ioo _ Wh3t would
0 be the further tre p .dierred rom fixed assets wil
atment if nothin aJ at l be 100 f
mentioned ~ g 1 _a , gJ . Na m . 104 o
e se 13 ....
1 e
b . the ass et .that is not tran ,.
-ta::.. Re.Ji i 53rion A .: bu t n ngs ce rtam s1 erred
Dr. 35 ,000 of the fin n. amount of cash . the d b. to
ro sw A c e II side of Real'sati
against its dispos
tBills P.J::1b!e p:iid al at the l~ " oofnd_Ac
on) 3s ,oo0 .\O . Unrecorde
d As set. •
clounL
JSSO uuon
Q. - !l. D.:ssolurion ex
penses '.ll110UI1ring 1 !C.B.S.E. 20/4. c1
6 e roi iK e b: tbe 0 <6.000 were to
furn . Dissolution be borne by pa Q. h-'- St. ate an. ) t\vo grounds
3 expenses amount rtner X and on the b .
er.tire :miouni \\3 5 p:i ed to <15,000 an dissolunon of partn
id b: firm . Pa ss d the ership firm . as1 s of which .
..\.c.: R.eafu;:ilion ..\ c jo urnal entI: . · f coun tna ) order for
\r . At the sw
to (C. B.S.E 20/9 Keraithe
Ss C~ro.l ..\ c Dr. 9,000 on any of the afopa rtner, the co urt mav
llowing groun ds : orde·
a1
To lb lk A c Dr. · .
6.000 ' a pannership finn to
tDi.sso;~on c.xpense: ( i) When a partn be dissohed
5 paid b: rbe fir 15 ,000 er become s insane ;
Q. ~ . O:..ssoicr:ro e m and .\~s share
de bited to his N (ii) When a partn
_ ~ amounti
!he tr ,~ b:, ilie ng m t 15.000 we
re to be bo rn e by
e.) as a panner. er becomes permanemh mcapable
firm. Dissohn:ion e.\. partner Y and · ofperf; · hi d
e:1i:-e :mxv..:i:1 was "J)CDSes amount ed omung s 1.U·,,.
pcid b: }·. Pass jour to f25 ,000 and the <J. 5 Sta te any tw 1.,
\J::: Re.a.!&rin::i ..\ c nal en11:·. o contingencies tha
firm. t may result into dissol
uuon of a par
fo rs Cc;:~!2J ..\ C Dr. I 0.000 mcrsl-q
Co ntingencies tha ,C BSE. .H P
(Disso:dlkl e.xprn t may result imo dis
Q. &, . ~ S? •ii"::::ei:1 ..'5 J)2.ld b:, ]0,000 solution oi 3 panncrs
of T2r.:::J· s (a Parm j ') ( i) If th e firm is
constitu ted for a fixed
lur r.rm .
er ) loan of <25.00
no1 ~ .: :. 2
□ tile books is 12.ken o, 0 to tb e wm. on the n-pi.1: of th3
r"::ss n e e -~ X>"..J:! er bY him at an ae:re firm, a computer (ii ) On the adjud
ication of a partner
t tc.7.1
3.i e.;::n ed value of {30,000 as an ir.sol\ er.:
• .
.\ c fa·..=; ' 5 ~ .-\ - Q. 86. State any tw · ·
: . o s1tuanons w hen a r. - ·1, ~oropulsonl\ dissoh~
T~..::i·s ce; :21 A c D r. 25,000 ww · •
.. · C 8 5 E : .'9 \1 p
10 R, ,2i;5 :-- ;g A: Dr . 5.000 . ulsori
.- :...n . A firm 1s com l dis5rnJ,.,d ;;-i ,hr follo,\-:i,
a ~:.::::i·s l...o2:i oft2 30.000 p : :,v • ~ ? .:ase) .
.5 .<J.X) se~ed b,.. 2: ( i) \Vhen all the
-==i ::::::,"'c'C(l_::ie.: ~ i,in£ partners or all .
t,::i on~ ca.~_:-: : ,cc
".'~· i :.: ::i.x-:i ,
0 ~e-r ZI ~ a ~ ,-a !~ ,;;:- :-_c.. , -:~c.
-
(ii) When the business 01~ t Xc ·•"1.e5 L ;!~- --
tbe .1i!P ' ·
•
r
tfl 10N CW A PA in'N F.RSi t
_,<,l ll ' IJJ frfR l•
11I • d
r~n l1sc noth'ing. Th e r• . IV]
s<.: tt lcmcnt u f h.1s claim cma1ning il!!Se
tr
.
pass necessary Journal ·c s Were tat.
"c:11 '>vcr h '• v
ntry fOt the . i... ·
\fl' • - ---- y a creditor •n full
a\J\>vc
/)ate
A's Capi\ltl Ale
re h Sf 2( r
4

Jf 'J, lJd hi;

Bank Ne
fo Rea lisation Ale
(AsseL<; rea lised on di.. .
- ~ lut,on)
1.32.000
SHORT ANswi
(Questions Ca R. QlJE.STIONs
- - __ - _ - - ._ rry1ng 3 l1v1ar
' ks
, ,,. ~;bering (K no wl edge ba;e-;;j )
R,er n .
1 Write the circum stances Und .
.
-, Clarify the difference betwer which a fi . .
... een ct· inn is dissolved.
partnership.
issolution of a finn .
. . .
3. What 1s a Realisation AccoUnt? and dissolution of
•. Me ntion the order in which the
. f ct·
the ttm~ o 1ssolut1.on of Partnerpro ceeds fromth
ship firm . e sale of Assets are util ised at
.. How will you deal with the Rea
-· r .
a firm ? 1sat1 on expense th .
5
at e time of dissolution of
Ex plain the accounting treatment at
th .
firm, o f th e assets and liabilities
.. not alr e dtun e of dissolut
. 10'
n of a partnership
.
. What accounting record 1s made. ea y recorded
on diss . f mthe boo .
ks of the firm .
1
o ut1on o partnership firm ?

PRACTICAL QUESTIONS
(Q ue sti on No s. 1 to 43 are strictly
in the serial order of Illustrations)
r • Manoj and Nand were par
tners sharing pro fits in the ratio of 3 :
journal entries under following situ 2. Pass 11
ations at the time of dissolution of firm :
(i) Workmen Compensation
Reserve stood at <1,00,000 and there
liability towards Workmen Compen was no
sation.
(ii) Workmen Compensation
Reserve stood at <1 ,00,000 and liability
of it was acertained at t 75,000 . in respect
(iii ) Work.m en Compensation
Reserve stood at <1.00.000 and liabilit:
in respect
of it was ascertained at { 1.20.000.
(iv) Work.men Compensation Res . .. .
erve stood a1 n ,00.000 and ltab11tr:· m
respect
of it was ascertained at t 1,00,000.
, . , .
. (i) Dr . Workmen Compensatio . ·e and Cr. Partner·s Capital A.ics m
n Resef\
3 2.
2 '91~@/ ~ ;~@ j
 e
.J
"C>f '. " '" !" :~ H
p:ir-..ncr V. as
,, ., , .:iJlo wed
~ l ~-000 as
Re..1 hsauo n A cc
a re
J>
appoi ~ :- -
mUileration
his r e m lookafte.lhc
--
- ~~
~ t l&.~
. ou nt . P l~
l r• } \.,"111t
~ :... I , , l Deb~t
_ Tbt ~,.__,~ agreedOf<hS\O '-~
- ~- Real~sation Ale - had to takeb:io,uon fon.,bich -
. • (,1il Deb'.t ,er he
() .2. 1/ r .~,_ oJ ;-r-_ts:::-10.:1 l8.00o Realisation A already ~..en
- . _ ~ ~1 .1 n •' " l Deb'.t le and Credit L" ~ \: .,.,onh
s
,ii f~~ l !0 .0 00 .,.er Real!sa.tion A . re B S E!ranstm~ to
-~ R =, !¢ 1'
· ·- ~ of l 12 e pa id b) a pa
rtner. l Deb'.t Real~ le : Crtd
it.\.f s ~ ~ Al
e.
.00o ... ere to
..: ; C' ~- ,a )- l Debit Realissa.ti on Ale
10 20l6. Delhii
~
- be met b) T , Cre&i Bank~
.. ~ us ha r a ation A /
-· ~~ d
A.
~ ..t'•.::..'~le. !lIwa'f!sl p:lld 'c
1
~a nk A le by Cr edit p, A.c
~ J) an ne r, bu <4 ,000 ~ y t9
,
,,1 1 s.uresn- ~ - rem unerauon o f < t pz l :-S o En try ,000; c ~
I 0,000 and he . .] . Ac_
.'.J..l/e,:per.se5 was to
__ = ,. fh e follo Sw pj ta !A cb y
,~1 viru. a p:umer. ,~a.> I". •d remuneration o f <15 .- ~ wing 1s the B b,•OOOand
~xpenses- .cw = ~ es a.mounted 10 <2 ,000 and he was to meet
A -- -~ ' E,-nt>.,ns -·- · ~ h3Jll1g ratios of th e panneral

'' _ nfir-,
m-·
I~., J ru = J.S.lU
t J0.OOO OD
. ,-~ ns es
,\eree-"wY -be 1:>om
-

amounting 10
0,000 w hi ch w

- 000
<' l ),
er e paidmbeet all
y~
·

l'-tJ·:o:-:,
Liabilities~
---~
sa nce ee t of A
are 3Sh
t
:,
--
and 8
as at 31
s.t March, 20
1!1. roe
fl .. r-
/VII) va un .
rneer aJla ex
,,..,,mer \\a 5 aJ
y- -
e b) a partner d th b I
lowed a remun
an
er
w er e pa
e a ance by th
id by the
e firm . firrn _
L c- •:; !l ,\c co
~, A
un ts :
85 ,000
97 ,50()-
Land & & it&ng
Motor Vehicles
A~<ffi
s f l
'
penses - firm paid .
at io n o f f 25 ,0 00 an d 30.000
an expense o f he w B 63 ,000 Stock
A05- (i) Debit f 5, O00. ,a s to
1,48,000 Deb(
ors
!&JOO
R,eaJi.sation AJc TI.&00
fu1 Deb ir Realisat an d C re
ion AJc and Cre di! Bank Ale . Less: Provision fo
r
1.1 3100
dit Partn er 's C Ba d
(t ii/ Debir Tu
shar 's Capital A apital Ale. De bts
le and Credir B - ~ · Cash at 1.10.5 50
I ,v ) Debit Rea ank Ale . Bank
lisation N e and . 2,45 ,500 13.650
(v/ Debit Rea Credi t Suresh 's
lisation Ale by Capital Ale. The partners de
f 15,000, Deb Sheet. Motor 1.. : ciIded to di ~ 45500
and Credit Bank
Ale by <'20 ,000
it Viru 's Cap
ita l Ale by f5 . V
d ewe es and Stssol ve the fimn on and
(v i) Deb it Pa . ,000 re sp ec uv ely an II D oc k w ere Id fi from th da =
rtner 's Capital A
le by '( I0,000
, t-13,500. Cre dito a ebtors were re so
alised in fullor La cash at ~1 e te of the Bala
6 9· nce
an d Credit Bank D eb it Rea lisation A , ~ 1 2)-0 rs w ere paid off subj n 0
~
Ale by le by ?5 ,000 ect to di sc · f . , .) and 0
(v ii) Debit
Realisation Ale <' 15,000 . 11e rc; \ . - d
ount o l,?OO .E & Bwldmgs were so
7.600
by <'25,000; C xpensesofrealisald a1
and Bank N e by redit Gauri 's C Prepare Realis tion
<'5,000 . ap it al A le by at io n A cc ou nt, Bank .Acc_ou
?20,000 close the books
Q. 3. Pass nece of the firm as nt and parmers, apnal
ssary Journal E a result of its di C • Accounts to
ntries on the di [ \ns. Profit on ssolution.
sso lution o f a R ea lisation n 9 ,850 ;
following cases partnership fin Total of Bank N Amount paid to A
(i) L, a partn : n in th e e n ,64 ,900 .] ~96,910 and B no
er, was appointe .9 -W:
d ro look after '.lint : Amount
was given a rem the dissolutio realised from D
un eration of ~ n process for w eb to rs H ,13,200.
l 0,000 . hich he Q. 5. P, Q and
(ii) Disso lutio Rare partners
n expenses ~8,0 de cide to di sso lve sh ar in g profits and lo
00 were paid by their firm on sses in the ratio of
(iii) Dissolutio the partner, M 31 -03-2018, the '2 : I : I. Tb~)
n ex penses wer sta nd da te on wh ich their Ba
(iv) P, a partn e ~5 ,0 00 . s as un de r: lance Sh~t
er, was appointe
be was allowed d to look after the pr BA LANCE SH EET
a remun eration ocess o f dissol as at 31 03 :018
o f n ,000. p ution for which
expenses . Actua
(v) N, a partner
he was allowed
l di ssolution ex
, was appointed
penses t4,000
to look after
th
ag re ed
were paid by
e process o f di
to bear the di
P.
ssolution

Creditors
Li
------~
abilities A,nouJU ~ -
t
~---
A,JelS
-~~

'\0.000
a remuneration ssolution for 80 .000 Bank
expenses . Actua o f ~9 ,000. N which B 1.,0.000
l dissolution ex ag re ed to bear the di ills Pa ya ble \0 .00 0 Stock
penses N ,000 ssolution Loan from p 20.000 Debtors 88.000
were paid by
the firm.
Re serve Fund 8.000 Les.s pro, -~.o-1 oo so ooo
e f ' 'ii •
1s100
~ JJ L :) • ~ I •
~• •J~:~
~~
 6.?0
l)ISSOLUTIL)N OF ~ PAR

Jnvc su11('1J b
TNERSH )
-
~
II Pfll~
. N ()J' A l'AR .fN ERs
( 11 1J I 1< > • - l l)p PIJU,1
pl'' . )chtors rea lised
Cop1 1JI l\ccounts . 4 11 l 1 20% less of
1.00.000 1-um 1 , . .
I' 1turc
1.00.000 Macluncr)
0,0oo
30,00( j' s loa n was paid off with . the a010
{I ') I . . Untu u, .
() ~.ooo 90 0 l
, oo iica hsa11on expenses arnou 1ntercs1for .· e Iron, lhern
R (~,) . I• six il1<>nth · ~ 91
.J,20,000 I , re req uired to prepare . n ed 10 t 1 , s.
4,20,000 yoll ,1 . . . , lOo.
. . nal anfonn:1tion is give n : (o) Rea lisation Accoun
• t
n1c following add1 uo
• • taken ovt:•r by pat book va lue. (h) ;1 's Loan Account and
(i) Investments ::ire
, C 8,
• , · wken ovt:, r b), Q fo r <'20,000 . ( c) Partne r s apit. al Acco s.Loan A
(ti) Furniture ,s
···r•~' pa1 o tr 3 ta discount of 51/o .
. s. ht:
(//1.. ') ( re d1tor
'd 0
(d) Bank Account. Unts , anu
· ccoun1
1
rs
(11·) Other assets rea I c·d 3S fo ll ows :
at 80% I. I ' Loss on Realisation ~2 , IO00
· f sank Acc ount ~2,04,0 O· F'
Swck O 00.] ' ' ·ina1 Payment
f65 ,000 l. tal
Debt~rs at 30% less . o I • Payment to Sundry
Creditors "60 to ,1 t &o ooo
Machine ry 11 n · ' and
, ,ooo . B t IO 000·
v Expenses of realisation
amounted to t 2,000. , 7_ A. Ba nd C were in partnersh· · •
'· .
() ' c Sheet showe d the followi 1Pshan
Pre are the necessary 1edger accounts to close the books of the firm salanc .. ng po . . ng Profi ts in th
p
. s111on on the d .
. . Liabil1ttes - - - _e ratio of 2 : I I
[Ans. Loss on Reah satl on f 80 ' 000 '· Final Pay ments : P t 1,24,000; Q t62 000 t ate of dissolution : : . Their
. R f 16 000 · Total ofBank Ale ·
Amoun t brought m by , , t 2, 94,000 .] ' ' cr~d110 fS
I 40,0oo Fixed A " Asse11
81·11s' paya ble I0,000 Stoc r"'sets
Hial.S: . . . d . the question abo ut the /s Loan k
(1) Nothing 1s mennon e m pay ment of 8/P. It will be assu 50,000
lull payment " ~II be made thereof. med that ~irs. A's Loan 20,0 00 Debtors
. 16,000 60,000
. . . , . ,,...,e n Com pensall on Reserve Les 30,000
d
(1) Nothing 1s menoone • th que stion abo ut the pay
m ment of P s Loan. It will also
woreu" 20 000 . s : Prov ision
. g a sepa •f'seLoan Accoun ,
in full-by prepann be paid ·
capita . Is · A ' Furnnure ~ 28.000
rate t. 40,000 Goo dwill
B 20,000
Q. 6, A and B were Partn ers sharing profits and losses C
20,000 Cash at Bank
in 2 : I . Their Balance She 18,00
0
as at 31s t March, 2018 was as et 20,000
follows : 10,000
j ~
-- -- -
...
Liabilities
Sundry Cred itors -- -- -- 2, I0,000 Cas
Assets
I. A agreed to take over 1,86,000
h at Bank furniture at 20% less th
60,000 1h
A's Loan@ 12% p.a. 50,000 Sundry Debtors
1,80 ,000
.
11. Fixed ass ets realised ~32
,000 and stock tS S,000 .an e boo k· valu
-
e.
General Reserve 90,000 l ess : Prov ision fo r Ill. Bad Debts amounted to
A's Capital 4,00,000 ~5,000.
Doubtful Deb ts IV. Expenses of realisation
B's Capital 2,50 ,000 6,50,000 Stock 1,70 ,000 were ~3,000. Creditors were paid
V. The re was a claim of ~6,4 at a discoun t of 5 01 .
2,00,000 00 for damage s against the firm 0
Investm ents . It had to be paid .
1Plan 1,50,000 Prepare nec essary accounts.
t & Machinery
4,00 ,000
B's Loan [!n s Loss on Realisation
20,000 ~·55 ,400 ; Final payments : A
Crn ,150; Total ofB ank Ale ~6.300; B rn ,1so;
I~
10,00,000 ~1 ,22,000 .]
lt ir• : Nothing is mention
Partners decide to dissolve ed in the question about the paym
the firm on the above dat 11 will be assu med that these will ent ofB /P and Mrs. ,f s Loan .
realised as follows : e. Assets and liabilities be paid in ful l.
') 8 X y d z are in par
(i) Plant & Machinery was · · ' tnership , sharing profits and losse
taken over by A at 60% of decided to dissolan . s equally. TI1e y
(ii) Investments were taken
the book value. ve the partnership on 31st March, 20 18, at which dale the Balance
over by Bat 120%. Sheet of the firm was as foll
ows :
(iii) Sundry Creditors were paid
off by giving them stock at Liabilities 4ssers t
and the balance in cash . 75% of the book value
Capital N cs : Premises 80,0 00
X 90,000 Machinery 68,000

/ ~J .' ; ).' !Jf;j

 ~
-
.. - ~
1 U TI < 'N <'F
"' ,
l • /\ i '/\ l( ' l"f \/p
I >1,<sp A R t N 1: 1~s1 ,J I ' JI \ >N \ l ,l{SJ 111 ' l•1r
' Iii> I'l l~ , • .·, ltvt
~t ,.I'' ' lll )d N
11 1111 1
t ) , , .
~t ,~•I. I 1, 1.:c S I Ur c~h 11:1:111 , .
<-. 1, t l\l il -:; •I0 ,110 lt<" t1 th e ir ll111u 11
•h ), tl( )tl .'.'- m ,d r.. lk b1,,, 1t1 ll f.J
· 1cc1 ,." 1<>oll lt~ ~ll lo .
.,, ' · ' ' / ,,,1,,/, r/,• ,· ' 1Oil 11 1' ~ I
H il b R~•..:-1..· l\ ,a
hl .: · On () \o;ll : ' v~ ll)(:,t . ', '/}
( ' ur n. .·n t \ ,·, • • I 11 'rl , lit "
) (\ ()( )() It' r,,,n Ori S.: p\e
I ' l'- 1q \ ll lH III I S
•. " , , a..-- l . / lo.ooo fllbcr 111,
\
4 . t~ l tl l ·u ~ n t ,.\ \' <l' 'I"
l • 1'1 ,1 ,111 ~ il~I-, ~t IJ;, Ai,,.,,
)
) 0 0 () <lO,l)O()
•
, _,, ,., It 20,ooo ' l<><:~ -in I) ~
I.. 1'." 1t tl'l ' l\i11, It · I r-" Oc
0

~ Ul h .in \ , l,, u nl s
t \ 14 ,t>oo Su ,1.1" ' )CI)
cc,va1i1C 4r,o
\ J\ .Uh.'<-' tn•r! I •< ., ',I ,
1·«1·1· I' Cbro~ 21 ~<Jo
l I ' II 1•1111 10,0oo
\ ,h cll 1\."\.' IT \.'l ll \ \1' ~~ ll.tCJI)
2. ti 7,oou l 1n li l o r~ 3 ., IJ n fr.,
6,00Q I' Uri 11., " eh
~~\ Rt.:n < ) l(lJ rc l~
1 ,d111i ; soo l I S1
( 1111- • 1 ta rit ,,_ ..:.. ~ 41
.~()()
.:k ~_5 .0 00 m
or e. S un d Ci Ooctw "'-, fv1ac1-, 1nc1y
nt ed ~ D eb to rs
0
le ss : St~1 11 1,fJO<)
1.-. ~ 4 ~ o
ah sa ti on a m ou
_>s -:t r-' ,) n w l"t': i\ l:.t,: hm s~ s ol n: ~2 .0 00 . I2 Prcpa·d
, Insurance
23 ,0()(J
f>n:-m is.
t, k
'~- ~ xp ~n
.u tx,<.'k , -al ~( . .:-,00 111 ti..lll se tU eml:"nt. ~ 00 20,0QfJ
R1 '
..l.'l..'l \ 3 Jr)(J
.m J B il ls Yc.>pt , .:-, 7 re al is ed as (i
-.J
1..lr.- ;1g_~ ~- d w 3L o f th e fi rm . I hl' asse ts w er e oc k
S un ~ C r~ ilr to d o se th e bo ok s lo-ws :
an t & M ac h· ol t 35 ooo ~2 0,ooo,
St 1.20.~ rl()
.I O O ; y ,wn.: { 5. 100; Pl
W 1c s
.~ hx iger ;11 ·
.. ~0
en ts : X tl ,0 1 1ncry ; Su nd ry D ' Br lls Re c
S hu " n ~ "t 's .. Fi na .I P ay m t 6 2, 10 0; '
ebtorsat IO•e1 vab1c tJ 80o-•
R l:"i!1 sa u on t5 .700 : 1urtt
o
1/ less th an 'book
[ \. , L1.."\._--S 1..m · ,~ .7 7. 80 0. ] .2 .2 0 1 7 :
i iluc.
re di to rs a ll ow ed a d . ount
isc .
of S¾ . ptttarn ag
0r :1 I 1.., f B: in k. .-\.1.. r a.nd Z ns at 28 . Su nJ ri- C
z , _~5 .1 00 ; T L \ : y o ut st an di ng re nt Exp
B:11:J.111..·e Sh el :" t o .. ·h t<'"'rced to pa to Pay his wife '
lm in ~ ,, ~LS the , .1ri:~ • its ~ enscs on disso1~:-ed carne to ~&oo s loan.
ll T he fo ll . ls sets h sh ar ed pr of . ion
pn ta tn and N ar es nd losses in th e rat ,0 of th . .
,)
32.ooo se tt le d . e1r ca pi1 ats Ac e
, 0. 00 0 B an k . , fin ally · ounts
48,ooo
11 , rt
ea lis at io n A c .
Pn:parc Jo ur na l,
R count ' Ca Pila! A ounts anct Ba .
10 .0 00 O c:'bto rs . cc
19,ooo R · n ~ 1 , 700 : Accoun1.
B ills P-.:i~ a bl e IS.0 00 Sto c k I, Loss on ea lts at io 4
Ca sh pa ,d to Pn·1aJn ~ 40nk200
B an k N e ~ I , o4 , 800 .
43,ooo ]
and Naresh
(.;· s l ,u n .::o.ooo Fu rn i tu re 1.09,ooo , 1, 60 0; To ta l o f ra n .
'
d B ui ld in g I . •
Goo dwil l an d Pr
epaid ln su
ce w, II be deb'1ted to Rear .
r s LoJJ1 .3 , ,0 00 La nd an her
pe n. sa no n R es en
e 20,000 d .in re sp ec t of these item isa11on Ale and no fun
\\ ·o rl .m en C 0m Z 's C ap it al nil' !11 c
11 b m a e s.
M Ri ta C h ow dh ar y and M' Shobha ·Fancv
C3t1Cl.l s 75 .0 00
I •
I II > I rs .
h · lo ss es
•ss ll
e ua are Partners in a firm.eB ·
'
E or ts s a n ng pr of its an d il 20 18 th
1.60.0 00 xp q y. On lstApr ' • a1ance
85 .0 00 2, 7 1,000 G:mnent s ow s ·
irm w as as fo ll
 OISS O L~ ~~N- 0! ~ ~~~ ilsl -lll> "ll )No r A PAR'l'NERs1i1
a; -.. .
1
6 94 ii L1
~ - - - - - -d bts real ised t ,, 4.0 - . b:ilance - p PIJl~
11~
of the stock was sold off - -

---
- _
00 . • ~ll~,
(ii) Book e a J>roftt-.. . : Rea lised value of stock . - - -. - .
st. . or
30 per cent on co .d out at a discount ot IO per cent · 10,ooo )( 140
. Bill
··") sundry Creditors were pai
(111 s Payab1
wor~rncn's Compensation b Joo"
uere paid in full. e l' ,l Jo Rea 1·rsatio
•
n Ale I\Cscrve I\/c
roner)' re ai·1sed n s.000 and Land and
t,_95
v.. Buildings 'I
( iv) Plant and Mac .
k over the goodwill of the finn , 000
20 J{i:ali sati on A/c
. at a vaJ ' . · Dr.
(v) Mrs- Ri ta ChowdhafY too \latton lo Bank Ale 90,000
f 30,000. were Of workmen Compensation Res
. af tion expense 5 f S,25 0. Dr.
•de of Capi.tal Accounts erve arnounlin
90 O 90,ooo
(vi) Re LSa , Bank Account and Part , g . oo
ner s Capital Ac SI
Show th e Realisation Accoun-, collnts .
·
There will be no entry of Sund lo t ) QOO
in p1il · fl Will be tr 90,(J{)(J
the books of the firm. . . f I '2 rhere wiII be no entry of Pre ry Cred" 1t
000· Final Payments :- Rita ~ l . ors !akin ansferred lo ,L
[Ans. Profi t on retalahs~t ;~
h fl
;Jc ~3,3,3,750.]
23 00
, , 0 ¾d
(i1 l . .
1, The fo llowing IS the Balan
Ill laking ove g over the inv
u,: Cr.

Shob . a ·080 ·
00, To o
partners sharing profits and losses
(!- ~· -:-: -:"" .~~ ---- - ce Sheet
r furniture . estrnc nts.
as
Q. I I. Anurag and Prem wer~ as
fo llows :
in 2 . I Liabilities ~ of A and B his rern uneratron .
.
h 'JQ'JO their Balance Sheet . . 0 n 3Ist ,·s Loan r--
, as at 31
Marc • ~ - !r.i 1 15,000 Cash st Marc h 20
f Assets ~ ~ ·s·sLoan Aaaet.s • 18:
uahtlities
60,00
-~ -- -- ~ -- --N
0 Bank J I
~115
f(.ldt
'ered1.tors 10,0oo Bank
red
Sundry C itors 83 oo 30,0o o Debt
80,000 Sundry Debtors . sMa ble
10,00 0 Lors
Mrs. Anurag· s Loan
Anurag's Loan
Workmen's Compensation
S0,000 Less: Pro vision for
Doubtful Debts ~
60,000
I
' O Bil~[ll!lding Expenses
ou~ : Capi tal 5,000 I'
1' 0O,OO nvestments
ess :Provision 30,000
._1000
Reserve f ,20,000 Stock 57,ooo 8 : Capi tal O Stock ~ 28.OO(J
1,00,0 80,ooo ITruck 10.000
Investment Flucruation Reserve J0,00 0 Furniture 00
20,00 40,000
0 Plant
Profit and Loss 5,000 Plan t
4,oo, ooo I 8 and MachInery · 75.000
Capitals : Inves tmen ts ~ o , : Drav.~ngs · &o,ooo
45,000 __ ___,___-, =,ooo
--===
Anurag 3,50,000 Adve rtisement Expenses 9 400
'
1s,ooo ---- ; Half the stock was sold at 10%
.~
Prem 45,000 3,95 ,000 less than th boo
7,20,000 was taken over by A at 20% more th
. the kvalue and the rema· . h
= .
2. Dunng the course of dissolution an e
a 1. b"t•
book value irung al f
·
The finn was dissol ved on the above date
: settled at ,3' I 2,000 against ~Jo 000 inclta • tty unde .
3. Asse ts realised as follows : ' d d. r action for damaoes was
(1~1 AnITTag took over 60% of the stock at a discount u e 10 the creditors. "'
of 20%. ;. 25% of the
remaining stock was sold at a profit Plant & Machinery - t 1,00,000; Truc
of 40% on cost; Remammg stock k- ~
found obsolete and reali sed nothing. was t 25,000; Bad Debts amounted to ts 12
book value. 000 H If ~OOO ; Goodwill was sold for
(ii) Finn had to pay t90,000 as com
pensation to workers . ' · a e mve stments were sold at
4. A promised to pay off Mrs. A's Loan
(iii) Sundry Creditors took over inve and took a h If h .
stments in full settlement. I00110 dISCO
· U.n t
. way a t e inves tment s at
(iv) Sundry Debtors reali sed at 5. Trade Creditors and Bills Payable
75% and plant reali sed 20% less . were due on average basis of one mont h
(v) Prem agreed to take over the resp after 31st March, but were paid imm
onsi bility of completing dissolution ediately on 31st March, al 12%disco1mt
and he was given furniture as his rem work per annum.
uneration .
(v1) Realisation expenses amo unted Prepare necessary accounts .
to t I0,000.
Prepare Real isation Account. [Ans. Profit on Realisation t86 800
: Final Payment to A {1 ,29.900 and
Hl ,14,000 ; Tota l ofB ank Ale ~3,0 0,600
[Ans. Loss on Realisation t 1,35,000 .] ).
Hints. Discount received on payment to Creditors 12 I
ots: 20,000 xIOO x12 = mo
U) Book value of remaining 25% stock : 25% .
of 40,000 t 10,000 2. Discount received on payment to B/P - IO 000 x-12 x-I = t I00
- · 100 12 ~~ • JJ! i
3. Cash balance oft 4,200 has been
transfe rred to the deb.110 fBank Ac'r:Jlltt / ~ 1
~ •-• _. '"
!JU9,!!.J
 ~
~
6.96 -
D IS SO LU TI
O N O F A PA
RT " "' 11
,1,~
~ • ll l' /\ P/
\ RT N ERSH II>
. . 1 . B:d:1ncc : -- - - - - - 1
l' IR.M
Sh cc l c,t A. 8 - - - - '~"-~S~ ,I 1
. •. '" "' "" "' " ,
Q. 1.1. lh and C, us nt 3 ll• Pt ,,,-''
" 1s t Murch ' -~
- -
r .. ,1,1••1.• 1,1.: \ S.40
••

,. _ , • 201 R,
l
J() ,000 Bank 2 6000 1nank
-' 0•()0 0 Bills Rcce . 1,,,1
,.1• ,.., •., 6.97
s. 00O s,oek 1vu bl e . 0
Crt•d itor.- . 1J cd 39,60
Mrs. .4 ·s 1, 0.111 10 di ss olve 6.&oo
'" OI)() s""d<Y IIJl .,. dcL th e fi
;-· 000 1.,•ss / PrDeh<o~ y
0 urs1;u1di n!l S:11:t
l') ov isi on for 40 ,llOO ,1.,c h• "" 1oo;.0 Ics th irm . Assets, arc
u d is<O <ake·sov'"
• book . )9,6()()
1r1,,c i-tn icn l Ffuc1un1inn Fund '" ' "' ' '"'li .
D,b v, i, ., "'' "' "'1
I Doub tful Debts (1 11 Il- e,
IJL'_111
' 0
oo.o<J(I 4,000 rs were reali sed !i 2 5
rs tharn ouni·,ng to , " r,11, ,. .
l{csi:r-'c~ O01,to
.w.ooo c. nd ond Bnild 36 O for 9
~
[:1pir.il j\.:c•,,un in,:, l t ) n'-. bi ll o n 6 00 0 of
l:- Punii 1un: under disco ~ 00 and c·•Oo·ch•/1
. • Ill) I' ' , , ,i, ,n ,. unt hav· C book V I 6,8 1
.1 a ue 00 at
1.10.000 Ty pe so
I0,,00
oooo '6
9
,000I n .s20
H " TI " ~
Inve stm ents I)
11,c Bi 11 pay ab le of t <n&1,o,a dish
C 70
30,oo
• 00o ' c, ed iW "
(' l \f l .11
.
"" pa,d off at
2,
assu
600 to be
onourcd had
• • mai mog I
- - 11o unt o f "'2 . Wscou t .'".. by p' "" ' L lo be tak
-- .
~.0 0.000 ---' ~ ¼!loo 11
rl
. n,c .d . ' ' S00 had to be n .ot IO o/, en up
d I ., sh,ri" ' rn
~
liq Ut atton ex o.
penses amou pa al at tha t fig
partnn,
er.,e de
prci
o_t1de1 :in
IO d.,ss
,;ns of "" pa rtn
~1:.o-01 , ... ihe f; m,.
The
d assets
c<S =
J • 2 c I . At
th, abo~
(I ,, l . t
id for W
or
n ed to t400 en Ckrn
ure
·
.
llsk Rec · .
d . ,e ah se
I d
of. )
-w,,.
o,,. as
D fo llo
\ •" ' ·'" ' " qu ,,
.d to show the
ornpensation
(il 5,Bioc n,:~,~" bk
sead r,, .,_.000..,,L:,r;inse
"· ,n- bt ws , dat,, R'3lisaH0o A .
d :u1ald 'Bui,sldeo
innn
gs real is"ed· ate40o..s were all
\l.,•L1t1n1
Loss on Rea lis . atio .
. n ~3 ,7
% higher than
good I 3 40 · Am " '""t' Cap1.tal Acco un
boO k ,.,\
(;;I Fnm;rure"'·
,_,,, sofd foe i 6.00
th,; r-,,J '°
paon
fnatirLa
e lam
?
\ _,
t ou nts of
o;WBor • 1
ts and Bank
0 by auct;on ankm
kAenccCo
oumnt Tount pa·
rt
,uno<m<ed n oo '° . an d auctioneec
' s commiss;on
ota\. • 10id''2to0 •Ra
l mji La f9,930·' A
(;;"Cl T,p enTI." " " '" ' . ,,,1<"'"'"A "° "",.
I mount
13ken o•·ec bv
. A d
o, an ae- .re, va I a
ua on o '~s,0
· f R """"°"
Ud \m·es m,en~ ,w t 00 t.: r Ra man an d Ri
o cha
'< neor '2,ooo ,,
nbe "" '" " "
n- sold ; the open . 18 th B \ w ,ce pann ecs .
ooauniss;o n o f) m"'.ke t at a pric ,• Qn 3 \.) .2 e a an ce S h« Ln a
0
', .,. , P3 e of tl S ,0 00, fo , wlucb ! of the ti<n firm sh ·
d C """'°" '°
,gn,<d ,ccep< \
'd to th , broke<
o• .r ess. AII ot
. a
BALAN.CE SH
EE
n was as an
fo ng
Uowpro
s .fits in thc rah.oo
T OF RA10
f
1 hecl ia hd ;ties w M1AN
8 AND
book rnJ ue .
(!'il To e ti nu retrenche
ece paid off at
tbe U a, a, J 1.3. ·
d their employee Uob W6es AsRI
setC\
s \A
che rirm :ind the s three months , Land and Building f
tim1 ha d to pay
t 25.000 as co m before th e dissolution of 7,00 ,000
Furniture 7.50,000
no t appearin g in pensation. This Richa 3,00 ,000 10,00 ,00
CIOSc the book th e aoo, ·e Balan liability was 0 Debto rs \,20,000
s of !.he fi rm b~ ce Sh ee t. s.:idr: Creditors
preparing Real 1,7 5,000 Stock 1,32,000
AccotmIS. and isatio n Account
, Partner' s Ca pi 1,03.000
[..\D.S. LO§ Ba nk A ccount
on Realisation {8 tal --- Cash
70.000
.400 : Final Paym 11,75,000
ent to A t 56 ,8 11
n o,600.J 00 ; B f4 IJ 00
and C The fi nn was di ,75 ,000
Hint : AmcUnI re ss ol ved on 1.4.20
alised from Sund 18 an d the assets
!) D ebtors : t 40 ,000 :'0!! 0115 : and liabilities \\ere
. (i) Land an settled as
Q. I~. Fo tlo wing
is ~ Balance Shet! t of Ram d building was
taken over by Ram
an at a depret:iation
March. :'.: 016 : j i Lal an d Pann cash: of 10° o for
a Lal as at 31st Iii) C re dito rs of t l 25
000 took ov er sto
' ck and debtors in
f ,4 ss et S claim ; ' full settlement of their
upiafs : I iii) Remai
GoodwiJJ 4,00o nin g credito rs w
lump Lal
16.000 Machine lir ) Furnitu re re ere paid by Richa:
Pz ;m u ! ry 6,000 alised t S,000 le
10,000 Plant ss than the book \·a
R ei m ,-es 12.800 Ir ) Expens es \ue .
3,600 of realisatio n w
I l l ~ UM t.;u ~ 10,800 ere <4 00.
& P n.. Rtsen Pas s necessary jo
e 2,000 Las : Pro'trision
- 800 , ~ •_o.oo
_o urnal entrie s for
di ssol ution of lhe fir
m.
 DISSOLUTION OF A PARTN!
6.98
Ans. Final Payment
to Raman 5,66,720 and Richa 2,92 Rso
880 ERSHIP FIR NOF A PARTI
D I S S O LU T I O N

RSHIP FIRM
A/c in Working Notes. Loss on Realie leela and
Hints: () Prepare Realisation isation will 1 7 . Mala,
Kala were
T1,90,400.

(i) No entry is to
be passed for creditos taking Over stock and
amount to 2015 their firm as
dissol
Theshari
taken paid by Richa. debtors Entry for n

fThe accountant preparepared

red sets were rofits in the
but fo
remaining creditors
Realisation Ac Dr.
50,000
paid

Ish
Account,
to forgot
post few:
You are required to complete
Realisation
realized and
Dunt, Partner's C
3
6.99
ratio ofof 3:2:1
ratio
these amounts liabilities wer
To Richa's Capital AVc
below i these accounts. Capital Accounts
Q.16. Verma and Sharma wene partners
in a firm
sharing profits in the
50,000 mounis,
given accounts
3:1. On 31.3.2018 their Balance Sheet was as follows:

BALANCE SHEET OF VERMA AND SHARMA

ratio of Dr Particulars REALIAmout
SATION ACCOUNT by
posting correc
as at 31.3.2018

Liabilities Assets
Sundry Assets Particularss Cr.
To
Machinery
10,000 By Provision Amount
Capitals Land and Building for bad
Stock 21,000 By Sundry Creditors debts
Verma 1,20,000 Machinery 70,000 By Sheela' s 1,000
80,000 2,00,000 Debtors
Debtors 20,000 Loan
Sharma
70,000 Bank
60,000 Prepaid I n s u r a n c e
400 By Repairs and 15,000
Creditors 80,000 By Cash- Renewals Reserve 13,000
Investments

3,000 54,400 Assets sold 1,200

2,70,000 60,000 To
Mala's Capital A/c
Machinery
The firm was dissolved on 1.4.2018 and the assets and
2,70,000 Sheela's Loan
13,000
Stock 8,000
liabilities se To Cash-Creditors paid Debtors 14,000
follows
were
15,000 By Mala's 16,000
as
ToCashDishonoured bill paid 5,000 Capital- Investments 38,000
) Creditors of 750,000 took over Land and Building in full
settlement ne
ToCash Expenses
800 *********** 2,000
claim;
88,200
(i) Remaining creditors were paid in cash;
88,200
(in) Machinery was sold at a depreciation of 30%; Dr. CAPITAL ACCOUNTS
Particulars Mala Neela Kala Cr.
(iv) Debtors were collected at a cost of T500; Particulars Mala Neela Kala
Expenses of realisation were 1,700.
()
Pass necessary journal entries for dissolution of the firm.
To Cash 12,000 9,000 By Cash
Ans. Final Payment to Verma R89,850 and Sharma 769,950.] 1,000
Hints: )
23,000 15,000 3,000 23,000 15,000 3,000
Prepare Realisation A/c in Working Notes. It will appear as follows
Dr. Dr. CASH ACCOUNT
REALISATION ACCOUNT Cr.
Cr.
Particulars Particulars Amount Particulars Amount
Particulas
To Land & Building
70,000 By Creditors
To Machinery 70,000 To Balance b/d 2,800 By Realisation Ac
60,000 By Bank A/c (Assets
To Debtors realised) To Realisation A/c - Creditors paid 15,000
80,000
To Bank Ac
(Creditors paid)
(742,000+779,500) 1,21,500 Sale of Assets 38,000 By Dishonoured bill 5,000
By Loss transferred to : To Kala's Capital A/c
(70,000-750,000) 20,000 Verma's Capital A/c 30,150
1,000 ***************

12,000
To Bank A/c
(Exp.) By Mala's Capital A/c
1,700 Sharma's Capital A/c 9,000
10,050 40,200 By Neela's Capital A/c
2,31,700 2,31,700 41,800
41,800

(i) No entry is to be C.B.S.E. 2015, All India)

in full settlement passed
for creditors of Accounts : Mala
of their claim. 750,000 taking over Land and Buld Balance of Capital
Realisation F18,000; Opening
L o s s on
I0,000, Neela 715,000 and Kala 2,000
2029:928
 6.100 DISSOLUTION OF A
PARTNERC
Balance Sheet at the Date of Dissolution not NERSHIP FIRM pINSOLUTION
TION OF A PARTNERCE.
.

FIRM
Q19. 4. B and Care in partnership sharing in 4:3 :3. Thev Given Sundry Assets (ot
decided to dissolye broug inthanby Cash and
A n s

ation96, 000; Cash

the partnership tim. At the date of dissolutiontheir creditors amount calisat

to 16,800 and k Ac 68,000.]

in the course of dissolution a contingent liability of F3,500 Do
accounts matured and had to be met. Iheir capitals stood at 120 rought into o t e
32,000 owed by Xwill be t
12,000; XsPaymentan)ent to71 ,40,0000; 6.101
Loss on
Y
ansferred to the 4,000; Total of
,200. 10,The000assetands
78,000 respectively. B had lent to the fim in addition to Capital 1 3
2. On Ist April, 017,A, Band e debit side
realised 45.670. losses in
proporti of his Capital
commenced business in
and

pA/cas thelr capital 22.000 /2, 1/3 and 1/6

Prepare the Realisation Account and Partners' Capital
ital Accounte
Accounts. Also rofit

R22,000 Account.
Bank Account.
show the puring tneyear they
Bank
being 5,000, being10,000 by respect
drew ively. partnpaidershipintosharing
[Ans. Sundry Assets T60,000; Loss on Realisation 17,830,
0. Fing
Final payment March, 2018, they 1,900 by A,A, 37,000 by They heir
R1,700 and 5,000 thei
B
4,868; B 4,651: C 2,651. Total of Cash A/c 745,670.1 00. B
000, taking up dissolved
furniture at their
aluation o fR5,000
t to A
firm. A by B and by C.
0.19. and B who aeir R2. 000 71,400
ountscreditors,
were in
A partnership sharing profits and losses in the taking by
ving there R2,000 and stock at an agreedC.
A fter p a y
and C up
of 4/7 and 3/7 respectively, decided to dissolve the firm as on 3 1st ,
necessary
accounts showing the remained a taking
time of dissolution A's capital was 1,25,030, B's March, 20 18. At the
070; the creditors proportion the
further
showing
sh brought in by any
the
partner distribution balance
of the
of
up debtors
1,000 at Bank.at 3,000.
723,150 and cash 4.520. Remaining assets realised as the cash
17,000. Los on case required. the Bank andPrepare
am at
F1,24,910 and aunted to [Ans. Sundr Assets
of the
dissolution were 1,860. A & B both were solvent.
date of dissolution and the accounts
Prepare the Balance Sheet:<penses of 100: Amount aid to B 71,300. Realisation
necessary to close the books of the Amount brought in 76,000;
final adjustments of cash between
partners.
firmm n the
Show the
400. by C 7400; Amount paid to A
Total of Bank alc
Ans. Sundry Assets 1,45,730 (other than Cash); Loss on O.23. YX, and Z entered into
Final Payment to A 71,12,070; B brings in 77,650. Total of Realisatio portions ofof 4:3
losses in the proportions partnership on Ist October
22,68 43:2,
Cash A/c F1,37,080.1 20,000 and R10,000, respectively, and with2017 sharing profits and
Q. 20.Ashok and Kishore were in partnership and liabilities on Ist October capitals of R30,000,
They agreed to dissolve the firm. The assets (othersharing profits in the ratio of 3.
than cash of
Their assets
uind up their aftairs, were as follows: 2018, the date on which
realised 1, 10,000. The liabilities and other R2,000) of wind u
follows particulars of the firm on that date the fi.firm Office Fixtures 71,000; Debtors R28,000; they decided to
weree ac Bills Receivable
as
5,000. Sundry creditors were
Stock-in-trade F45.0
5,000; and
Creditors
reed to take over the R30,000;
Stock-in-trade at a discount Bills Payable T4,000.
40,000 Payable. of 10% and pay off the Bills
Ashok's Capital
Kishore's Capital 1,00,000 Y agreed to take Over the
Book Debts at
Profit & Loss Account 10,000 (Dr. balance) Creditors.
a discount of 20% and
pay off the
Realisation Expenses were 8,000 (Dr. balance) Z took over the Bills Receivable at
1,000 R4,877 and Ofice Fixtures at a
Creditors were settled in full 10% depreciation of
Account. settlement at F38,000. Prepare Realisation and
Cash 5% p.a. interest is to be
credited to each partner on his
Ans. Book value of Assets capital.
Prepare Realisation alc and Capital a/cs of the
79,000. Final setlement Kishore (other than Cash) F1,20,000. Loss on Realisation partners and an account showing
of Cash A/c F1,26,250.] :
adjustment of profits or losses in the business.
brings in 14,250 and Ashok is
paid 87,250; Total Ans. Loss (P & L A/c Dr. Balance) R15,000: Realisation loss
Q.21. Xand Y brought in by X T17,755 and Z F1,404; Cash paid to
10,323; Cash
5:3. They were partners in a firm YT19,159.
agreed to dissolve the firm on sharing profits and losses in the ratio ot Hint: Interest on Capital will not be allowed, because there is loss in the business.
Xand Ywere 780,000 and June 30, 2018. On that
date, the
was R32,000 and the amount owed respectively; the amount owed by X toCapitals
740,000
the fim
of
Q.24. P. O and R started business on Ist April, 2017. They shared profit and loss
emounted to F37,000 and balance at by the firm to Y was
wing by X to the firm realised bank 10,000. The assets 25,000; the creditors in the ratio
of 2:2:1. Capitals contributed by themwere PR40,000: 9 R30,000
KR20,000. The partners were entitled to interest on capital (@ 6o p.a.
and

other than
epare the Balance Sheet of theF46,000. Realisation expenses amounted the amount of R25,000. The partners
counts to close the books of the firm as on
June 30, 2018 and
to
Rz,00 During the year the firm earned a profit (before interest)
nad withdrawn P 10,000: O F8,000 and R 5,000.
firm. necessary ledget R1,00,000. The
Ist March, 2018 the firm was dissolved. Theassets realised
22C 923
 n155OLUTIONOF,

DISSOLUTION OF A uTION OF A
TNERSHIPFIRIRM
.102

creditors of K15,000 were paid at a discount ol S%. Expenses incurra. TNERSHIP FIRM
on realisatio
osson Realisatior
fotal of Cash/Bar Wc 3,29067,000.] Final
wereI,4S0.

Accounts, Realisation Account, Cash

ation
5,184;
nere
willbe no entry for
the
Payments Deepak 6.103
payment
lint:

Prepare Partner's Capital ,026 and

and Balance Sheet to close the books count, Prof Mrs. Deepak's Loan. Jyoti
andLoss Appropriation
Account
Profit o.26(B).
A, B and C
sharing
ship firm profits
[Ans. Divisible profits
19,600; Capital A/cs on 31st March
h, 2018 irm.
bef of their partners) in th
on 31st the
March,proportion
dissol
dissolution P R40,240; Q T31,640; R 20,120. Total Sundry Assets under

201 of 3:2:1
as

on Realisation 8,000, Final payments:

PR37,040; O R28,440 and and R:
R 1,07,000, Loss sheet
was

Liabilities which agreed upon

Cash A/c R1,00,000.] R18,520. Total late their balance
of C a p i t a lA c s

Q. 25. A, B and C were partners from Ist April 2016 with capitals of 40,000 Assets
A
Machinery
2,00,000 and 1,50,000 respectively. InThey
They carriced on business for two years.
shared
the first year ending on
profits
in the ratio
of
31st Mar
3,00,000,
2:21 A s
Loan
20,000 Stock-in-Trade
60,000 Investments 40,500
Mrs. 10,000 Debtors 7,550
they made a profit of 2,00,000 but in the second year ending on
loss of T60,000 was incurred. As the business was no longer profitable March,
2017,
tho."018,a
31st Creditors

vestments Fluctuation Fund 18,500 Less: 20,830

the firm on 31st March, 2018. Creditors on that date were 75.000 TSSolved 6,000 Provision for
Doubtful Debts
9,300
withdrew for personal use 740,000 per partnerner
The expenses of realisation were 5,000.
per year.
vear. The assets realised partners
R4,00,000
urrent A/c-C
Cash at Bank
600
8,700
94,5 11,500
Prepare Realisation Account and show your workings clearly. 5,420
[Ans. Balances of Capital A/cs before Dissolution A R2,76,000; B
actments are taken over by A for
The i n v e s t m e
94,500
er all
1,76.000.and
R7,000 andR17,500.
C798,000; Total Assets R6,25,000; Loss on Realisation T2,30,000.1 loan. B
takes all tthe Stock at
over A
sold for
sold for67,000. debtors agrees to discharge his wife's f

Q.26 Following
(A). Balance Sheet of Deepak and
is the
Jyoti,
Machinery 1s The
nenses of realisation amount to T600. remaining debtors amounting to
realise 50% of5,000 4,000.
at
who were sharino book value. The
profitand losses in the ratio of3: 2, as at March 31, 2018 ari ng iund that an investment not
recorded in
Liabilities Assets aken overby one.of the
creditors at this value. the books is worth 73,000 and it is
Creditors 38,000 Cash show the necessary ledger accounts on
Mrs. Deepak's Loan
Bank Loan
10,000 Bank 1,500
10,000
AsProfit on realisation 28,470; Cashcompletion of the dissolution of fim.
15,000 Debtors
20,000 26.735 and B R18,490. Total of Bank A/c brought in by C 6,755; Payment to A
Capital A/es Less: Provision for
Hint: C's Current A/C appears
T81,325.1
Deepak 10,000 Doubtful Debts
on the assets
side, which means that it has a debit
Jyoti 1,000 19,000 As such, it will be transferred to the Debit side of C's balance.
8,000 18,000 Stock Capital Account.
Current A/cs: Furniture
12,000
Deepak 2,000 6,000 0.27. Mehta and Menon were
partners in a firm, sharing profits and losses in the
Plant ratio of 7: 3.
Jyoti 500 2,500 P&L A/c (Dr. 30,000
Balance) 5,000 They decided to dissolve their partnership fim on 31st March, 2016. On that
83,500 their books showed the date
The firm
83,500 following ledger account balances
dissolved on that date and the
was

() Assets realised as follows following arrangements were made Sundry Creditors 27,000
Debtors 718,000; Furniture Profit and Loss A/c (Dr.)
R32,000. 75,500; Plant 8.000
(i) Cash in Hand 6,000
Deepak agreed to take over stock in full
settlement of his wife's loan. Bank Loan 20,000
(ii) Creditors were
paid at 2% Bills Payable 5,000
interest due for six months discount and Bank Loan was discharged along with 1.98,000
@10% p.a. and Sundry Assets
(i) Expenses
of realisation amounted to F1,800. Capital A/cs I.12.000
Show the Mehta 48,000
necessary ledger accounts to close the
books of the firm. Menon
 DISSOLUTION OF A PARTNERS OF A PA
6.104

Additional Information
SHIP FIRM sOLUTION
INERSHIP FIRM
Zagreed to take the
(a) Bills Payable falling
due on 31st May, 2016 were retired
on
the date of
i)
(n) The shares in B
shares in C Co.
o. Lid.
to be dividedLad.a 5 each.
rebate of 6% per annum.
dissolution of the firm, at a
the furmiture (included in sundry asset. ledger accounts to 6.105
(b) The bankers accepted
the
value of18,000 in full settlement of the loan given by themVing ah
Show

1ns. Profit on alisation record the in pro it sharing ratio.

book dissolutic
(c) Remaining assets
w e r e sold for 71,50,000. to ZZ
t to
*15,676: Total520; sh
Cash Alcbrought
payment

final of in by
(d Liability on account of outstanding salary not recordedin
in the books, 0.28 (B). Following 15,676.) 4,754 and
amounting to R15,000 was met. sses in the ratio of 3 :2:1. balance sheet of Y
10,678
678;
(e) Menon agreed to take over the responsibility of completing the P, Qand
Liabilities R who
work and to bear all expenses of realization at an agreed rem
2,000. The actual realization expenses were Fi,500 which were
were which
ssolution Bank Overdrafi

12,000 Debtors Assets

were
sharin' profits
firm on behalf of Menon. paid by 1 Creditors

Mrs.PsLoan 70,000 Less: Provision

You are required to prepare Capital A c c o u n t s : 25,800 Stock 20,000
() Realisation Account, and 1,200 18,800
P 3,000 Shares in
(i) Partners' Capital Accounts.
1,20,000 Motor Car 'A' Ltd. 40,000
(ISC 2017) R 95,000 Plant 30,000
[ Ans. Loss on Realisation F44,950; Final Payment to Mehta 74,935 and 5,000 75,000
3,27,800 Advertisement Suspense Alc
h.
732,615. Menon 80,000
84,000
Hints
() There will be no entry for payment of Bank Loan.
was dis
The firm was dissolved on that date and
the 3,27,800
I.Assets realised as 1ollows: following arrangements were
Debtors 715,000,
(i) Entry for remuneration and realisation expenses:
Stock was valued. at Plant at 30% made:
Realisation A/c Dr. 2,000 736,000 and this was
taken over by P
discount.
To Menon's Capital A/c Market value of the shares of and Q
500 old in the market and the A Ltd. is
Rl6 per share. equally
To Cash A/e
1,500
profit sharing ratio.
balance half were Half
taken over by Ptheandshares were
Q. 28
(A). X, Yand Zwere in partnership in Q their
sharing profits and losses in the ratio A creditor for 50,000 took over Motor Car
7:2:I and the Balance Sheet of of
the firm stood 31st on March, 2018, as under: the balance of creditors were in fullsettlement of his claim and
Liabilities paid at a discount of 2%.
Assets v. of
Expenses realisation amounted to R6,000. P
Creditors 3,142 Cash in hand agreed to discharge his wife's
Loan.
Provision for Depreciation Debtors
244
on Machinery ,746 Prepare Journal entries and Ledger accounts.
4,000 Stock
Capital Accounts: 100 Shares in B Co. Ltd.
3,498 [Ans, Loss on Realisation 744,400. R
brings in Fl6,400; Final payment to P
3,582 60 Shares in C Co. Ltd.
2,000 49,200 and Q {24,600. Total of Bank A/c
480 1,11,400.]
,720 Patents Note Bank Overdraft is shot-term borrowing. It will be first transferred to
16,124 22,426 Machinery 7,600 Realisation Alc and then paid of. the Cr. of
6,000
Buildings 5,000 Q. 29. P, Q and R were partners in a firm sharing profits in the ratio of I:2:2
Goodwill Their Balance Sheet as at 31st March, 2019 was as follows:
3,000
29,568
29,568 BALANCE SHEET OF P. O AND R
On 3Ist March, 2018, as at 31st March, 2019
it was decided to dissolve the firm on the following terms:
) Xis to take the Assets
over
buildings at 77,300. Liabilities
5,00,000
() , who will continue Creditors 2,10,000 Land and Buildings
with business, to take over 8,000
at book
values, Patents at 6,500 and Goodwill, Stock and Debtors Bank Overdraft 50,000 Office Equipment
2,00,000
pay the Creditors. Machinery at 1,500. He also agreed to 0's Loan 40,000 Stock
60,000
Debtors
Capitals:
26,9 28 4
 PART
UTIONOF A RSHIP FIRM
DISSOLUTION OF A PARTNERSLT from
6. 106 realised Debtors, Stock
I.00,000 Less Provision for FIRM realisation. and
2,00,000 Doubtful Debts 3,000 Debts amounte to ninery,
2,00,000 5,00,000 Bank
Bad and is to 6.107
57,000 (2)
realised R46,00 There wasR2,000
an bear
8,00,000 35,000 Stock penses of
8,00,000
over by A at F8,000,

Market value of Inve

unrecorded realised
lised
asset of 7\736,000 and
Partners

intormation about
agreed to dissolve
dissolution :
the firm on that date. You are aro

given the
followinong
3) Investments ascertained
creditors agreed to accept t was
00
h
ninery
which was taken
tal

() One ofthe Debtors tor 20,000 paid R 12,000 in full setlema.

were paid
at a
discount of
T6,000. Investments at
to be
this 720,000, and one
w e r e proved bad. 4) An ewriter, not shown
oftice typewriter, not value. of he
and debtors of F5,000
account in the Remaining creditors
i) Part ofthe stock was sold for R20,000 (being 25% more than tha
book valu
(5) T h e r e w e r
utstanding expenses
4,500. Expenses of
books of
accounts, realised
realisation metanmountin g These were 720,000.
(im Ofice Equipment was accepted by the creditor for 77,000 in ful to
6,000.
Another creditor of 40,000 was paid only 40% in full settlem
account and remaining creditors accepted remaining stock in full
settlement
nent .
of his
Prepare necessary accounts.
LOss on Realisation
by B
amounted to z2,000. settled for
settlement of nd B T14,600. Total«of 83,500; C
Bank Alc brings in 741,700,
their account.

(iv) An unrecorded asset of *20,000 was handed over to an unrecorded lia :

1,81,700. Final
Q. 31..A,
B and Care payment to A
F15,000 in full settlement. of
March 2018, their
partners sharing profits
Balance Sheet was as and
follows:losses in the ratio of 4:2:1.0On
(v) Land & Buildings were sold at a loss of 20%. st
Liabilities
(vi) O's Loan was settled by payment of F30,000.
undry Creditors
(vii) Realistion expenses Tl6,000 were paid by R. 35,400 Goodwill Assets f
Mrs. B's Loan
15,000 Leasehold Premises 12,700
You are required to prepare the necessary accounts. CapitalAccounts
A Plant and Machinery 1,00,000
[Ans. Loss on Realisation ,10,000; Final 1,30,000
Payment to P
8,000; R1,56,000 B Stock 60,000
and R1,72.000; Total of Bank A/c 75,02,000.] 1,02,700
5,000 2,37,700 Sundry Debtors
C 60,000
Hints: (i) There will be no entry for unrecorded asset given to unrecorded liability. Less: Provision 30,000
Cash at Bank 700 293
() Entry for payment ofQ's Loan will be:
Profit & Loss Alc ,700
s Loan Ac Dr. 40,000
2,88,100 8,400
To Bank Ac
30,000 2,88,100
To Realisation A/c It was decided to
10,000 dissolve the firm, A
Cash at Bank) at the following valuations:
agreeing to take over the business
(except
Q. 30. A, B and C were partners in a firm
2:2:1. The Balance Sheet of sharing profits & losses in the ratio of
Leasehold Premises at 760,000
the firm at the date of dissolution was as follows:
Liabilities Plant and Machinery at R12,000 less than the book
Assets value.
Bank Overdraft
Creditors
21,000 Debtors 40,000 1/4 th stock at 33
% more than its book value.
86,000 Stock
Provident Fund 60,000
Capital Accounts: 18,000 Investments 25,000 Remaining Stock at 20% more than the book value.
Machinery 80,000 Sundry Debtors subject to a provision of 5%.
B 1,05,000 Prepaid Expenses 3,200 Mrs. B's Loan was paid in full and the creditors were proved at R32,000 and were
42,000 Goodwill 38,800
C's Capital Account taken over by A. Expenses of dissolution came to 7900
25,000
close the books of the firm and prepare the
Balance
2,72,000 2,72,000
repare necessary accounts to
Sheet of A.
Youare informed that A R81,300) and by C
Ans. Loss 749,000; Cash brought in by
on Realisation
) They appointed B to realise A/c !,02,200; B/S Total R2,10,500.]
the assets. He is to
receive 5% of the amound Lash paid to B T86,300; Total of Bank
20S128
 DISSOLUTION OF A PARTNERS DISSOLUTION
TION OF APARTNERSHIP
6.108

Q.32. Give journal

entries in each of the following alte TNERSHIP FIRM
ative cases on it) Debit Haider's FIRM
tal Alc
dissolution of a firm )Debit Realisation Alc and and
i ) Realisation expenses paid byX
on
behalf of the firm. ()Debit Realisation AJcan Cred Credit Real
i ) Realisation expenses paid
by the firm |,000. However, the expenses (Vi) Debit Jame's
Capital Alc by redit Bank ealibysati19,000
Nc on Alc by 12,000. 109
be borne by partner for which he was to be given a commission
and Credit Bank
Realisation Alc by76,800 and Haider'
AJc by
cash realised on dissolution. Cash realised from assets was of soere t s 000.
o on net 35.
P andg were partners: 710,20
2014 the firm was dissolverin
cash paid for liabilities was 40,000.
(i7) General Reserve appearing in the balance sheet was 20,000
2,00,000 and March, .

al Accounts of
date the Capital Accounts
a
firm sharin
The dissoluti
and profits
apital AJc by
73,400
hat P and ion resulted losses
) Sundry Creditors amounted to R15,000. These were paid at a disoe 50,000
1here was a
respectively.
O
bank balan
ashoued
er
loss of .On
[Ans. (i) Debit Realisation A/c and Credit X's Capital A/c. discount of 2%, Pass the necessary Journal Ente journal Entries for (i) the
lance ofaedit bala of 60.000
z60,000. On
partners, and (ii) making final and
(ii) Debit X's Capital A/c and Cr lit Bank A/c by
payments totransíer
the

Debit Bank A/c and Credit Realisation A/c by

R1,000; Final payment,P 40,000 the
of loss to
the
F2,00,000 Capital accounts
ns.

and Q partners.
Debit Realisation A/c and Credit Bank A/c by
F40,000:
Debit Realisation A/c and Credit X's Capital A/c Saurabh Vaibhav R20,000.
0. 36. Gaurav, Saurabh and
and Vaik
by F8,000 losses in thhe
ratioof 2:2:1. The
1.They were
(in) Debit General Reserve A/c and Credit Partner's Capital nsferring Sundry decided to partners in
dissolve the fim sharing
a
A/cs in. assets (other
sharing ratio.
profit liabilities to realisation account, tnethan cash in hand firm on 31st profits and
(iv) Debit Realisation A/c and Credit Bank A/c by
ar

off as tollows: assets were and cash at March, 2018.

Bank)
14,700.1 realized and and
0.33. Jain, Sharma and Verma were partners in a firm hinery
(1) A machinery with a book value liabilities were third
paid
sharing profits in tho of
ofI:2: 1. On 31st March, 2018 their firm was dissolved It
was ratio 50% ar stock worth R5,000 R6,00,000 was taken over
will look after the dissolution work and will be paid RI5,000 as agreed that Sh settlement of his claim. was taken over by a creditor of by Gaurav at
dissolution expenses were5,000. R2,84,000 were paid to theremuneration creditors
T (i) Land and b
d and
building (book value R9,000 in full
settlement of their claim of R3,00,000. Dissolution of the firm resulted
into a
in full broker who charged 2% R3,00,000)
commission. was sold for 4,00,000 through a
T18,000. loss of 5The remaining creditorS
were
Pass necessary journal entries for the above transactions. and the remaining assets were paid R76,000 in full settlement
taken over of their claim
C.B.S.E. 2019, Kerala) iv Bank loan of R3,00,000 was by Vaibhav for 17,000.
[Ans. (a) Debit Realisation A/c and Credit Sharma's
Capital A/c by paid along with interest of
(b) Debit Realisation A/c and Credit Bank A/c 15,000. Pass necessary journal entries tor the
21,000.
by 75,000. above transactions in the books of the
(c) Debit Realisation A/c and Credit Bank A/c firm.
by 72,84,000 LAns. (i) Debit Gaurav's Capital Alc and (C.B.S.E. 2019, M.P.)
(d) Debit Partners Capital A/cs
respectively by 4,500, 9,000 Credit Realisation A/c
and Credit Realisation A/c and 74,500 (ii) Debit Bank A/c and Credit by 3,00,000.
by R18,000.] Realisation A/c by R392,000.
Q. 34. Pass the necessary (ii) (a) Debit Realisation A/c and Credit
journal entries for the following transactions on the Bank Alc
dissolution of the firm of (b) Debit Vaibhav's Capital A/c and Credit by 776,000.
ratio of 2: 1. The various James and Haider who were
sharing profits and losses in the Realisation A/c by 17,000.
assets (other than cash) and (iv) Debit Realisation Alc and Credit Bank A/c
transferred to Realisation Account outside liabilities have been by 73.21,000.]
(i) James agreed to pay 37. Adiraj and Karan were
off his brother's loan 10,000.
Q.
partners in a firm sharing profits and losses in the
ratio 3:2. On 31st
(i) Debtors realised March, 2018 the firm was dissolved. After the transfer of assetS
12,000. than cash in hand and at bank) and third party liabilities to the Realisation
(in) Haider took over
all investments other
(iv) Sundry creditors R12,000.
at Account, the following information was provided:
R20,000 were paid at 5% discount. 0) Furniture of F70,000 was sold for R68,000 by auction and auctioneer's
(V) Realisation
expenses amounted to F2,000. commission amounted to F2,000.
(vi) Loss on realisation
was 10,200. ) Adiraj's loan amounting to 35,000 was settled at R37,500
Ans.() Debit (C.B.S.E. 2011, Outside Delhi)
Realisation A/c
and Credit discount
i) Debit Bank A/c Jame's Capital A/c
and Credit Realisation by F10,000. l Out of the stock of 780,000, Karan took over
50% ofthe
cost.
stock at a

ofi at a profit of 30% on

A/c by R12,000. 20% while the remaining stock
was sold
O
C20 9:28 14
 6.110 DISSOLUTION OF APARTNERS
(iv) A bills receivable
of R5,000 under discount was dishonor
had become insolvent and hence the bill had to be met by the as the acceptor
FIP a UTION OF A
TNERSHIP FIRM
fi D An old typewriter
which was
(v) Profit and Loss
Account showeda debit balance of 756 000 )
whereas its expected
alue
32.000
which were R70,000 was was
75,recorded
to of
Realization expenses amounted
(v) paid by Adirai )
Stock

aken by 000. in thethe tbooks 5.111

Pass the necessary journal entries
for the above transactions on c) Total ditors of the Dishaa*20,000. vas sold
for
the firm. C.B.S.E. 2019,issolChennr
ution of untraceable and other
credito
fim were discount of 30%. 2,000
[Ans. () Debit Bank A/c and Credit Realisation A/c by 766.000 nnai) hMohit paidrealisatione
get remuneration expenses of
to
ccepted paymentAacreditor for
(i) Debit Adiraj's Loan Alc by R35,000 and Realisation A/c
A/c by was responsible to
of T13,000 R18,000 allowing 10% 2,000 was
Credit Bank A/c by 737,500.
R2,500 and bear all the his discount.
ii) Debit Karan's A/c by R32,000 and
Capital Bank A/c by
aken a loan of realis
Nandan had taken a loan. compl
lisation e ting
expenses. the private funds, who
R50,000 from the dissolution process was
(e
him to the firm.
Credit Realisation A/c by 784,000. 52,000 and and
(iv) Debit Realisation A/c and Credit Bank A/c by F3,000 was recovered
F12,000
from a debtor firm, which was
(v) Debit Partners Capital Alcs by R33,600 and 22,400 and Credis
year.
which was paid fully by
by 56,000.
LAC
(a) Bank A/c and writen offfasa Bad
Disha'
(b) Debit Dish: s Credit debts last
(vi) Debit Realisation A/c and Credit Adiraj' Capital A/c by Debit Realisation Realisation
Capital Alc and Credit A/c by
2,000.] Alc and 2,000.
(d) Debit A/c and Credit BankRealisation
Q Give the necessary journal entries for the
38.
lisation
following transacs A/c
dissolution of the firm of Aman and Rajat on 3Ist March,
2016, after the tr (e) Debit Bank A/c and Credit Mohohit'A/c
s by R16,200.by 749,000.
Debit Bank A/c and Credit Nandan's
on

LoanCapital
various assets (other than cash) and the third party liabilities to Alc by
Realisation A of Credit Ac 13,000.
They shared profits and losses in the ratio of 2 :I. Account Realisation Alc by by 750,000.
a) There was bill of exchange 10,000 under discount.
a
of The bill was
. 40. Angad,
Raman and
fim. Pass necessary Harshit were
dissolve theirfim.
R12,000.]
from Derek who became insolvent. recei.
eived Journal entrnespartners in a fim.
W

(other than cash and bank) and for the following They decided
(b) Bills Payable of 730,000 falling the third
due on 30th
April, 2016 Realisation Account : party liabilities after various to
29,550.
was
discharged a assets
have been
() here was a stock of transferred to
(c) Creditors of F30,000 took over stock of
F10,000 at 10% discount discount and 790,000. Raman took
balance was paid to them in cash. and
d thhe emaining stock was sold at over 50% of
)Profit and Loss AC was 40% profit on the stock at 10%
(d) There old book value.
was an
typewriter which had been written off Showing
distributed among the partners. a debit balance
estimated to realize taken away by Rajat at completely. of T15,000 which was
F600. It was
It was
estimated price 25% less than the iit)A machinery which was not recorded
in
(e) Aman agreed to take the (iv) Angad was paid only R5,000 (in full the books was sold for 2,000.
agreed remuneration of F1,000responsibility
over
of completing dissolution at an amounted to 5,500. settlement) for his loan to the fim which
and to bear all realization
realisation expenses {800 were
paid by the firm. expenses. Actual (v) Realisation expenses amounting to
) Loss on realization was 75,000 paid by Harshit.
54,000. C.B.S.E. 2017, Comptt. Delhi) (vi) There were 100 shares
[Ans. (a) of each in DCM Ltd. acquired at a cost
which had been written RI0
(6) &(c): Debit Realisation A/c and Credit off of I.200
valued at 9 each and divided completely
(d) Debit Rajat's Bank A/c. from the books. These shares are
Capital A/c and Credit Realisation
(e) Debit Realisation A/c A/c. among the partners in their profit sharing ratio.
by 71,000; Credit Bank A/c by 7800 and C.B.SE 2012 C)
Capital A/c by 200. Aman's Ans. (i) Debit Raman's Capital A/c Cr.
Debit Aman's Capital A/c by 36,000 and by T40,500 and Bank
Credit Realisation A/c by T1.03,500.
A/c by R63,000 and
18,000; Credit Realisation A/c Rajat's Capital A/c by
Q39. Disha, Mohit and Nandan are by 54,000.] (7) Debit Partner's Capital A cs by 5,00 each and credit Profit & Los
0
Pass necessary Journal Entries for the partners. They decide to dissolve their firm. Account by F15,000.
and Bank) and the third party liabilitiesfollowing after various Assets (other than Cash (n) Debit Bank A/c and Credit Realisation A.c by R2000
have been transferred
to Realisation Account ) Debit Angad's Loan Ac by F5500 and Credit Bank A c by 5.000 and

Realisation A c by F500
 DISSOLUTION OF APARTNERSL pISSOLUiONOD A
UTION OF
6.112
Realisation A/c and
Credit Harshit's Capital AVc hu
FIRM 1Balance
TNERSHIP FIRM
Sheet of
( ) Debit
Partner's Capital A/cs by *300 each and Credit Reat 5,000. Liabilities Michael.
nael, .
(v1) Debit
900.1
isation A/cby Amount
ckson and
John
ohn a
as at 6.113
Q. 41. 1f total assets
arc R12,00,000; total liabilities are 3,00 000.
000; assets Creditors

Assets
31.3.2017
70% and cxpenses on realisation are < 10,000, what will be will he.
the 11,500 Bank
realised at profit or 3,500 Debtors Amount
on realisation? loss Capitals

Ans. Loss on Realisation 3,70,000.] Michacl

S0,000 Less: Provision for
25,0 6,000
ebtors were
Jackson
48,400
Stock inDoubtful DDebt
Balance Sheet, Total
Q.42. In a firm 's appearing at 75,00,
provision for doubtful debts appeared at T10,000. On dissolution, bad dehtand
John
14,000
1,00,000 and the remaining debtors were realised at 10% disco
89,000 Furniture T rade
2,400 46,000
T.

were
amount was realised trom debtors?
much 1,04,000 Sundry Assets 16,000
2,000
Ans. 3,60,000.] It was agreed that 34,000
Q. 43. 'and Yare parters. They decided to dissolve their firm. Pase nMichael was to
take over 1,04,000
entries assuming that various assets and external liabilities have been tro
cessary 740,000.at
34,400 and the
Fumiture at
Realisation Account to this figure. Creditors of R2,600 and Debtors
(1) N's loan was appearing on the liabilities side of Balance Sheet at F40
(ii) Jackson wvas to
take over
T10,000 were to be amountingto
accepted an unrecorded asset of R60,000 in full settlement of his acc unt. He other Sundry Assets at
all the
stock
paid by him at
in
Creditor to whom R25,000 were due to be (ii) Jo 28,800 (being 10%trade at 14,000 and
was to take over
(2) Raman, a less some
paid,
unrecorded computer of ?18,000 at a discount of 10% and the accepte and assumed the remaining Sundry Assetsthanat book value). of the
the of

paid to him in Cash. balaneo a

remaining onsibility for the 90% W

was (iv) The
debtors were sold to discharge of the loan.of the book value
unrecorded creditor of R40,000 accepted an hook value. The
(3) Sudhir,
expenses of dissolutiondebt collecting agency for 50%
an a
unrecorded vehicla
20,000 at 725,000 and the balance was paid to him in Cash. Prepare Realisation F600 were of the
bunt, Bank
(4) There was a Contingent liability in respect of bill
discounted but not mah Account and Partners'paid by John.
20,000. LOss on Capital Accounts.
[Ans. Realisation {12,800; Final (C.B.S.E. 2019, Delhi)
(5) Furniture of R20,000 and goodwill of R30,000 were
Sheet but appearing in the Balance n13,740; Amount brought in by Jackson payment to Michael 715,320 and
no other information was provided regarding these two items. 0.45. Srijan, Raman and Manan {20,360; Total of Bank Alc to 0

Ans n the ratio of 2:2: 1. On 31st were partners in a firm sharing R30,560.j
00
March, 2017 their
Balance Sheet wasprofits
(1) Debit Xs Loan A/c and Credit Realisation and losses
A/c by 740,000. Balance Sheet of Srijan, as follows:
(2) Debit Realisation A/c and Credit Bank Raman and Manan at
A/c by 78,800 Liabilities
as
31-3-2017
(3) Debit Realisation A/c and Credit Bank Capitals: Assets
A/c by 715,000
(4) No entry. Srijan Capital Manan 10,000
2,00,000 Plant
(5) No entry] Raman 2,20,000
1,50,000 3,50,000 Investments
Creditors 70,000
Bills Payable 75,000 Stock 50,000
40,000 Debtors 60,000
ADDITIONAL QUESTIONS Outstanding Salary 35,000 Bank 10,000
Cr.

Profit and Loss Account

Q.4.
(For Practice) 80,000
Michael, Jackson and John were 5,00,000 5,00,000
00
alio of 3 ;1. On 3Ist March, 2017,
: 1 partners in afirm sharing profits
eir they decided to dissolve their firm. On thatin tnc
On the above date they decided to dissolve the fim.
Balance Sheet was as follows date the liabilities.
Srijan was appointed to realise the assets and discharge
Srijan was to receive 5% commission on sale of assets (except cash) and
was to bear all expenses of realisation.
2e2C.9228
 DISSOLUTION OF APARTNERSHD pIssOluTIO
6.114

(i) Assets were realised as follows:

-

SHIP FIRM
1ON OF A

47. Following is
ARTNERSHIP
the
FIRM
lance Shect
(R) March,2 0 1 5

Plant 85,000 of Vinit

Stock 33,000 BALANCE SHEET nd
Debtors 47,000 Liabilities 6.115
as
at
31st March, 2015 ogesh as at
(in) Investments were realised at 95% of the book value. Creditors 31st
(v) The firm had to pay R7,500 for an
outstanding repair bill
rinit's Le
3,60,000 Bank Assets
earlier.
not Ms
Yogesh'sL 60,00 Stock
ided for
(v) A contingent liability in respect of bills
receivable, discounted
investment Fluctuation Fund 1,0300,0,00000 Investm
Debtors
bank had also materialised and had to be
discharged for T15,000. with the CaP
als

Vinit 80,000
(vi) Expenses of realisation amounting to R3,000 were 2,00,000 Less: Provision 70,000
paid by Sriia.n. Yogesh
1,00,000 3,00,000 Fixed Assets for 2,00,000 1,00,000
Prepare Realisation Account, Partners' Capital Accounts and Bank Acce Doubtful Debts
(C.B.S.E. 2018) Profit and 20,000 1,80,000
[Ans. Loss on Realisation 2,02,575; Cash brought in by 8,50,000 Loss Alc
Payment to Srijan R98,545 and Raman R36,970; Total of Bank Mohan 66 stc, Final The firm
dissolved on 31st March,
was dissolv 3,80,000
Account 40,000
0. 46.
Hema and Garima were partners in a firm
sharing profits in the
3,08,015.1 ligbilities were paid as under

Vinit promised to
2015. The
assets were
8,50,000
3:2. On 31st March, 2015,
their Balance Sheet was as follows:
ros
of
(a)
pay off Mrs. realised and the
BALANCE SHEET OF HEMA AND
discount. Vinit's Loan and
GARIMA (b) Yogesh took away 90% of the took away
as at 31st March,
2015 stock at 20%
(c) Sunil, a debtor
of investments at 10%
of dissolutior HeT50,000 had to pay the
Liabilities discount.
Assets
Creditors was
36,000 Bank allowed a amount due 3
Garima's Husband's Loan
60,000 Debtors 40,000
immediately. discount of 5% formonths after the date
Hema's Loan
40,000 Stock 76,000
The remaining debtors were collected making payment
(a) Credito in full.
Capitals Hema 2,00,000 Furniture 2,00,000 were paid 73,50,000 in full
Garima 1,00,000 3,00,000 Leasehold Premises 20,000 (e) Fixed Assets alised setlement of their claim.
1,00,000 2,82,000 and remaining
4,36,000 AThere was an old
furniture which has investment realised 77,500.
4,36,000 books. Yogesh took away the same for been written off
On the above date the firm
dissolved. The various completely from the
Realisation expenses 2,000 were 4,000.
was
liabilities assets were (g)
were settled under
as realised and
paid by Vinit.
() Garima agreed to pay her Prepare Realisation A/c, Bank A/e and
husband's loan. Partners'
(i) Leasehold Premises realised Capital A/cs.
1,50,000 and Debtors 2,000 less. [Ans. Loss Realisation {64,000; Final PaymentC.B.S.E.
on 2016 Comptt, Delhi)
(i) Half the creditors to Vinit
1,54,000; Yogesh
agreed to
accept furniture of the firm in brings 37,000; Total of Bank Alc
in
their claim and
remaining half agreed to accept 5% less. full settlement of 76,04,000.
(v) 50% Stock was taken .48. P, Q and R were partners in a fim sharing profits in the ratio of 1 :2:2.
remaining stock was sold for by
over Hema on cash
payment of 790,000 and Their Balance sheet as at 31st March, 2018 was as follows
(v) Realisation
794,000.
expenses F10,000 BALANCE SHEET OF P, Q AND R
paid by Garima on behalf of
were
Pass necessary Journal
entries for the dissolution of firm. as at 31st March. 2018
the firm. Liabilities Assets

Ans. Profit on (C.B.S.E. Sample Paper, 2016) Accounts Payable 15,000 Land and Buildings 47,000
ma R1,78,360.] Realisation 720,900; Final Bank Overdraft 8,000
Payments Hema 2,12,540 and
12,000 Office Equipments
56,000
Hint. No O's Loan 18,000 Stock
entry will be passed for Creditors taking over 18,000
furniture. Capitals Accounts Receivable

2
Pay able
Aunk(herdralt
117
nding Expenses Ansets
hrothers Loan
s
'sLoan
art
ent Fluctuat Fund 16
10 990 Deurs 15 590
Employees Provident Fund 2 300 25 960
(ieneral Reserve

I's Capital 12090 BilsLetsRevaeProvson 15 30

' s Capital 209090
20 000 Cah 175560 3,709
a Bark
20 00 Proit and lass
15 969

1,26,000 Alc (Dr 10.0099

The firm
decided upon:
was
dissolved on
30th June,
Balansoe: 13.000
4,000
(a).Xagreed to
pay
2018 and
off his
fol owing arange 26900
the
b) DebtorS realised brother'
(c) Ytook over all the 12,000: s loan gements were
realisedinvestments
(d) Other assets at
Plant 20,0
as
follows12,000.
(e) Sundry Creditors and
Sto at T8,000: bills uilding-50,000, Goodwil -
and Xtook payable were 76,000
76,.000
alisation Expense: over Bills setled at 5%
You are
required to amounted to R2,0Recei
00.
vable at 20P%discount, Yaccepted
Ans. Profit on pass Joumal Entries. discount.
Realis
Total of Bank Alc 9,800; Final
O 51, A. B T1,01,000.1 Payment to XT35 900
and C were and Y
4-2018 they decided to partners in a firm 73,900
Rs
Capital was 10,000 dissolve the fim. Onsharing
that
profits in the ratio of
amounted to 780,000 and (Dr.) and C's Capital wasdate A's Capital was S:3:2.On
Creditors were paid at a Cash balance was R12,000. The R25.000 (Dr.). The 2.00,000.
All discount of 10% and the assets realised Creditors
partners were
the cash account. solvent. Prepare realisation expenses of dissolution were
2,00.000:
account, parner' 1.240.
Ans. Book Value of capital s
accounts and

26,240; Cash paid to A Assets (other than Cash) 233.000; Loss on

Total of Cash
Account
T1,86,880; Cash brought in by B17.872 and CRealisation
F2,60,120.] by R30.248
.52. The
da partnership between Xand Ywas dissolved on Mareh 31.2018. RCE
were respective credits to the Capitals were On that
due to
creditors. 760,000 1.50.000 and 10,000. 1.20,000 .00
due for Bank Loan and Reserve has been
maintained for 20,000. X and were
Y shared profits in the ratio of 4: i. Cash balance of
Ral Was also kept in the fim. Assets realised R3,02.000. Prepare Memorandum
ance
Sheet, Realisation Account; Partner's Capital Accounis
a 2O /2
 6.1118
pISsOLUTION OF A PARTNERSL
F3,42.000 P PIRM
than Cash) OF A PA
[Ans. Book value of assets1(other
to
.
,4,006 and )6,000. Total on Realisation
f Cash Account
UTION
NERSHIP FIRM
40,000: Final pay ment was taken
over by
320.0001
urnitur

were settled at 2% Fox at

5 3 Peter,
Roberts and Sunny business
commenced on 1
f theApril 2016 with
rditors

LoanAccoun discount. Mrs7,500. Bills

50,000 and t40,000 respectively. Profit
Capitals To0,000, the second year amoun
of first yea a claim of Wolf accer ayable r

48,000 hile losses

in 12.000. Drawings per Nas
Ihere
was

amages against the epted ?38,were 5 00 paid iniv full, .119

paid 131
were F7,000 per annum partner 0 0 0
in ful while
The firm was dissolved
the first day ot the third year, Ist April
on
018. Credit
One customer, whose:
R27,750
in count was writte for 74
(0 whi
settlenent
14,000 who paid *12500 in tull and final
were

amounted to 5,000 on that date. Other assets realised R1,62,000, EYne ettlement. ors
that day were
ncluded given above. en off was settled at
on

Cash Prepare (a) Kealisation Alc, Actual as

bad,
nses amounted pital realisatic1on expenses paid ?1 ,800,
(b) Capital
the firm.
of now
to 3,000. the BookS
close
Accournts which1
ealisation43,1,52,330.1
280, Amount brought Partners, amount ed
U of
Prepare the Realisation
Account.
As. Realisatios
Loss on i Cr.
al of Bank Account (c) Bank to ?2,100.
[Ans. Balance of Capital Accounts before Dissolution
48,000 and Sunny 38,000. Book value of assets (other Peter58,000;
thanCash)
Roberts 8,890

56. J, Sand RR were

were in in by
Fox
Account to
00
Realisation Profit 7.500.]
1,53,000; Their Balance Sheet as
.2:1. The
partnership
at sharing
31st Marc
?10,390 and Wolf
54 4 and B dissolve their partnership. Their positi
31st March, 2018 March, 2018profits and
was as losses in the
S00
was as follous.
Liabilities BALANCE SHEET follows ratio of
A's Capital Capital Accounts:
B's Capital
60,000 Assets
Sundry Creditors
40,000
Buildings
12,000 Plant
Cash at Bank
25,000 R 8,600 Stock 10,000 of
The balance of A's Loan Account to the firm stood at 2,000 Reserve Fund 10,400 Debtors 2,000 low
R20,000. The realisot: Employees Provident Fund 3,000 Acrued Interest 12,200
expenses amounted to 800. Stock realised R40,000 and Debtors ation
machine at the agreed valuation 30,000. R+took a Depreciation Provision 3,000 Cash 5,000
of 20,000.
Other fixed assets realised 60.000 5,000 1,000 Cr
Creditors
Prepare necessary accounts. 2,800
11,000
Ans. Book value
of Assets (other than Cash) F1,43,000. Profit 53,000
6.200. A is
paid 763,100 (in addition to his loan) and B on
Realisation |
1.32,000.] R23, 100; Total of Bank Ale It was agreed to
dissolve the firm, and the 53,000
(J took terms 000
Buildings book value and of the
Q.55. The over dissolution were
following was the Balance Sheet of Fox
and
at
2018, when they decided to dissolve the firm: Wolf as at 31st March (i Accrued interest was not collected agreed to pay off creditors. 800
Liabilities 7600 which was met. whereas there was a
Assets (ii) Other assets realised: liability contingent of
Capital:
Cash at Bank Plant : R25,000,
Fox 30,000 Stock: R11,200,
Wolf Stock 4,500 (iv) Realisation
expenses 7600. Debtors: 4,600.
24,000 54,000 Debtors 18,000
Creditors Prepare Realisation Account,
Mrs. Wolf's Loan 88,500 Furniture 42,000 Capital Accounts and Cash Account.
Bills Payable 40,000 Machinery 12,000 Ans. Profit on Realisation 74,400; Final payment JR16,700;
23,000 Profit & Loss A/c 1,06,500 RI1,633. Total of STI1,067 and
22,500 Cash A/c R43,600.]
2,05,500 57.
Sanjay and Sameer were partners in a firm sharing Cr.
The assets realised: 2,05,500 2:3.On 31.3.2018 their profits in the ratio of
=
Balance Sheet was as follows: nan
Stock
Debtors 10,500 BALANCE SHEET OF SANJAY AND SAMEER
,000
Machinery 27,750 as at 31.3.2018
T88,500 Liabilities Assets
Capitals Landand Bulding 3,00,000
Sanjay 2,00,000 Stock 20
 NOFA PAR'TNNERS
IP
PIR
9.Arnab,
And Dh IRM
Ragini 20Dhnn
and
On 3IstMarch,
Shect was as under
lance >lCet wa
015,Ditrhuyad
ey were rartners
decided to
BALANCE SHEET O dissolvshare theiring profits S121
Liabilities
as at RNAB, RAGINI
31st
Sirm. in the
On that ratio of
date ther
131
March, 2015 AND
'nulitors

Amaah
Brother's Loa G0 O00 Bank DHARUJPAD
yhrtuipzad 's an 95 000 Deburs Assets
Fluctuation Fund
n e s t m e n t .

Arnab
1,050,0,000000 Les Cr
pitals

Ragini
2,75,000
2,00,000 Stock
PrBadovisLehtsion for 79 000 50,500
rupad 1,70,000
6,45,000 IBuinvestldimngents 20, 960 150,K0 000

Profit and ,50.00 600

9,50,000 l0ss Account 250 900
The assets were
realised and
the
3,00,000
) Anab reed to pay his liabilities were 50,000
950 00
((i) Investments realised 20%brother's loan. paid as under
less.
(i) Creditors were paid at 10 of
(iv) ilding was auctione less. iow
for
() 50% ofaf the
the
less than the
stock was taken3,55,000. Commission on Cr
over
and the by Rag1mi at market auction was 5,000.
book value:
(vi) Dissolutionexpenses were remaining was sold at market
price which was
the balance by I 8,000.
000. R3.000 20%
Dhrupad. The to be R3,000 were price.
repare alisation Accou Bankexpenses were paid by him.bome by the fim and
Account and 000
Ans. Loss on Partner's Capital Accounts.
104.600 and DhrupadRealisation R1,27,000, Final (C.B.S.E. 2016 Comptt. All India) ,800

Hint. Realisation of RI,37,600; Total of BankPayment:

A/c R6
Amab 2,63,800;
60.000. Ragini
Building will be recorded at the net
Q. 60. A, amount of
B and C 3,50,000.
dissolve their partnershipsharing profits and losses in the ratio of
firm on 3:2:
and pay off 31st March, 2018. A 1
agreed to
liabilities. He had to bear was asked to realise the
romised a lump sum the assets
amount of T3,000. Theirrealisation expenses for vwhich he was
ollows: financial on position that date was as
Cr.
Liabilities
Accounts Payable Assets

Mortgage Loan 40,000 Goodwill 20,000 ,000

Advance from B 30,000 Lease 75,000
Employees Saving Bank 25,000 Patents 6,000
Capitals: 16,000 Stock S0,000
Accounts Receivable DA n
 pIssOLUTION OF PARTNERS
A
6.122
80,000
66,000
Equipment
1,46,000 300 Shares in X Lid
ARTNERSHIP FIRM (LUTION OFA
PARTNERSHIP FIRM
Cash
3620,,000
000 (urncntAccounty

C's Capital ,000

13,000 7,500 Cash
2,57.000
12,000 ve for Coningency
Comussion Rece:Sency AYs in Busines
9,500 Current Accon
2,57,000 5123
Rescr
131
ssion Received in Adva 10,000
Informations 6,000 19,006
valued at 0 , 0 0 0 and this
was taken over by 2956
(1) Stock was at and
?18,000; and Acco
and B equally
B equat 1,90,500 4,500
Lease realised 1 .
10,000: Equipments
Accounts ey hared profits in the ratio
of X
at 20,000 and
other assets proved
by
valueless.
A amounted to 1,80o.
Receivable 'agreed sed to
to bear all
realisation
to 373,200
-
2, Y:
3/10 and
(2) Actual realisation expenses paid
which was I this 7: 1/5.
expenses.
amounted to Cr.
expenses
(3) There
712.000.
was an unrecorded asset of i0,000 which was taken a. Other informations are
ith the
withdrawn byservice Xis
hin from paid 2,000.
at
4) A bill of ?3.200 due for sales tax was received during the course of
(1) Ass

% of the exception of
hts are investments
investments
the firm. Atual
and this was also paid. realisatio also agrees to
to taken over
discharge the Bank
and
Cash,
by X at
are sold for
yritten off
5) Sunil, an old customer whose account was written off as
as bad
bad in taken over by 7 at the Loan. 75% of ?125,100.He
in the market value of The their
year. paid 2,500 which is not included in the above
above
the
stated previous
accounts (2 There were
outstanding 120%.
expenses amounting
remaining book value.
investments were
2,000.
receivable to 75,000. These
(6) Market value of the Shares in A Ltd. is ?100 per share. Half the shares. B/R for 710,000 was were settled for
2% the bill was discounted receivedfro a
sold in the market subject to a commission of the balance
and half ed from the bank. customer Mr.
of
divided by all the partners in their profit sharing ratio. were paise per were
received from his Surender becameSurender Kumar and iow

Prepare necessary accounts. (4) Commission received in estate insolvent andnd 75

advance was
deducting 60% for work done.
[Ans. Loss on Realisation F6,000; Cash brought in by C T15,500; Pavmer returned to the customers
740,500 and B 739,000; Total of Cash A/c F1,93,700.] to4 Vou are required prepare the necessary
to after
a
Cash realised from sale of shares ins. Loss on Realisa accounts.
Hints: 1.
20,000;
z79,500; Total of Cash A/c 1,42,600.1 Final Payment to X T61,800;
150Shares@7100 each 15,000 Y *33,700
and
Less 2% of 15,000 300 Hints Following entries will be passed for realisation 000
14,700 () Realisation A/c expenses
Dr. 800
2. No entry need to be passed for realisation expenses of R1,800 paid by 4. To X's Capital A/c 2.000
Only the following entry may be passed for ?3,000 promised to be paid toA: 2,000
(ii) X°s Capital A/c
Dr. 3,200
Realisation A/c Dr. 3,000 To Cash Alc
3.200
To A's Capital A/c 3,000 2 Following entry may be passed for the payment on account
of BR discounted
3. Accounts Payable, Mortgage Loan, Advance from B and Employees ) Cash A/c Dr. 7,500
Saving Bank will be paid in full. To Realisation A/c 7,500

Q.61. XY and Z decided to dissolve partnership. The position as at 31st i ) Realisation A/c Dr. 10,000
Cr.
December, 2018, the date of dissolution was as follows: To Cash Ac 10,000

Liabilities Assets .2.A and B shared profits in the ratio of 7:3. They dissolved the partnership
the amount
Creditors 40,000 6% commission on
000
20,000 Freehold Property
ad appointed A to realise the assets. A is to receive
Bank Loan 5,000 Machinery 40,000 realised from Stock, Debtors, B/R and Shares.
Capitals: 70,000 Investments 16,000 The position of the firm was as follows
Y 40,000 Stock 30,000 Assets
20,000 1,30,000 Debtors 30,000 Liabilities dachin 202CVAN28 HE
TON OF.

PARTNERSHHIP FIRM
1,00,000
.30 900
00 \
A5 466 1Fumniture
e d i t o r s

ustandny Fxpenses and &

ilhúlding
12
Tettors 6.131
2,92 000 arlk
Fwas
appointed
muneration of zs
to
dertake the
undertak
,000, F 3463506
process ol
agrecd to bear
lows
didissølssoluthuontion ftot
the
The Land &
Building was sold for 1 utich he ws
expenses.
C

) urniture was sold

25% of 1,08,08,900
at
900 Assuts ealialzledorwed
Machinery was book value
as

scrap afor
) sold as

(/)
All Debto were realised
at full
79,000,
ditors were payable on an value.
the Creditor on average of 3 monthe f-
harging the date of months
Pass necessary irnal entries for dissolution, theyfrom the date of
dissolution in the books dissoluoftion. Om
allowed discount
a

of the 5
firm. io of
Realisation 1,12,350;1
Net amount(C.received
BSE Sample Paper.
Ans. Loss on
elow
inal Payment made to E
R81,060 and F 2018
Hint: Payment made to creditors 42,750
R56,0601 from G
*24,970 and Cr.

Q.64. A, B and C shared profits in the ratio

the date of of 1:2:2.
heeton dissolution: Following is their Balance
Liabilities
Assets 2,000
Sundry Creditors
2,50.000 Cash at Bank
Bills Payable 25,000 Debtors 25.00 1,800
Workmen Compensation Reserve 30,000 Less Provision for 4,00.000
fs Loan 1,00,000 Doubtiul
Capital Accounts Debts 20,000 3,80,000
3,00,000 Stock 20,000
5,00,000 8,00,000 Machinery 3,00.00
Land& Buildings 4,00,000
Advertisement Suspense Account 30.000
Capital Account:C 50,000 Cr.
12.05.008
12,05,000

D,000
Informations: aal value.
 OFA p
6.126
DISSOLUTION OF A PARTNERSH
HIP FIRM
/sLUTTON

ARTNERSHIP FIRM
Pass nece
eSsary Jou
(i) Debtors were all good.
R60,000
issoluton. the irm: entries for the
(wl An unrecorded
asset estimated at was taken
over by partner
over
I.
Realisa
Expenses 3,000 follov
llowing transactions, 5.127
750,000.
Workmen Compensation.
B at
Realisation
Expenses paid. actions, at the time
to bear these expenses.paidby the
(v7) Firm had to pay R40,000
as of«
fin
Loan was
(vii) A's
settled by giving him
cash.
an
unrecorded asset
asset nofe 775,000 Y, one of the
partners, tookover a 2,000, Mr. Xone
T60,000 and the balance in 3. one of the
(win Partner A is to be paid remuneration of R20,000 for dissol 4.
7 one of the partners agreed to machinine for R20,000 partners has
take
Realisation expenses of R15,000 were paid by the firn. A, one oft
him at
partners has given loanoverto the creditor of
the time of
Prepare necessary accounts. to
dissolutior the fim t30,000 for
Loss on Realisation 30,000; C brings in
[Ans. 374,000; Final 6. Profit. OSS I
Account balance of
of
710,000. It was paid20,000.
73,08,000 and B4,26,000; Total of Bank Account 8,29,000.1 Payment to 4 Balance Sheet.
R50,000 appeared on back
1. Debit Realisa tion the
assets side of the
Hin Entry for settlement of.A's Loan:
A/c and
A's Loan Ac Dr. 1,00,000 Debit X's Credit
Capital A/c and Credit Bank A/c
To Bank A/c
40,000 Debit Y's Capital
3. Debit A/e and Bank A/c byby 3,000.
To Realisation A/c 4. Debit Realisat ion Credit 2,000.
60,000 A/c
Debit A's Loan Ac andandCredit Credit Realisation
Z's Alc by
F20,000.
0. 65. Susan. Geeta and Rashi are partners sharing profits and losses in Debit Partner' s Capital Alcs andBank A/c. Capital A/c by 20,000.
the
ratio
.

of5:3:2.Their Balance Sheet as at 31st March, 2017, is as under: 67. Pane p and
O share profits and Credit Profit &
che losses in
Loss A/c.]
BALANCE SHEET OF SUSAN, GEETA AND RASHI passed for the following transactions on 5:3. What
2ssets (other than cash) and
the Journal entries would be
as ar 3/st March. 2017
third party dissolution of W
liabilities have been their firm, after various
Liabilities Amount Assets
Account?

transferred to Realisation
Amount () Profit and Los
Account (Dr. Balance)
Sundry Creditors 50,000 Cash at Bank P was asked to look into the appeared in the books at 730,000.
Workmen Compensation Reserve 25,000 Sundry Debtors 70,000 a commission of F2,500. dissolution of the firm for which he was
65,000
Empioyees Providend Fund 5,000 Less Provision for allowed
Bank Loan 55,000 Doubtful Debts (5,000) (i) O took over part of the stock at
R6,400 (being 20% less than the
Capital A/cs Goodwill 60,000 (i) An unrecorded liability amounting to book value).
Susan 2,20,000 Furniture 50,000 F10,000 was settled at 78,000.
Geeta 1,00,000 (1) Motor Car of the book value of
1,70,000 Building T80,000 taken over by Creditors
Rashi 3,80,000 value of F60,000 in full settlement. of the book
135,000 5,25,000
6,60,000 [Ans. (i) Debit Partner's Capital A/cs in
6,60,000 & Loss A/c. profit sharing ratio and Credit Profit
Thepartners decided to dissolve their partnership on 31st March, 2017. (i) Debit Realisation A/c and Credit P's
Capital Ac.
The (ii) Debit O's Capital A/c and Credit Realisation A/c R6,400.
following transactions took place at the time of by
(a) Realization expenses of 72,000 were dissolution: (iv) Debit Realisation A/c and Credit Bank A/c by T8,000.
paid by Susan on behalf of the firm. (v) No entry for asset taken over by Creditors.
(6) Geeta took over the goodwill for her own
business at R40,000. 68. Ravi and Mukesh were partners in a firm sharing profit and losses equally.
(c) Building was taken over
by Rashi at 73,00,000. Un 31st March, 2019 their firm was dissolved. On the date ofdissolution their Balance
(a) Only 809% of the debtors
paid their dues. Seet showed stock of 60,000 and creditors of R70,0. Afier transierming siock and
(e) Furniture was sold for
797,000 Creditors to realisation account the following transactions took place
Bank Loan was settled along with interest of oftotal stock at 20% discount.
You
5,000 Kavi took over 40%
in full setlement
are
required to prepare the Realization Account. S C . 2018 30%
of total stock was taken by creditors of F20.000
over

Ans. Loss on Realisati on Remaining stock was sold for cash at profft of25%.
a
?1,08,000.] t
62:9:28
 DISSOLUTION CF
A PARTNERSL
6.128
creditors were paid in cash at a discount of 109%
RSHIP PIRM ION OF APARTNERStN
FIRM
(iv) Remaining o Realisation A / c

journal entries for thc above transactions in the bodt. .

90 000
CB.S.E. 2019 the irm. By Ashinsh' s Loana
Pass necessary

By
Ans. () Debit Ravi's Capital
Ac and Credit Realisation A/c by 1 9 omptt) Ashish''sC
By Neha' Capital A
Ale
(i) No Entry Capital ANe .131

(iii) Debit Cash

A/c and Credit
Realisation A/c by *22,500
( ) Debit Realisation
Ac and Credit Cash A/c by R45,000.1
(CBSE
INCOMPLETE INFORMA:
blehKira
probi nd
Rishab are partners
decided dissolve the firm sharing
Sample Paper, 2015)
QUESTIONS BASED ON
(Strictly as per Sample Paper
lssued by CBSE) RMATION 5:
of
information
ratio
2 :1.:
given belo
to in a

complete Realisationfirm Ist profit and losses

on
Cr
Bank A/c : November, 2018.
Alc, Partner's inthe
From the
Problem . Capital Accounts and
Ashish and Neha were partners
in a firmm sharing protits and losses in REALISATION ACCOUNT 00

the firm on Ist May 2014. From the informasratio Particulars 00

4:3. They decided to dissolve
Capital Accounts and Bank A/c. given
By CreditorsParticulars
Partner's ToSundry A s s e t s ; C
below, complete Realisation A/c.
REALISATION A/C Debtors 20,000
Dr. By Bills Payable 27 000
Cr. Stock 25,200
Particulars
Particulars
Investments 20,000 By Mrs. Prakash
Loan
10,000
T oSundry Assets
By Sundry Liabilities Bills R e c e i v a b l e
8,000
By Bank
(Assets realised) 5.000
By Kiran's
42000
Machinery 5,60,000 Creditors
40,000 Machinery 60,000 Capital A/c
Ashish's wife's loan Bills Receivable)
Stock 90,000
25,000
Goodwill
6,000 1,39,200 By Bank (Unrecorded 7,000
OW

A/c:
By Bank (Goodwill) Asset)
55,000 By Bank:
Debtors To Kiran's Capital 1,200
Machinery Bills Payable 10,000 5,000 Cr.
ToBank 4,80,000 By Loss transferred
to
Creditors
Debtors
10,000 Realisation Expenses 2,100 12,100 Prakash's Capital Alc
To Ashish's Capital Ac By Ashish's Capital A/c Prakash's Capital A/c Kiran's Capital Ale
To
Ashish's wife's loan 34,000 Stock 1,28,000 Wife's Loan 5,000 Rishab's Capital Alc
To Neha's Capital A/c: Typewriter 70,000 1,98,000 Contingent liability
Realisation Expenses 7,000 By Neha's Capital A/c
for bill discounted 8,000 13,000
Debtors To Bank (Creditors)
To Profit transferred to 40,000
Ashish's Capital A/c 4,000 1,86,800 1,86,800
Neha's Capital A/c 3,000 7,000
PARTNER'S CAPITAL ACCOUNTS Cr.
7,93,000 7,93,000 Dr
Particulars Prakash Kiran Rishab
Particulars Prakash KiranRishab
PARTNER'S CAPITAL ACCOUNTS Cr.
Dr.
75,000 50,000
Ashish Neha Particulars Ashish Neha To Bal. b/d 6,000 By
Particulars By Realisation
R) )
3,300 Ac (B/P and
To Realisation A/c By ToP &LA/c 9,900 Realisation
To Bank A/Ve 4,00,000 4,50,000 By To Realisation exp.)
By Alc (Bills By Realisation

Receivable) Alc (Wife

To Realisation Loan d

. BANK A/C Cr Alc contingent

19,200 12,800 6,400
(Loss) liability)
Particulars Particulars By Bank Ac
To Bank A/c
o Balance bd. By Realisation A/c (Final C2
 Dr (Creditors) Dr Particulars
Realisation A/c Particulars
Particalars
By
Prakash's Capital
Alc By Realisation A/c
By To (Creditors and B's Loan) $2,000
Capital A/c 35,700
By Kiran's To By Realisation A/c
(Expenses of realisation) 1,600
By
o By

To
Rishab's Capital
Alc
1,17,100
1,17,100
Problem 4 Rehman were partners in a fim sharing profits in the ratio of
Rahim and
Ram,
information given below
Problem 3. Ist January
2019..From
F the informatior 41:5. On
28.2.2019 the firm was dissolved. From theAccount
Bank
Realisation Account, Capital Accounts and
firm on
dissolve their
Ac and the Bank
decided to
A/c
A and B Ac, Capital complete
the
Realisation REALISATION ACCOUNT Cr.
givenbelowcomplete REALISATION ACCOUNT Cr. Dr Particulars
Particulars Particulars
Dr. By Sundry Liabilities
Particulars BySundry Liabilities To Sundry Assets Provision for Bad Debts 8,000
38,000 Debtors
2,74,000
ToSundry Assets Creditors ANc Bank Loan 4,34,000
6,000 1,08,000
Stock Alc Mrs. A's Loan A/c 10,000 Stock
Creditors 3,80,000 8,22,000
19,000 1,32,000
Debtors A/c Mrs. B's Loan A/c 15,000 63,000 Furniture
ByBank
4,000 4,00,000 35,61,800
Furniture A/c A/c Machinery (Assets realised)
28,000 By A's Capital 30,00,000 39,14,000
Plant A/c
(Investments taken over) Building 4,43,500 By Ram's Capital (Furniture)
10,000 67,000 of Bank Loan)
Investment Ac To Bank (Payment By Rehman's Capital
By Bank A/c (Assets realised)
of Creditors)
ToA's Capital Ac 5,000 To Bank (Payment (Machinery taken)
10,000 Stock A/c
(Mrs. A's loan taken over) To Rehman's Capital
Debtors 18,500 By Losstransferred to
To Furniture 4,500
(Realisation Expenses) Ram's Capital Alc 29,080
Rahim's Capital A/c
To Plant 25,000 53,000
Rehman's Capital A/c
By Loss on realisation
transferredto
Cr.
A'sCapital A/e CAPITAL ACCOUNTS
Rahim Rehman
Dr. Rahim Rehman Particulars Ram
B's Capital A/ Particulars Ram
6,00,000 10,00,000

By
To Realisation By General
APITAI ACC Cr. Reserve 56,000
 fo By B
By Realisation A/c To By
To Bank A/c
(Payment of Creditors) By Workmen
By 3,61,000 (Final Payment)
By
Compensation
Reserve
By By Bank A/c 3,000
(Amount
brought in) -

3,900
18,900
64,500 61,500
roblem 5. Dr. BANK ACCOUNT
Cr
A. Band Care partners sharing profits and losses in the ratio of 3 :2:1. Thev Particulars Particulars
cided to dissolve their firm Ist Jan. 2019. Complete the Realisation Account
on
To Balance b/d By Realisation A/c
an Account, Capital Accounts and Bank Account from the information given below: To Realisation A/c
(Liabilities Paid)
REALISATION ACCOUNT (Sale of unrecorded asset) 15,000 By Realisation A/c (Exp.)
Cr By Loan from A Alc
2400
Particulars To $7,000
Particulars
To By
Sundry Asets By Sundry Liabilities By
Stock A/c 59,400 Provision for
Debtors A/c 57,000 Bad Debts A/c 3,000
Plant and Creditors A/c 46,200
Machinery A/c 1,31,100 2,47,500 Bills Payable A/c 10,800 60,000 Solution to Problem 1
Bank Ac By
(Liabilities paid of By Bank A/c REALISATION ACCOUNT Cr
Dr
(Assetsrealised): Particulars Particulars
Stock 45,000 By Sundry Liabilities
Goodwill 12,000 To Sundry Assets 40,000
5,60,000 Creditors
Debiors 34,200 Machinery Ashish's Wife's Loan 25,000
Stock 90,000
Plant and Machinery 90,000 55,000 By Bank
By Loss on realisation Debtors 4,80,000
Machinery
To Bank (Creditors) 10,000
transferredto (Balancing figure)
40,000 Debtors
A's Capital A/c By Ashish's Capital A/c I.28,000
To Ashish's Capital A/c Stock
B's Capital A/c 34,000 70,000 1,98,000
(Ashish's wife's Loan)
Typewriter
C's Capital Alc 9,450 To Neha's Capital A/e Ac
7,000 By Neha's Capital 40,000
Realisation Expenses) Debtors
 se UTON OF APARTNERS IP PIRM
Solution to Problem 2

Partieulars
REALISATON ACCONT
To Sundry Asseta
Debtors 20,000 y CreditorsFatidors
Stock 25 200 By Btls Payable
Investments
20,000 PBy Mrs. 10 000
Bills Receivable 8,000 By Bank Prakash L.om
(Assets
Machinery 60,000 (Bal. Fig) realised 42.966
Goodwill
6,000 1,39,200 By Kiran's (Capital A/c 93 2089
To Kiran's Capital A/c (Bills Receivable)
Bills Payable By Bank
By Bank (Unrecorded
10,000
Realisation Expenses 2,100 (Goodwillh Aset)
To Prakash's Capital A/e 12,100 By Realisation 20
to
L.ons transferred
Wife's Loan 5,000
Contingent liability Prakash's Capital Aic
for bill discounted 8,000 Kiran's Capital A/c 19200
To Bank (Creditors)
13,000 Rishab's Capital Ac 12,800
(Balancing Figure) )
22,500
640
1,86,800
Dr 86300
PARTNER'S CAPITAL ACCOUNTS
Particulars Prakash Kiran Rishab
Particulars Prakash Kiran Risthab
To Bal. b/d
To P&LAlc
6,000 By Balance bid
,900 6,600 3,300 By Realisation 75,000 50,000
To Realisation
A/c (Bills Alc (B/P and
Receivable) 7,000
Realisation
To Realisation exp.) (4)
By Realisation
12.100
Alc (Loss) 2
19,200 12,800 6,400 Aic (Wife
To Bank Alc
(Final Loan &
Payment) 8)
58,900 35,700 contingent
liability) 13,000
By Bank Ac
(Amount
brought in) 5,70
88,000 62,100 15,700 88,000 62, 100 15,700
Dr.
BANK ACOUNT
Particulars Particulars
To Balance b/d (Bal. Figure) 2,000 By Realisation Ac(Creditors 22,500
To Realisation A/c 58,900
By Prakash's Capital A/c
(Assets Realised) 93,200 By Kiran's Capital Ae 700
To Realisation A/c

920/)/28 14
 DISSOLUTION OF A PARTNERSHIp SOLUTION OF A RTNERSHIP FIRM
6.136
(7)
RM
(Unrecorded Assets) 1,200
To Realisation A/c
(8) 5,000 (A)StateW
Whether the ollowing statemen
OBJECTIVE TYPE JESTIONS .137
(Goodwill realised)
(6) 15,700
To Rishab 's Capital A4c . There is no
fference between the True or Fals
1,17,100 of firm. dissoluti on of
I,17,100 an from the wife of partnership and dissolution
himself partner is treated just
a

like a

Whenever there is a change in from the partner

Answer and Hints to Solve Problem 3.
newfirm comes into partnership the
existence. old fim stands
() Loss on Realisation F6,600.
4. rtner's personal assets can also be used for
dissolved and a

(2) Dr. side ofA's Capital A/c will be totalled first and the balancing figure u
be Opening Capital ie, 'By Balance b/d' 710,000.
5. The firm will be
insolvent.
necessarily dissolved, evenpayment
if a
of firm's
iabilities
single partner
3) Balancing figure on Dr. side of B's Capital A/c will be 'To Bank A/c' 4 36 Goodwill appearing in the book of becomes
and balancing figure on Cr. side will be Opening Capital i.e., 'By the firm will be
T8,000.
Balance bld Account on its dissolution.
transferred to Realisation
7. Partner's loans have to be
Balancing figure in Bank A/c will be the paid before any
(4) Opening Balance i.e., To Balano partners as capital. payment is made to
b/d' I1,500 any of the
Revaluation Account is opened on the
8. A
dissolution of a
On the dissolution
of a firm, Goodwill will be sold like fim.
Answer and Hints to Solve Problem 4. 10 On the dissolution of a firm, any other asset.
Realisation Account
liabilities appearing in the books of the is debited with
(1) Balancing figure on the Cr. side of Rehman's Capital A/c will be firm. all the
Expenses paid R7,000.
Realisation 11, On the dissolution of a firm, cash-in-hand is
(2) Profit sharing ratio is 4: 1:5 and Ram's share Account'. transíerred to the 'Realisation
of
hence total loss on Realisation will be F72,700. Realisation
Loss is 29,080, 12. Profit of realisation on the dissolution ofa firm is divided in
the capital ratio.
(3) Bal. Figure in Realisation A/c will be
Machinery taken 13. Dissolution of partnership
automatically results in the dissolution of
by Rehman
1,90,000. 14. Partner's Loan is transferred to the Realisation Account
the firm.
(4) Bal. Fig. Ram's Capital A/c Cr. side will be
on the firm. with the liabilities of
Opening Balance
Final Payment to Ram 13,47,920; Rahim 76,06,730 and Rehman 714,00,000. 15. There is no difference between Revaluation
(5) Bal.
78,50,650. Account. Account and Realisation
Fig. in Bank A/c will be Opening Balance 748,000.
16. Total of debit side of Cash Account is
dissolution of the firm. equal to its credit side after the
nswer and Hints to Solve Problem5. 17. There is no balance left in any account after the
(1) First of all, Cr. side of Realisation dissolution of a firm.
closing of books in case of
A/c will be completed and the total of
side 3,12,900 will be Cr. 18. Even
be Liabilities Paid Off
put on Dr. side and the missing
figure on Dr. side will if nothing is stated in the question, outside liabilities have to be paid in
763,000. full on the dissolution of the firm.
2) Loan from 4 R57,000
(B) Fill in the Blanks:
(3) Opening Capitals 4 60,000, B 12,000 and C 1. Dissolution of Partnership may or may not involve. ofthe firm.
60,000. * * * * * * * * ** * *

4) Payment A R36,150 and C

Final
2. Realisation Account is...
752,050. In nature.
5) Cr. side of Bank A/c will be totalled 3. When realisation expenses Ue
first and the total are paid by a partneron
behalt o 1u
Fig. will be Opening Balance of 72,10,600 will be put
on the Dr.
side and Bal. A/c will be credited.
****
****

*** . A/c will be debited and. .

T10,500.
2 2 8 14
 DISSOLUTION OF A PARTNERSHID
SHIP FIRM DISSOLUTION OF A PARTNERSHID FIRM
6.138
first for settling..
.Firm's property is applied On dissolution, if
******"

20 investments are not

5. In case of dissolution of partnership...
******..*....
relationship between the
Investment FluctuationReserve is
given on the
givenen in
balance 6.139
partners does not conme to an end. tO.... .*...
iabilities side, sheet
tis
and onl
On dissolution, cash in har
6. Books of accounts need not be
closed in case of dissolution
ion of.
of .
.... 21
transferredto transferre
7. For firm's debts, all partners are liable.. . . . and severally. . ACCount.
(C)MatchingQuestions
8. On dissolution of firm, fictitious assets
transferred to
are .

On dissolution of a partnership firm

9. On dissolution, Partner's Loan is to be paid . . .

payment of outsid. Credit Balance of Bank

Account
liabilities but . . . payment of partner's capitals.
is 50,000 and
is transferred to
(iWife's Loan is transferred to
(aRealisation Account
Partner's Capital Account
10. On dissolution, if Workmen Compensation Reserve liabilility and

forclaim is 740,000 then R40,000 will be credited to.

... A/c and **********
.
(ii) Goodwill
appearing on
6Bank Account
10,000 will be credited to . side is transferred to assets (c) Realisati
lisation Account
I1. An unrecorded liability of T10,000 was settled for R7,500 on
dissolution On 2. In case of dissolution:
payment, it will be debited t o . . . . Account with .
12. On dissolution of the firm, the partner's personal assets are first used for
Death of the Partner
payment of...... inUnlawful business (a)Compulsory Dissolution
13. On dissolution, goodwill ii Person of unsound mind (6) Happening of an event
appearing in balance sheet is
transferred t (c Mutual Agreement
Account.
*************

(ivDissolution
the partners
with the consent
of (d) Dissolution by court
14. On dissolution, losses are first of all met out of . .

15. In the Balance Sheet Total Debtors

appear at 1,00,000 and Provision for
Doubtful Debts appear at 8,500. If bad debts amount to 20,000 and
remaining debtors are realised at a discount of 10%, the amount realised
Revaluation Account (aAll Assets and Liabilities
from are
debtors will be . . recorded
(ii Realisation Account
16. Rashmi, a partner, is to bear all expenses of realisation for which
she is to be (6) Only changes in assets and
paid 10,000. Rashmi had to pay realisation expenses of liabilities are recorded
R15,000. Amount
debited to Realisation Account will be. 4. On dissolution
17. A.
*******

of a partnership firm
Band Care partners in firm in the ratio of l :2:3. On firm's
a
dissolution, Unrecorded asset sold for cash (a No entry
firm's total assets are F1,00,000 and creditors are
20,000. Realisation (ii Unrecorded asset taken by
expenses are 73,000. Assets realised 25% less than the book-value.
a
(b Bank A/c Dr.
were settled at 95%. For
Creditors partner To Realisation A/e
profit/loss on realisation, A's capital account will be (in Unrecorded asset given to
..With . . .
*************
******* (c) Partner's Capital A/c Dr.
18. On creditor To Realisation A/c
dissolution of a firm, firm's Balance Sheet total is
assets side of the Balance Sheet 71,00,000. On the 5.
items were shown Advertisement
5,000; Profit & Loss Account (Debit) Balance expenses Partner's loan to the firm (aIs asset for firm
4,000. Loss on realisation was T8,000 and Cash Balance
710,000. Total assets (including cash i Firm loan to the partner (b) Is liability for the fim
balance) realised will be .
. 6. On dissolution of a partnership firm:
Creditors of R30,000 and Bills
basis of Payable of F10,000 were due on an average (When goodwill appearing in the (a Partner Capital A/c Dr.
one month after 3 Ist March, 2019 but
31st March, 2019 @ they were paid immediately on To Realisation A/c
6% discount Balance Sheet is transferred to
Account p.a., the amount debited to Realisation Realisation A/c
will be . .

Ac Dr.
(iWhen goodwill is realised in cash (b] Realisation
To Goodwill Ac

020:3228
 DISSOLUTION OF A PARTNERSHIP DISSOLUTION OF A NERSHIP FIRM
6. 140 M
(c) Bank A/c
When any assct is taken by any
Dr I1. At the time of dissolution of a
(i) To Realisation A/c
pariner
(Cash realised from saleof
rtnership firm 6.141
transferred to asset is (a) Revaluation
liable jointly (a) Private debts aluation Account
(All the partners
are
Davment of Partner's capital
and severally for transferred to is
(6) Bank
loan by (6) Firms debts Account and
(i) If partner has
taken
(ii) General reserve is
transferred to Account Reaisation
mortgaging his Private property (c) Partner's
then his private property can't be Capital
Bank Account Account and
applied first for payment of
(d) Partner's
12. On dissolution ot partnership firm
a Capital Accounts
partnership firm :
8. On dissolution of a aDebt already written
Realisation expenses paid by (a) Partner capital will be credited off now
received at the time of and (a)
dissolution Partner's Capital A/c
partner and was to be borne by is recorded To Realisation A/cDr
him only
(i) Asset taken by partner
(mRealisation expenses paid by firm (6) No effect on partner capital (b) Realisation A/c
but it was to be borne by a partner
(ii) Partner paid his wife loan ToPartner's CapitalDr.
(c) Partner capital will debited (c) No entry A/c
(iv) Creditors taken investments
(a) Realisation will be debited (d) Bank A/c
Dr.
To Realisation A/c
9. On dissolution ofa partnership firm: 13. At the time of dissolution of a
partnership firm:
Realisation expenses 25,000 (a)Partner's capital will be crediter Unrecorded liability taken by
(a No entry
paid by fim, out of which by F15,000 partner
715,000 was to be borne by a
i) Unrecorded liability paid in cash (b) Realisation Alc
partner Dr.
(i) Realisation paid
expenses (b) Partner's capital will be debited (ii) Unrecorded liability settled by (c) To Cash A/c
Realisation A/c
25,000 paid by partner, out of by 15,000 giving an unrecorded asset Dr
To Partner's
which 10,000 was to be borne Capital A/c
14. At the time
by the firm of dissolution ofa partnership firm:
(c)Partner's capital will be credited A ' s wife loan taken over by A
(a) Realisation Account
by F10,000 (i) Provision for doubtful debts (b) Realisation Account and
(d) Partner's capital will be debited Partner's Capital Account
by 10,00o (iii) Bank Overdraft will be (c) Realisation Account and Bank
10. On
transferred to Account
dissolution of a partnership firm:
(iv) Payment of Partner's loan ( ) Partner's loan Acount and Bank
( Payment of Employees Provident (a Realisation and Bank Account Account
Fund is recorded in
15. On dissolution of a partnership firm:
(in Asset taken by the Partner is
(b) Realisation Account ( Dissolution of Partnership which (a) Profit and Loss Account
recorded in
account is prepared :
(ii) Liability taken by the Partner is (c) Partner's Capital Account (in) Dissolution of Partnership fim (6) Realisation Account
recorded in
which account is prepared:
(d)Realisation and Partner's Capital (11) Retirement of a partner which (c) Revaluation
Account

Account
account is prepared
2920:9:231
 DISSOLUTION OF APARTNERSHT
6.142
(d Profit & Loss
ERSHIP FIRM pISSOLUTION OF A PARTNERSHIP FIRM
Account Appropriation (ii) One of the
partners takes
l6. At the time of dissolution ofa partnership firm
3,96,000 which is Sundry
10% more than Assets for .143
Bank overdraft will betransferred (a)Partner's Capital AccouUne Book value of Sundry Assets. book value.
Find
(b 74,40.K
to
ounts
Bankloan willbe transferredto:6)Bank Account (c) 4,44 90
(in Balance of P & L will be (c)Realisation Account
transfèrred to: 21. On dissolution of a partnership firm : (dy 3,60.006
(iv) Advertisement Exp. shown in
Workmen Compensation (aWorkmen
assetswill hetransferred to Reserve appears in the Compensation Reserve
Alc
17. On dissolution of a partnership firm Balance Sheet a To Realisation Alc Dr.40,009
40,000 To Partner's
Creditor of T80,000 took over the (a Cash A/c Dr. 10,000 Capital A/cs 24,04
i Workmen 16,09
stock of T70,000 in full To Realisation A/c
Compensation( )
Workmen
10,000 Alc Compensation Reserve
Reserve appears in
settlement of his debt. the
(in Creditor of 780,000 took over the (b No entry Balance Sheet at To Realisation AJcDr.40,000
40,000 and liability (ii) Realisation A/c
stock of 70,000 To Bank Alc Dr.50.000 40,000
arise at 24,000
(in Creditor of 780,000 took over the (c) Realisation A/c Dr. 50,000
stock of 90,000 and paid the To Cash Alc
10,000 (ii Workmen Compensation (c) Realisation Alc
Reserve appears Dr. 40.60
balance tothe firm. 10,000 Balance Sheet
in the To Bank Alc
40,000
at
18. On dissolution of a partnership firm: 40,000 and liability
Partner's Capital Accounts will
arise at50,000
beclosed by:
(a) Realisation Account (ivWorkmen Compensation (dWorkmen
(i Partner's loan account will
Reserve does not
appear CompensationDr.Reserve
Alc 40.0003
be (b) Partner's Current Accounts in the Balance Sheet and To Partner's
closed by Capital Acs
40.000
liability arise at
40,000
(in Goodwill Account
appearing in
assets will be closed by: (cPartner's Capital Accounts
19. On
L d Bank Account (D) Multiple Choice Questions
dissolution of a partnership firm: Select the Best Alternate and tally your answer with the Answers
Assets of the firm will be used end of the book given at the
(a At first, for payment of
liabilities firm's 1. In which condition a
partnership firm is deemed to be dissolved
(Dissolutionof firm (b Revaluation Account (A) On a
partner's admission
(i Change in Profit Sharing Ratio (B) On retirement of
(c At first, for
payment of personal (C) On
a
partner
(iv Personal Assets of a Partner loan expiry of the period of partnership
will (d Realisation Account (D) On loss in
be used partnership
20. On dissolution of 2. Court can make order
dissolve the firm when
an to

( One of the
a
partnership firm: (A) Some partner has become
:

partners takes fully mad

3,96,000 which is 10% less Sundry Assets for (a 74,00,000 (B) Partnership deed is fully followed
Book value of than book value.
Sundry Assets. Find (C) Continued future profits are expected
(D) Fim is running legal business

I2C 20
 DISSOLUTION
OF, PARTNERSHIP FIRM
DISSOLUTION OF A PARTNERSHIP
SHIP BFIRM
6.144 ratio 6.145
In capital (B) In Profit
3. On dissolution of a firm, realisation account is debited with (A)
(C)Equally
sharin, ratio
(D) None of the above
assets to be realised
(A) All iecalution of the firm,
12. On dissoi amount received from
sale of
(B) All outside
liabilities of the firm credited to: unrecorded asset is
sale of assets Partner's Capital Accounts
(C) Cash received on (A) (B) Profit and Loss Account
one of the partners
(D)Any asset taken o v e r by (C) Realisation Account
D) Cash Account
4. On dissolution of a firm, out of the proceeds received from the sale of a.
assets 13. (A)
Realisation A/c isa:
.. Wl be paid first of all Nominal A/c (B) Real A/c
(A) Partner's Capital (B) Partner's Loan to Firm (C) Personal A/c
(D) Real Alc as well
(C) Partner's additional capita. D) Outside Creditors
as Personal Alc
14. In the event
of dissolution of firm, the partner"r
personal assets are
the first used
5. At the time of dissolution of firm, "Loan of partners"' (Loans given for payment of
y (A) Firm's liabilities
partners to the firm) is paid out ofthe amount realised on sale of assets (B) The personal liabilites
the two
(A) After making the payment ofloans given by third party (C) None of D) Any of the two
(B) After making the payment of balance of Capital Accounts of partners 15, A partnership firm iscompulsorily dissolved
(C) ARer making the payment of above (A) and (B) (A) When the business of the firm is declared illegal
(B) When a partner of the firm dies
(D) Before the payment of loans given by third party

6. At the time of dissolution of firm, at which stage the balance of

partner's
(C)When a partner ofthe firm becomes insolvent
capital accounts is paid?
D)When a
partner transfers his share to some other person without the
(A) After making the payment to third party's loans consent of other partners
(B) Before making the payment of partners in respect of their loans
16. At the time of firm's dissolution, Balance of General Reserve
shown in the
(C) After making the payment to third party for their loans as well as
Balance Sheet is credited to
loans
partners
(A) Realisation Account (B) Creditor's Account
(D) None of the above. C) Partner's Capital Account (D) Profit & Loss Account
7. On firm's dissolution, which one
of the following account should be prepared 17. On dissolution, goodwill account is transferred to:
at the last?
(A) In the Capital Accounts of Partners
(A) Realisation Account (B) Partner's Capital Accounts (B) On the credit of Cash Account
(C) Cash Account (D) Partner's Loan Account
(C) On the Debit of Realisation Account
8. In the event of dissolution of a
partnership firm, the provision for doubtful (D) On the Credit of Realisation Account
debts is transferred to:
(A) Realisation Account (B) Partners Capital Accounts 18. At the time of dissolution of partnership firm, fictitious assets are transferred
(C) Sundry Debtors Account (D) None of the above to
9. On dissolution, if a (A) Capital Accounts of Partners (B) Realisation Account
partner undertakes to make payment of a liability of the
irm C) Cash Account (D) Partners' Loan Account
. s debited
(A) Protit & Loss Account 19. At time of dissolution of partnership firm, the balance of profit and loss
(B) Realisation Account
(C)Partner's Capital Account (D) Cash Account account shown in the assets side of Balance sheet of the firm is transferred to:
Unrecorded liability, when paid on (A) Realisation Account (B) Cash Account
dissolution of a firm is debited to :
(A) Partner's Capital A/cs (C) Capital Accounts of partners (D) Loan Accounts of partners
(C) Liabilities A/c (B) Realisation A/c
(D) Asset A/c 20. At the time of dissolution of partnership firm, the amount of 'Bills Payable"
On dissolution shown in the liability side of Balance Sheet is transferred to:
of a partnership firm, profit or loss on realisation is
mong the partners distributed (A) Capital Accounts of Partners (B) Realisation Account

(C) Cash Account (D) Loan Account of Partners

4
 FIRM
OFA PARTNERSHIP
PAR

DISSOLUTION OF A PARTNERSL UTION

DISSOLUTION OFA
6.146
accounts are transferred to FIRM (A) Realisation Account
(B) Cash Account 6.147
21. On dissolution, the
final balance ofcapital Account of the Partn
(A) Realisation Account
(B) Cash Account
C) Capital (D) Liability Account
D) Loan Accounts of Partners 31. lance
Cash balance. shown in the Balance Sheet is
(C) Profit & Loss Account shown on dissolution
(A) Realisation Account
(B) Cash Account
of firm in
between the partners is called
22. Change in the existing agreement (B) Dissolution of Partnership
C) Capital Account
D) None of the Account
(A) Dissolution of Firm
(D) All of the Above firm's
32. On
firm's
dissolution, on realisation of
dissolution
goodwill (which
(C) Dissolution of Business will be credited to: was shown in
Account' Balance Sheet)
& Loss appearing on1
23. On dissolution, the balance of "Profit assets
(A) Cash A/c
(B) Realisation A/c
transferred to : Profit & Loss A/c
side ofa Balance Sheet is (C) (D) None of the A/c
Realisation Account
(A) On the debit of HOTS
Account
(B) On the credit Realisation
of Ondissolution of a tirm, its Balance Sheet revealed total creditors 50.000:
Accounts
of Partner's Capital Accounts
(C)On the debit
tal Capital 48,000; Cash Balance R3,000. Its assets were
will be realised at 12%
(D) On the credit of Partner's Capital less. Loss on realisation
a0 tor
T00 firm's realisation
for tirm's
(A) R6,000
(B)F11,760
24. On dissolution ofa firm, a partner paid evn
expenses
Which account will be debited?
(C)I1,400
(D) 3,600
(A) Cash Account
(B) Realisation Account 24 On firm's dissolution, when a
partner voluntarily gives his personal asset to
(D) Profit & Loss A/c firms' creditor as payment, the account credited will be:
(C) Capital Account of the Partner (A) Realisation A/c
(B) Partner's Capital A/c
25, On taking responsibility of payment of realisation expenses by a partner
the (C)CashA/c (D) None of the A/c
account credited will be:
(A) Realisation Account (B) Cash Account 35, On dissolution, when a
partner takes over an unrecorded asset, . . .

credited
(C)Capital Account of the Partner (D) None of the Above
(A) Capital Account of the Partner (B) Cash Account
26. On dissolution of firm, loss calculated in realisation account (C) Asset Account
(D) Realisation Account
debited/credited to which account?
36. On dissolution, when a
partner takes over an asset..... is debited
(A) Cash Account (Credit) (A) Realisation Account (B) Partner's Capital Account
(B) Partners' Capital Accounts (Debit) (C) Cash Account (D) Asset Account
(C) Partners' Capital Accounts (Credit) 37. In case of dissolution, assets are transferred to Realisation Account:
(D) Realisation Account (Debit)
(A) At Book Value
27. Profit or loss of realisation account is transferred to: (B) At Market Value
(A) Profit & Loss Account (B) Capital Accounts of Partners (C) Cost or Market Value, whichever is lower
(C) Balance Sheet (D) None of the Above (D) None of the Above
28. Which of the following is transferred to Realisation Account: 38. On dissolution, the balance of a partner's capital account
(A) Balance of Cash Account appearing on the
(B) Balance of Profit & Loss Account assets side of a balance sheet is transferred to:
(C) Amount realised on sale
of assets (D) Reserves (A) On the Debit of Realisation Acount
29. Which of the following is not transferred to Realisation Account: (B) On the Credit of Realisation Account
(A) Balance of Cash Account
(B) Balance of Reserves (C) On the Debit of Partner's Capital Account
(C) Balance of Profit & Loss
Account (D)) All of the Above (D) On the Credit of Cash Account
30. On taking responsibility of payment of a liability of T50,000 39. On
dissolution, partner's loan is transferred to :
account credited will be: by a partner, tne
(A) Partner's Capital Account (B) Realisation Account
(C) Partner's Loan Account (D) Revaluation Account

020 23 446
 - - !?I:_S~?I~V!?~ _ - -oi:_A_P ~~ _!~_!'~
[..Uf 10N
~-!.!~ - - - - - - -:- - - - - - - ;i~ ; of capital accounts~ ~F_A! ~!~ !:_ ~ pill
- - - - - -
ossE- - ) Realisation Account - - - - - - - - _ _
are trans ferre d to : - ~
6.147
(B) Cash Account - - - -
21. On disso lut10n , the final b - (A C
(B) Cash Account (C) a pital Account .of the Partner (D) Liabili'h, A
(A) Realisation Account (D) Loan Accounts of Partners
•J ccount
(C) Profit & Loss Account J cas h balance. shown m the Balance Sheet is shown on d' .
. .3 • (;\) Realisat10n Account ISSO1ut1on offinn in .
. • · greemenl between the partners 1s called : (B) Cash Account ·
22. Change ID the eXJSt l~g a
(A) Disso lution offir ~
(B) Dissolution of Partnershi
(D) All of the Above p
I (C) capital Account (D) None of the Account
firrn ' s dissolution, on realisation of good
will (which was shown
(C) Dissolution of Business .3 2· ~;Janee Sheet) will be credited to 10
. f'Profit & Loss Account' appearing on the :
23. On disso lut10n , the ba 1ance o
d
ass (A) c ash Ale (B) Realisation Ale
side of a Balance Sheet is transferre to .. ets (C) profit & Loss Ale (D) None of the Ale
(A) On the debit of Realisation Account
(B) On the credit of Reali sation Account On dissolution of a firm, its Balance Shee
t revealed total creditors tSO 000 .
(C) On the debit of Partn er's Capital Acco Total Capital f4~ ,00_0; C~h Balance f3,00
.
(D) On the credit of Partn ers , Capital Accounts
unts
Jess. Loss on reahsat1on will be :
0. Its assets were realised at' l l¾
. (A) t6,00 0 (B) fl 1,760
.
24. On d1sso lut10n o a ti,rm, a partner paid noo for firm's realisation expe
f
(C) t 11 ,400 (D) ~3,600
Which account will be debited? nses
(B) Reali sation Account · _ On finn's dissolution, when a partner
(A) Cash Account 34 voluntarily gives his personal asset to
(C) Capital Account of the Partner (D) Profi {inns' creditor as payment, the account credi
t & Loss Ale ted will be :
(A) Realisation Ale (B) Partner's Capital Ale
25. On taking responsibi lity of payment (C) Cash Ale
of realisation expenses by a Partner, the (D) None of the Ale
account credited will be : 35, On dissolution, when a partner takes
(A) Reali sation Accounl (B) Cash Account over an unrecorded asset, ..... .. ....... . is
(C) Capita/ Account of the Partn er (D) credi ted :
None of the Above (A) Capital Account of the Partner (B) Cash Account
26. On dissolution of firm, loss ca (C) Asset Account
lculated in realisation account ,s (D) Realisation Account
debited/credited to which acco unt? 36. On dissolutio n, when a partner takes
over an asset ..... .. ... ... is debited
(A) Cash Account (Credit) (A) Rea lisation Account
(B) Partner's Capital Account
(B) Partners ' Capi tal Accounrs (Debit) (C) Cash Account (D) Asset Account
(C) Partn ers' Capira/ Acco unts (Credit ) 37. In case of dissolution, assets are trans
ferred to Reali sation Accow1l :
(D) Rea lisation Account (Debit)
(A) At Book Value
27. Profit or loss of realisation account is
transferred to : (B) At Market Value
(A) Profit & Loss Account (B) Capital Accounts of Partn ers (C) Cos t or Market Value, whicheve
(C) Balance Sheer r is lowe r
(/J) None of the Abo ve (D) None of the Above
28. Which of the following is trans/erred to 38. On di ssolution, the balance of a
Reali sa tion Account :
(A) Balance of Cash Accowll
(C) Amo um rea lised on sale of assets
(8 ) Balance of Profit & Loss Account
(D) Reserves
partner's capital account appearing on
asse ts side of a balance sheet is trans
ferred to :
the
'l
(A) On the Debit of Reali sation Acco
unt
29. Which of the fol/owing is not transferre
d to Realisation Acc ount : (B) On the Credit of Realisation Acco
unt
(A) Balance of Cash Acco unt
(B) Balance of Rese rves (C) On the Deb it of Partner's Capital
(C) Balance of Profit & Loss Account(D) All Account
of the Abo ve (D) On the Cred it of Cash Account
30. On takin g re~ponsibility of payment of a liabi 39. On disso lution, partn er's loan is trans
acco unt credited will be :
litv of f 50 000 by a partn er the ferred to :
' ' ' (A) Part ner 's Capital Account
(B) Reali sati on Acco unt
(C) Part ner' s Loan Acco unt
(D) Revaluation Account
j J -~
 ,-rroN o I I\ p /\R TNE RSHJ- P -FIRM- -- - -
Ju :
6. 148 DISS OLUTION OF A PAllT NERS Ji.tt>, - - - - -
,., _
wt,i h.: t r~
,,, , 1 L ~r1sferrin g assets to realisation account . 1>.1~9
- - ri~ 1, I
-W. SUJ1d ry Cred i tors amou nk-d to s~ 000
' ' ·
T h l'SC \\"\.'f\: pnid at a disco unt f ····· ······· ······· ··· ···· ·
, s O •n
m1 e d- to
· 0 5¾ nnsfc rrcd :
Rea lisati on accou nt " i ll Ix• dd:iil l'd b\B)··-~-7-.·(J·OO .
ht: tr,
pa ten
ts (B) G o od ·11
w1
(A) ~8.00 0
D) ~:,, ••.IQO (/\) c·· sh (D) Inve stments
(C) ~400 (
(Cl ,, . . . .
,- 7.., 000 f roud asset s are t2,0 0,00 0; total h_ab1~1t
-' I. Ther e was Unn."Cordcd nss er O ' - · . whic·b
:111 h was in h •n over by a p
· ·d b , 1 .1es are t40,000; amount realised on
. C · 3.1 \ccou nt wdl be dt: rte.: · llrtne r f assets is t I ,75,0 00 and realisation expe
a l ~ J.500 . Partn er s apll· ,- ) ••• •••••• ••••• ••••• s•il c o ·11 b nses are t 3,000 , the profit or
( B) ~ 1.500 ··
I (A) ~2.00 0 1oss on reali sation w1 e:

f
(C) ~500 D) ~3. 500 (/\) profi t f 12,00 0 (B) Loss t68,000
( (C ) Loss ns,ooo
. .
.p On d1sso luaon of . a fi1m 1• :111
. wmx orde d tuminm:: of tl1e va lue o
f ts 000
. (D) Loss ns,ooo
-· . "'-' • 00 Which Account w1-11 be ere d '
ta.ken -up by n P3[0lt'r tor , .J · 1ted and' by hWas
much amount} : ow 111 , disso lutio n ofa firm
, debt ors were tl7 ,000. Of these t500 \
l11 t. ~d the rest reali sed 60% . Whi ch became bad
Ii
(A) Cash Account by ~➔.300 acco unt will be debi ted and by how much
(B) Realisation Account by noo arnou nt? .
(A) Realisat10n Acco unt by t I 6,50
0 (B ) Prof it & Loss Acco unt by ~500

I
(C) Partner·s Capira.J Account by (S.0O
O (C) Cash Acco unt by f9 ,900
(D) Realisation Account by (4.30 0 (D) Debt ors Acco unt by ~7,100
-43 Oa the basis offo llo\,i ng data.,
fi nal payment ro a partn er on firm 's disso
lution H<, '~·_. In the Bala nce Shee t T otal Debt
\\ill be made : ors appe ar at tS0,000 and Prov ision
Debit balance of Capital Account (14,0 00; . Doub tful Deb ts appe ar at ~ 1,50 0. How for
': ( 43.000: Firm ·s asser taken over by him
Share of his prof it on realisatio
for ( 17,00 0. Debtors, if bad debt s amo unt to ~ 10,00
muc h amo unt will be reali sed from
0 and rema ining debt ors are reali sed at
(A ) ( 31 ,'0 00 n
(B) t 29,0 00 a disco unt of 5%
(C) t 12,000 (A) fl8, 000
(D) t 60, 000 (B) t36, 500
..W. On paym ent of expenses of dissolutio (C) fl 6 ,575 (D) t39 ,500
n, acco unt will be de bited :
(A) Realisation Account 3. How muc h amo unt will be paid to Cred itors for
(B) Cash Acco unt 5 t25 ,000 if ~S ,000 of the
(C) Profi t & Loss Account (D) Non e of the Abo ve credi tors are not to be paid and the rema
ining cred itors agre ed to acce pt 5%
45. An unrecord ed asset was valued at less amo unt?
( J ,00, 000. On finn 's disso lutio n, it was
sold for 52% . Realisation account will be (A) t18, 750 (B) n9,ooo
cred ited with :
(A) ( 52,000 (C) n9,750 (D) t20,000
(B) N8, 000

I
(C) ( l ,00,0 00 54. P, a part ner, is to bear all e xpen ses
(D) Non e of the Abo ve of reali satio n for whic h he is to be paid
-'6. On firm 's disso lution, a partn er unde t 2,000. P had to pay reali satio n expe nses
rtook firm 's cred itors at f 17,000. In this of t2,500. How muc h amo unt will
case the acco unt will be credi ted : be debi ted to Real isati on Acc ount?
(A ) Cred itors Ale (A) t500 (B) t2,500
(B) Cash Ale
(C) Real isation Ale (C) t4,500 (D) U ,000
(D) Part ner's Capi tal Ale
47. On disso lution, losses are first of all 55. How muc h amo unt will be paid to
met : A , if his open ing capi tal is U ,00,000
his shar e of reali satio n prof it amo unts and
(A ) Out of Capital (B) Out of Prof its to t l 0,000 and he has take n over asse ts
(C) Out of pri vate assets of partn ers (D) valu ing f25 ,000 from the firm ?
Out of loan from Ban k
(A) t2,35,00 0 (B) t 1,65 ,000
48. ............................ ..is prep ared at the
time of disso lutio n : (C) t2, 15,000 (D) n ,85 ,000
(A ) Reva luati on Acco unt HOTS
(B) Prof it & Loss Acco unt 56. Inve stme nts valu ed t2 00 000
were not show n in the book s. One
cred itors took over th~e ' inve stme of the
(C) Prof it and Loss Appropriation Acco unt nts in full satis facti on of his debt
n ,20,0 00 . How muc h amo unt will be dedu of
(D) Real isati on Acco unt cted from cred itors?
(A) t20 ,000 (B) n,2 0,000
(C) ~4,2 0,00 0 ~ r.,~~.;, ; ~® ~ ~J ~ !;
 or A rARl~':_!{~f-!!_f'.!~~ - - - - - - - - - - - - - - - - - - ~-~
DISSOLUTIO N OF 1\ PARTNERslilp
6. 150 _ - - - - - - - - - - - - - - - - _ f.1~A-, ,1Lr ri o N - - .- ;
2' -ooo became bad. One debtor became insolvent. 70% were
- - - - - - - - - - - - - - - - - . . '( 1 ,o 000 a nd cas h balance
. is t - ..___ 1'
,,,< 0111 °f rh 1sf ' m him out of t5 ,000. Full amount was recovere d firom the
57. If creditors are <'25.000. c.1 pit:i 1 ,~ . - ~ ? . 10,00o
f 1drY :i•~l'l~ · ' rccovcrcd ·b~~rs. On account of thi s item, loss in realisation account will be :
whal will be the amounl O sw · · (B) ~ l .85.000
1i:r1:incc d;O (B) t 1,500
(A) '(/,75,000 (DJ n-W.000 (/\) t5. I (D) t2,000
(C) ( I ,65.00~ . . _:m· ., n.oo.ooo. B noo.ooo and ct 1 (CJ 0 .soo
0
58. If opening cap11als 01 pJrtJJtr.- • . • .f f 50 000. B ~40.000 and C ~ O,ooo
. dr.l . - durin" rht· ,·car arc . . . , 30 OQ
and the1.r wrng~ = . : \Ii /I be Lht· amowi r of assers of the fim?' 0 1., , dz arc partners in a firm in the ratio of 4 : 3 : 2. On firm's dissolution,
and creditors are '(60.000. II 11 .11 (B) f.J,20.000 l. 11() (15. ,\': } ,an t I assets are (70,000, creditors are (15,000. Realisation expenses
• f1l s to a C d.
100 _ Assets realised 15% more than the book-value. re 1tors were
(A) '(5.40.000 D) f6.60.000 11r
(C) N.80. 000 ( nrc ti¾ more. fo r profit/loss on realisation, Y's capital account will be
HOTS
59. Iftoral assets ofa
f I., OO OOO JIJd ro ral liabilities are (2 40 OOO
fim1 a.~ -· · . f · th ' '.
will be rhe capitals of P. Q 31ld R if they share pro its m e ratio of th .
, What
paid. d/c red1te. d w1·th ..
debi~redit f8 , l 00 (B) Credit ~2,700
li
- . · 1·- I . ., • 3 · eir (A) D bi·t f2 700 (D) Debit n,400
capitals and protir sh:m ng r:iuo ~ · - · · (C) e '
(A) P N ,80.000: Q U:20.000: R H 60,000
(B) P n 6o.ooo: Q n20.ooo: R N. so.ooo
11ors d. solution of a firm, firm's Balance Sheet total is n7,000. On the assets
66- ~dn isf the Balance Sheet items were shown preliminary expenses ~2,000;
(CJ p n oo,ooo: Q uoo.ooo: R f 6.oo,ooo SI e 0
fit & Loss Account (Debit) Balance ~4,000 and Cash Balance t 1,800.
(D) p f 6,00,000: Q f-t.00.000: R n ,00,00O
f~~s on realisation was t6,300. Total assets (including cash balance) realised
60. On dissolution of a finn. a partner·s_ca~iral account_has a credit balance of
f4 2 000 His share of profir in real1sat10n account 1s (9,000. He has . wi ll be:
• · · . Paid (A) i69,200 (B) nl,000
firm 's realisation expenses n ,ooo. He Will finally get a payment of:
(A) (39,000 (B) f42,000 (C) <64,700 (D) t62,900
(C) f54,000 (D) f4 8,000
»ors
61. On dissolution of a firm, a p~er took ave~ ? l 7,00~ investments for 67, On dissolution of a firm, partners' capital accounts balance was ~63,000;
f 14,000. Which one of the fallowing account will be debited/credited With creditors balance was ~ 12,000 and profit & loss account debit balance was
how much amount? <6,000. Profit on realisation of assets was n,800. Total amount realised from
(A) Partner's Capital Account Debit with f 14,000 assets was :
(B) Partner's Capital Account Credit wi th ? l 7,000 (A) <81,000 (B) n6,800
(C) Realisation Account Credit with f 17,000 (C) <70,800 (D) ~None
(D) Realisation Account Credit with <3,000 68. On di sso lution of a firm, a partner took-over the investments of ~ 15,000 at

I <19,000. By how much amount the Realisation Account will be credited?

62. On dissolution offmn, which item is debited to the realisation account?:
(A) Realisation expenses paid by partner (A) <4,000 (B) ~ 19,000
(B) Balance ofreserve fund (C) Nil (0) <23,000
(C) Amount of unrecorded asset
69. Amr, Bina and Charan are partners. The finn had given a loan of <20,000 to
(D) Creditor's balance shown in the Balance Sheet Bina. On the event of dissolution, the loan will be settled by :
rs
(A) Transferring it to debit side of Rea lization Account.
,J. At the time of dissolution ofa fl d. c
<1 ,20,000; Cash B . rm, re itors are n0,000; Partners' capital is (B) Transferring it to credit side of Reali zation Account.
Protit/L . th ~lan~e is ?1O,000. Other assets realised i 1 50 000.
1 oss m e realisation account will be . , , (C) Transferring it to debit side of Bina 's Capital Account.
(A) ?60,000 (Loss) . ·
(D) Bina paying Anu and Charan privately . (C B.S E. Sample Paper, 20 15)
(C) ?40,000 (Loss) (B) ?80,000 (Profit)
7
CD) ?30,000 (Loss) o. Which of the following is not tran sferred to Realisation Account?
(A) Balance of Profit & Loss Ale (8) Advertisement Suspense Ale
On dissolution of a finn debto ?
' rs I ?,O00 were shown in the Balance Sheet. (C) Partner's Loan (D) All of the above

[See Answers at the end of the book) '-'~\ (}W~~/ ~ 1 , / !.\ •J -••
.,
•
pissolution of a Partnership Firm
indi,u1 P.1rt1H.'r.-;hip ~ct-makes a diSlinction between di ssolution of partncrt1 hip and
1 111 ,n t,t" partm:-r~htp (tnll . termination of the
Ji~'t' l~rtnL'rship agrcl!mcnt and a reconstruction of the firm due to admi ~<Jion
, 1,1 r·· . . . ,
l• rt,nlent and death of a ~artncr. D1ssolut1on of partnership may or may not result into
11
d ,\, tn:-,, Jo\\ll of the business as the remai ning partners may agree to carry on the
it
~111L:- .
, ., und~r a new agree ment.

that the firm closes down its business

anJ comes to an end. On the dissolution of the firm , the assets of the firm arc so ld and
liJbilities are paid off and out of the remaining amount, the accounts of partners are
settled.
Thus. in case of dissolution of partnership, the firm may continue i.e., it does not
mean the dissolution of firm . But in case of di ssoluti on of the firm , the partnershi p is
automatically dissolved.

Dissolution of Partnership
The partnership is deemed to have been dissolved in any of the following cases :
(i) ln case of change in profit-sharing ratio of the existing partners
(ii) 1n case of admission of a new partner
(iii) ln case of retirement of a partner
(iv) 1n case of expulsion of a partner
(v) In case of death of a partner
(vi) 1n case of insolvency of a partner
(vii) In case of expiry of the period of partnership

Diss~l~
--------
of Partnership Firm
,,, ii, , 1)f llii;~olution of Partnet ship Firm .
A partnership firm can be di ssolved in any of the followin g ways:
I \i \; nhout the Intervention of the Court :
1 r ,. , IO) A partnership fim1 may be disso lved when
. l; Mutu·1I A 1n en){ nt (. ~u. ·
1
· • ~ · t b
II ~ c ·ts di ssolution Since a partnership t1rm is se up y
a th e partners agree 1or 1 •
an agreement, it can be dissolved by an agreement. . . .
2 • • ). A finn is compulsonly dissolved m the
Compulsory Dissolution (Sec. 41 ·
following cases :
 orssoumoN_ 0! ~ ~A! ~ER Sl-i n> ~"
- - ·nO N or A PAR T~_ERS l-llP FLR.M
of the fin11 become s inso lven t. - 'I.!\~
p1s~ o 1.LJ
r all but one parmer - - - \ - 6.J
(i) When all O fi becomes unlawful. ciosurc of Books of acco unts need t be I
· .\. ooolL~ of
(ii) \\'hen busm e,s- of the rrn _ closed. no
II
Books of acco unL~ have to be
nl . n C• l ,, ( , " '. .., ~ ) •. A tirn1 may be diss. olv
ed Accoun ts
1 ( I ,, " .
on the close d.
f the follo \\i ng 1nc1dents . I
happening of an::, one o scttlclllent of I Assets are reva
lued and liabilities
(i) On the insoln•ncy of:i P3fC s. Asse ts_ ~nd reasscss~d a_nd _gai!1 or loss on A.s_seis are sold and liabilities arc
!ler. 1,,iabihtlCS revaluation 1s_d1stnbute P~td . off and balance, if any. is
d amon
(ii} On death ofa parmfe~e ob·e
ct for which the firm was form
the partne!s 111 their old profi~ dtSlnbutcd among all the partners.
ed . shanng ratio .
...) n the fulfilme nt o
(III 0 ~
. d for which the firm was form
n·) On the expir: of the pen ed . Dissolution of partnership does
( . l , When othe duration . . firm . EtTect not necessaril y mea ns tlie 0
.. \. ,11.
. <
of the part ners hip
. .s. . ""nner bv g_jvi ng non.ce to th
1s not fix 6.
dissolution of firm . issolution of firm necessari ly
artn means the dissolution of
and 1r 1s at ,\111. an::, r- - · o er p ers can d.issolve thect partn ership also .
· -
fi.nn . e co urt' s There is. no inter
th vent ion by. the
7. cou
. rt smce e partnership . A finn can be d'ISSO 1ve d Cl'th
intervention 1s I w1·1hout the ·m tervenuo er
· n of th e
1H1 B or ~r uftt.~ {. tr! I ~.:. ' lication by dissolved by mutual consent.
court or by order of the court.
The Court may. on an app a partner, ord er the diss .
olu tion of th
partnership firm under the followin . . e
g circumstances.
( I ) When a parmer has become
of unsound mind.
(] ) When a parmer. other than Set tle me nt of Accounts on Dis
th: Pai:t11er _filing a suit , has solution
permanently incapable of perfomu become Sec tions 48 of the partnership
ng his dun es as a par tner . act specify the mode of settlement
(3) When a partner, other than of acco unts on
the parrner filing a suit, is gui lty the dissolution of a partnership
of misconduct firm. It is as follows :
that may harm the partnership. ( 1) First of all, the amo unt oflo
ss, including the deficiency of Cap
(-f ) When a partner. other than out of profits, next out of Cap ital shall be pai d
the parrner fili ng a suit, wi lful ly ital , and lastly, if nece ssary, will
or persistently be reali sed from the
commits breach of partnership agre partn ers i.n thei r pro fit sha ring
ement. ratio .
(5) When a partner, otber than (2) Am oun t real ised from
the parrner filing a suit, has tran the sale of the assets of ~e ft.rm
whole of his interests in the finn sfer red the contributed by the partners), shal (i ncluding any sum
to a third party . l be applied in the fo llowmg man
(6) When the court is satisfied ner and orde r :
that the firm can not be carr ied (I) First of all, outside debts of
on exc ept at a the firm will be paid .
loss . . . th d ed by partners will be paid off.
(II ) Out of the rem amm g amo
(7) When the Court is satisfied
that the dissolution is j ust and equ unt, e 1oans a vane
itab le due to C - I Accounts will be returned
some other reasons . (I 11 ) The reaf ter the bala nce of 1 .
partners apt
. . .da d the part ners in their profit
(fV) If som e amo unt remains O
, it will be d1v1 e arnon"
Distinction between Dissolution
of Pa rtn ers hip an d sha ring ratio.
Dissolution of Fir m
.s: Basis of Dissolution of Partnership Dissolution of Fi-rm
No. Distinction .
Pa ym ent of Firm's Debts an d Private Debts (Sec. 49)
•ders are called ·Firrn· s Debts'·
Firm' s Deb ts : Deb ts whi.ch the f owes tO outSl
I. Mca aiog It refers to a change in the existi ng irrn . .
It refe rs to closure of the fiflll. . arU1er owes in his pe rsonal capacity are cal led
agreement be_tween the partners. 'P . Pri \ at e Deb ts : Deb ts which a P
The finn contmues its business. nvate Deb ts' . - d 10 pa)' off
2. Cont inuation le of the asse ts of the. firm is ,ono
hrst use
The finn continues its business . (i) Am oun t real i sed from the sa the partners .
of Business of the firm comes to an 1u - ava1.1able , it is di stributed an :=,
fi1rm debts and if the re is any SllfP s -' II b ' use d Ii1rs t to
the business end. .. . .
th sale of pnva te estate or partn ers \\ t ~ ·11 be used
) (u) Am oun t rea li sed from e lus a\·:1il:lbk, 11 w1
Economic
Economic relationship be and if there is nnY surr
Relationship the . tween Eco nomic re latio nship between pay
. the priv ate deb ts of the parlJ\ers.
ch a= }~ mm ues though in a the part in paying off the firm 's deb ts. · :.1 -,Jf l) ' ~ , ..11•1
ners com es to an end -
~ ~• ~~ ~ ; i 8 l!.J
 ., (.lf A p~~t~~~~
:~=- C,api taJ Ales
, ,:-: - - rofit & Loss AJc
- - -lli.- &.S

°
· 1 p rerred Revenue Expenditure Ale
10 Del . S
, as Advertisement uspense Afq
)'~..1,1._, n0 floss iransferred
. )
to Partner's Capital
0-- v v fit sharing ratio
, _ , .,1 pro

XJ. sts a provision against any as~"' h • .-

1, :nere e . .. . . , -Y..l, sue as Provision for Bad and
__, D:!bts - or · Prov_1s10n for Deprectat1on etc., the assets should be transferred
Concerned par~•s s.1.Jare .
;;, . .:' --~a]l.Sation A)c at _Its ~oss figure and such Provision Ne should be transferred
7~.s of furn•5 prr,pi_-:1;y ov; 15
.urm .s debts can be ia:pprlfc d b Ale.
._· -:-= cR-c:di t 5ide of R.eal ation oo example, if the total Debtors are ?50'000 and
· t4For
' _ on for doubtful e ts 1s , 0, the entries •>11~11 be :
towards payment of ws JJrlYa:t :.1 -;-:?- I ,.~I
<kbb.
-:f. • • Rt:alisation Ne Dr. 50,000
101
~iu y.:ZS f.l. ,--
\ ....__, -,,,_:-_:e.r·~ ;mv~ Private prop<>Jty isf .ap '--
_. Plied "'-bl
50,000
-l ~ To Debtors AJc
14,..m~ "'tr l:u.s ,..
;-rope:;,\ ,,. .
,.,rna:~ deo1.s C?.JJf lO?rdru, paymem O pnvate !Jebts.
Ix ~ L!.rM3::CS pa:, ~I;! 0 Debts Ne
m r-r.: i;."";:J'~d,;:,,.:; 11 ) Pro\ 1-5 1· 0 n for• Doubtful
• Dr. 4,000
TO Realisatio n Ale 4,000
r, , r,. sec for the transfer of such provisions :
---
Accounting Procedure on Dissolution of Firm
' . •on for Bad debts AleAl
Pro'- is1 . .
Dr.
D
n for Deprec1atJon c D
r.
Pro\1s1O N
Jn rJr&i tJJ close the boob of w firm on dissolution the following acco unts are h e rv Replacement Reserve c Dr.
<Jptni;;d in the ordtr g.r. ,;n !x:lv;, M~in.J
·fn ves tment Fluctuation Fund Ne r.
l .K.!!ahs:-i..llon Ao.;<,1m1 To Realisation Ale . .
2 Partnt:r' ·, lhan Accounts .
(Vanous rese rves and provisions transferred lo RealJSatwn Ale)
3 Partner" '.> Cap11::1l Accounb . .
(ui)Cashan d Bank balance are not transferred to realisation account.
4 Cc:uh or Bank Ac.count , n ) Assets are a Iways transferred to the realisation account at book values.
I ,ti I · 11,,. • 1 r ,Lr, t · A 'Reali!lation Account' is opened for disposing of all
1
•r,~ 'lg Liabilitie~ Accounts :
12 ) I· qr (
the ~sets of the fi nn and making payment to all the creditors. Realisation acco unt is a Sundl') Liabi lities Ale Dr.
nominal account and the object of such an account is to find out the profit or loss on To Reali sation Ale . .
re.ifaat1on of ay,et.<, c1nd payment of liabilities. I: ntries in realisation account are made /Transfer of sundry li abilities to Realisauon Ale) .. . .
in the followin g manner ·
. . d h'I transferring the liabil1t1cs to this
Following points should be kept m mm w I e
<l) hir' l<i\m~ A,\th Aw,unh: All a<;scL<; of the firm (except Cash and Bank account : . . e transfe rred to Realisation
balance) are transferred to thi; account at boo!i' value,. Entry is : wh1 · ch re Ia te to thirddparti
ft es ar Outside Loans, prov ·ident
Other
(i) Only those liabi lities
Real_i~ation Ale Dr. . p ble Bank Over ra . . . .,
/\ e such as, Creditors, Bi ll s aya ', Wife Loan, etc .
f o Sundry !\sset5 !\Jc Partner 5 fi ed to reallsat,on account.
l·und, Outstandin g Expenses,
(AsseL~transferred to kealisation Ale at Book Values) . o are not 'dtrans offerrseparately. This is becausef
(ii) Partner's Loan Acco unts to
While tnmsfc;rring the a ,, ''"' tO h' ed and f tside li abill.t1.cs 11ut bcfim:
pa1 paymen t o
Partner' :-. Loan Acco unts arc prepar l
in mind : sse s t is account, the fol lowi ng points should be kept • A ment o ou d. b la nce
Partner's loan is to be paid 3JLCr pay
( i) Onl y those asset~ which . . . , . pa . , . . , . Fund, Cre it a ,
rtncr s ca pitals. Rese rve, Reser\ c , e tra nsferred
accoun t· l·i,·ti'ti'<iL
" 1.s a<;seL<; such a , can be Iconverted
into Cash are transferred to this .. . . . ·h as Genera 1 Ne. Tl,c•s'~ accounts .,r
s accumu atcd losses like Dr. balance of p & L A/c and (111) Undi stributed pro fit s sue R , li sation . cntrv i~ passed :
deferred revenue ex , d.' li.ke
. pen iture Or bala fA d . or10 P&1" /\le are also not transicrrc, ed. to ea rit sharing ratJ·o. Followmg · ~
nm included in the defin 't•
such accounis should beI ion o..1assets
. · nee O
and sh Id
vcrt1 scmcnt Suspense Ale etc., are
b
· ou not e transferred to Realisation c.
Al Partner's Capital accounts in th eir pro · Dr.
1 ~ i ~Jr( , ~ • ~ tJ,
· (1' ' - :fK~\ ._.
transferred to the Partner's C 't I A cncral Reserve J\lc Dr.
ap1 a - ccounts : Rcserv,, F11nrl /I /,.
 1 /I l'/IR rNER',l 111' l·IRM
Dl'-'iOt UTION OF A l'ARiN . l I 1, ,._, ( 1
61, l:Rs111 ,, ,"
Conunge ncy Reserve Al e Dr 1• , ,~1! ' l \\ ',r 1--nicn ( ·0111pcnsalion
I"
Reserve: hl "'"'
¼Ju UL ~ I 50 0 ,
1 7

Profit & Loss Ne Dr. l'

11.1I1 il1l' 111 rc~pcct o II was ascertained .at f 2,00
• • 00 in lhe Balancc· Sh
, eel and
Dr . ";J' no Workme n Comp,.: nsat'1011 RCS(:rv · 000
Workmen Compensa rion Resel"\ c A c 1i,1L
J t,1 p.1) ~ 40,000 as compcnsution to th . c in !he Balance Sheet and Ii
1 .
fo Partner's Capit.al Ac, t• l
11.1
(Undistributed profi ts t.ran.Sfcrred 10 Capit:il A cs) c workers. irm

\\ " ( , , 11 , 1 , \I n
hi JOURNAL
s resel"\'e 15 crc:itcd out of profit:, of the firn1 to ml'el th~ claim for c
1 0111 . !'articular.,
by workers. At tJic time of dissolu tion. this reserve 1s dealt with as follows
. f)cn~l1vr l.F Dr {(J C'r rr,
(/) , • , ' , r, , , IJ.1' 111, \\ orkn1cn Compensation Reserve Ne
'\\ ,rh. 1>111 ( 111 ipt 1,.itwn I{ ,
1
1 Lavan ya 's Capital Ne Or. 1,50,000
such J case, the en ti re :imoun l of Workmen Com~n sati~n Reserve ~:,
the Capit.al Account:, of p~ners in their profit sharing ratio. The Jod1ted
~ni In
·' 0
ro Pnya's Capital Ne IJJO,f,<J(J
10 50.(#J
(Workmen C~mpensation ~eserve transferred to
Enif\ 1s urn.ii l'Jrtllcrs · Capital Accounts in their profit-sharing
Workmen Compcnsation Resem: Ne Dr rauo)
Io Partner's Capital A cs
workmen Compensation Reseive Ne Dr.
(ti) In l. " lfn .1111 uni , I 11 1111111 1 11 , th.,11 tl,1· ,HIH pd 90.000
urt ,,r \\ Ork (O )
10 Realisation Ne
, 1 • 111 1<1 , n, Amount equal to liability is Credited to Reali' 11 ln (Workme n Compensation Reserve to the extent of
90,(){)()
. . C
Account and tJie rcmamm g amount 1s red.Ile d to p artners' Capital Acco sa11on liabili ty transferre d to Realisation Account)
111 their profit sharing ratio. (Suppose Workmen Compen
sation Reservun1s (/i ) Workme n Compensation Reserve N e Dr. 60,000
no,ooo and ltabilllj for claim is ~8.000) : The Journal Entry is : c IS ·10 Lavanya·s Capital A/c 40,000
f Workmen Compensation Reserve Ne Dr. 20,000 J'o Priya's Capital Ale 20,000
To Realisation A c 8,000 (Surplus of Wo rk.men Compensation Reserve
To Partner's Capital Ncs 12,000 transfe rred to Partners' Capital Account in thei r
(11i) 111 l.1, .. thl' .111 111111 111 11Jl,1ht, 1, cqu:il to the profit- sharing ratio)
amount or Workmen
( m 1pcn .1111 1 H, ,, n L The amount of Workmen Compensation (c) Realisation Ale Dr. 90,000
Reserve is 90,000
Credited to Realisati on Account. The Journal Entry is : To Bank Ale
Workmen Compensation Reserve Ne (Payment of liability on account of Workmen
Dr.
To Realisati on Aue Compensation)
Workmen Compensation Reserve Ale Dr. 1,50,000
(ii') In c_,r, th· . muunt of I ah1'1h , morr than !he amount 1,50,000
or Wo rkmen 1111) (a}
( or.1pcn~atwn Rt t·n t The entire amount of Workmen Compensation To Realisatio n Ale
Reserve is transferred 10 Reali sation Account. (S uppose Workmen (Workmen Compensation Reserve transferred to
Compensation Reserve is n0,000 and liability for clai m is ~25,000 ). Realisation Account)
The Dr. 1,50.000
Journal entry is · (h) Realisatio n Ale 1,,0,000
Workmen Compensation Reserve Ne Dr. 20,000 To Bank Ale
. ·1
(Payment of hab1 1·ty on account of Workmen
To Realisation Ne 20,000 ·
Compensation) 1.50.000
Dr.
ILLUST RA T!ON 1. Workmen Compensation Reserve Ne 1.-0.000
[n) (a)
Lavanya and Priya \\ere partners sharing profits in the rati o of 2 : I. Pass To Realisation Ale ~ rred to
journal
entries for the following transactions al the time of dissol ution of firm : (Work.men Compensation Reserve traJ1S c
2.ou.OOll
(i) Workmen Compensation Reserve stood al ~ 1,50,000 in the Realisation Account)
Balance Sheet and Dr 2.00.000
there wa~ no liability towards Workme n Compensation. (b) Realisation Ale
(it) Workmen Compensati on Reserve stood al ~ 1,50 000 in the To Bank Ale
Balance Sheet and . . n account 0
f Worknirn
li ability in respect of it was ascertained at ~90 000 (Payment of liab1 1ity 0
Compensation)
(iii) Workmen Compensati on Reserve stood at~ I 5,0O~O in the
Balance Sheet and
liabi lity in respect of it was ascertai ned at t I:50:ooo.
 ~, or A PARTNE RSHIP PIRM
Lr l Jl ) 1• -
J>ISSOI. U'l'ION OF A PAR'l'N , ,~',l ll ex penses o f rea
. I'1sation are .

l
ERS1IIP 1· 11 ) w11c11 paid by a ~.9
'IJ\ ('' i.; •ilisution Ale
(, .~
Dr. l 40,00 0 f-1 partner on behalf o .
'I l{culisu1 lon Nr
Tu
I fl ' 'l'o partner' s Capital A/c Dr. flhe firm :
IJ 1u1l,. A/,
(l'nyniclll ofl iubility 011 uecmml of W11rk111c11
40,uou (lleuli s.ition expense s paid by partner)
11 I
( (li1lpCIISflli1111) . w1ii.:n the firm has agreed to pay a
(I' d xpenses and the partner has to be fi xed amount to th
( 1) 1111 II, Jur I ,) 1 II 1
,,t \•,"' ' ,J11sa11on i.; 11·s·1tion Ale ar the expenses . e Partner towards
f\: lteH ' I) ·
(i) When assets nre so ld for cash : -ro Partner's Capital A/c r.
( 't1sh/Bo11k /\/c I )r. ow nuncration allowed to the partner)
To Renlisntion /\k
(Assets sold for Cush ) (IV) When rea. lisation expenses are to be bome by the partner
·db) 1hc fi rm . . and the expenses
When ussel is tnken away hy one of the pnrtners :
(ii) are
pa' partner' s Capital Ale 0
Partner's Capitnl /\le Dr. To Cash/Bank Ale r.
To Reali sation N e Reali sation expenses paid on behalf ofthe partner)
(Assets taken over by partner) (
v) No entry will be passed if the expenses are to be b
(,i,) !fan asset is given away to a Creditor in part or full paymen (fl. pocket. .
t of his d th ome and paid by the partner
agreed amount of the asset is deducted from the claim of the Creditor and out o 11s
the ~~s, c . .
is paid to him. No entry is passed for the transfer of asset to the creditor. ,,, If' nothing 1s mentione
. • d about the treatment ofreat·1sallon
. expen ·1 ·
alancc . I as rnet the real isauon expenses. scs 1 1s assumed that
For i:xnmplc. if t11e amount due to a Credi tor is t 1,00,000 and he agrees
to ta the 11nn 1,
stock ?rthe book ,olue of t80,000 '" no.ooo and the balance ;n Cash, the follow/'
entry 1s passed :
ng
iLL"ifsfR A rioN~
pass journal entnes
'
rr Realisation Ne Dr.
30,000 fo r the followmg transactions :
To Bank N e 30,000 (i) Reali sation expenses amounted to ~5 ,000.

If the questi_on is si lent about the realisation ofan asset, it is assumed that the
has not realised any amount.
asset l (ii) Rea lisation expenses amounted to ~8,000 were paid by partner x.
(iii) Reali sation expenses amounted to ~ I0,000 were paid by the firm on behalf of
a partner.
(-n I· ntril'' of pa~ nll'nt of Outside Liabilitic~ ( Whethe r recorde {ii') Reali sation expenses amounted to ~ 15,000 were paid by the firm
d or . Mr. X, one
unrcrnrdcd) · of the partners, has to bear these expenses.
(v) Realisation expenses amounted to n0,000 were paid by
(i) When Liabilities are paid in Cash : the firm. t8,000
Realisation Ale were to be borne by the firm and the balance by Maruti, a partner.
Dr.
To Cash/Bank Ale (vi) Dissolution expenses amounted to ~20,000. ~8,000 were to be _borne
by th~
(Liabilities paid in cash ) fi rm and the balance by Maruti, a partner. The expenses were paid by Marull.
(ii) When any partner agrees to take over some liability : (vii) Sudhir a partner, was allowed a remuneration of <I0,000 to
_carry out
Realisation Ale dissol~tion of the firm . He was to bear all expenses of realisauon which
Dr.
To Partner's Capital Ale d to t 16~ 000 were paid by the firm.
(Partner agreed to pay a liability) ... amounte
. . n of <I5,000 for dissoluuon. work
(1'111) Ravi , a partner, 1s allowed a remunera!IO . h
. at'on whic amoun ted to <5,ooo were paid
j 1f the quewon · s1·1eot about the p:iyment ofa liabi lity, it has to be paid out in full.
· is and is to bear all expenses of rea Iis i
by the firm. . f t20 000 for dissolution work.
(5) For pa}ment of realisation expense s:
(i) When expenses are paid by the firm .
Realisation Ne
To Cash/Bank Ale
(Realisation expenses paid in cash)
·
Dr.
(ix) An.ii, a partner, is to be paid remunerattOOon o e pai·d bv the firm.
Reahsat1on expenses arnounte d to n ' 5 . werf - 000- for dissofuu.on work.
. .
·d munera11on o 0 ),
(x) Sunil, a partner, is to be pat re
9 000 were paid by hitn-
Realisation expenses amounted to t '
'
 .. I ' / -- "' •c:ansation.
s,ooo c,. ~)
I •'

(1) Rrahsation N e Dr. ,. T'JV'

,. . us f) Aft ON 3.
.
To Bank Ne 1ii . cccssar)' Journal entries on the d. .
p,i=-=- n . 1ssolution of
(Payment of realisation expenses) s,00o
o'' ing cases . a partnership firm in the
(1i) Realisation N e Dr. s,ooo foll (fl Dissolution expenses were ~800.
1 o ,\"s Capital Ne
(Realisation expenses paid by X on behal f of the finn) 8,000 .) Dissolution expenses ~800 were paid b p
(11 . Y rabh u, a panner
(11i) Partner's Capital Ale Dr. .) Geeta, a partne r, was appointed to look aft h . .
10,000 (11/
To Bank N e she was a11 owe d a remuneration of t 10er t e d1ssolut1on ·
work, for which
(Realisation expenses paid by the firm on behal f of the 10,000 dissol ution expenses. Actual dissolutio ,OOO. Geeta agreed to bear the
n expenses t9 500 .
partner)
(/\
·) Janki, a partner, agreed to look after the d'
.
t S,000. Janki agreed to bear the dissolut·
. ' were paid by Geeta.
1sso1ut1on w k fi ,,
(iv) .\"s Capital N e Dr. 15,000 or or acornmjssion of
. ion expenses A I .
To Bank Ale expenses t 5, 500 were paid by Mohan a th · ctua dissolution
1s,000 . , no er partner, on behalf of Janki
(Realisation expenses paid by the fi rm on behal f of the {r) A partner, Kavtta, agreed to look after dissolut'
0
·
partner) t9 000. She also agreed to bear the dissol / n process for a commission of
(v) Realisation N e Dr. '· f "9 000 ' u ion expenses. Ka vita took over
8,000 furniture o , , 1or her commission F ·
Maruti's Capital Ale . . · um1ture had alread , be
Dr. 12,000 transferred to reali sation account. ) en ft fl
To Bank Ne
(Realisation expenses paid by the firm. Finn's share of 20,000 (vi) Adebtor, Ravinder,
. fort 19,000 agreed to pay the d.1sso1ut1on
• expenses which .
expenses debited to Realisation Account and balance to s o
were t 18,000 m full settlement of his debt. (C· B· · £ · 2017, UIS /•de De 11).
11
Partner's Capital Account )
SOLUTION :
(i·i) Realisation Ne
Dr. 8,000 JOURNAL
To Maruti 's Capital Ne
(Realisation expenses paid by the partner on bahel f of the 8,000 Dale Particulars L.F Dr ((J Cr. (( J
firm) (1 ) Realisation Ne Dr. 800
(v,i) Realisation Ne To Bank Ne 800
Dr. 10,000 (Pay ment of dissolution expenses)
Sudhir's Capital Ne
Dr. 6,000
To Bank Ne (II) Real isation N e Dr. 800
16,000 To Prabhu's Capital Ale 800
(Remuneration allowed to the partner and ,
charged from him) excess expenses (Dissolution expenses paid by Prabhu on behalf
(viii) Realisation Ne of the firm)
Dr. 15,000 (111) Realisation Ne Dr. 10,000
To Ravi's Capital Ne 10.000
To Bank Ne 10,000 To Geeta' s Capital Ale
(Remuneration allowed t Ra · 5,000 (Remuneration allowed to Geeta for dissolution
firm on his behalf) o v1and expenses paid by the work)
Dr. 500
(ix) Realisation Ne* (1v) Jank.i 's Capital N e
Dr. 5.000
To Anil's Capital N e Dr. 27,500 Realisation N e 5.500
To Bank Ne 20,000 To Mohan's Capital A/c . d
(Remuneration allowed and . 7,500 (Expenses paid by Mohan on behalf of Janki an
expenses paid) Commisc;ion allowed to Janki)
 l'hi s a Cl' Ollll\ ,
(l
tn:\l..e nee , ., ,~ 1~rcf)a1cJ ,, l I
11.::.sary ad111stn1c111 s in I 'I hi~
h)
lh •
c va ucc m111t ill prcrr.11ctl h J 11111.l
I hT , 11,• ol' a~~~ ts · 1)111

1:1 I 1l1es nnd 1 , U1c 1~r,,t ',t or 1o;l:i

•>11 thc
•~I flJi:lC t.:; ~Hid rc p1l )lt1C ~ale
l·ve n alk r I nl t) f'
l llhlt i1ics
1
1-cv'·ll t 1' 11 t 1c prcp·•u-:ii ·
1011
• or 11,c rirn, comes lo an
,ua <> acc ou1H the ·
COl llltl llCS lo funcl' c1i<I nllc t'
tmu
· I
wit ' !l changed i,in, thounh prcpamti,111 of thh llCC t) Ul\l
1-,1 . . "'
among the part.nc~ . c attonsh 1p
side is mo ~ than the \'111 11<.' of Only the d1ffcrcn•'' I
:l!'!' ('t.S :1nd the hook value•· ,~c,d >ctw.cen 1300
hi&hilit ies . ·' ·11 revised
values o1 ~:-sets and liabiliti
1.. valu e of :L~scts
an<l \
es is liahilille s. the realised value or
r'-'co rde d recorded m this :iccount. :is~eiS and the :ictual paymen
01 liabil t
I
ities is recorded in this
acc ount.
Cr \\h en Thi s account may be required
pre pu ed to he prepared man,, tim• 17 iis acco unt is prepared only
- . :.~ ::s .~ . e>..elu!!mf! R, -~ I l1a!11ht1es 1c-x cltk.i1Ih ·s
~• ~
~' i ! during the lite-time of a, tim,.~ once during ihc lif'e- time of a
::::... ::iw:10..1.S .:?S.SCL, . C~ h:tlsnce of P 8.. L A
-c.. tim, . I
~ ~ "' ? & l .\ .:..
:... ~ ; : r - -': ~
Re, ,en·es.. P.-...rmc:r. s C ap: iol I~ I
·s u;-.rul C:irren1 Ac.:-o:.I:".:t., Loan from
. _- ~ .\_.:~--, ..=lt.'-. !. .A'"l.:11 l~ P.1.-mer.s \ ,.., ,, ~ - p.11d off afte r all If a partner has given an) loan
the outside liabilities arc paid to the firm. his
,, . _, '-',u nt 1-. not tnn sfc in full. Therefore , Partner 's
- ~- !:S h~•. rre d to the realisation accoun lt H
B~ f'..:n,"lSJOD on Xl~ 3SS __..,_,c·J , cp.ir.ltel~ and pai t and his loan account is •.
~~ ;:::n.: far .:!..-.c1L---P::f e: (S'.i,::.h :lS
1 d off by passing the followi
;':C ,\ lSl0 il for do u:: ,~ de ~ ng entry :
t::.- :'!me· ;,;-en i' .• r1'1Cr° ., I oan ·\
J.S,...:i:::i for de:rrrec..1:mn etc.) c Dr.
- ;- ► 1,, l ' ;bh Bank. A,·c
L ~ A._ :
~1- ..r:I : ~ j
•• - ~--o.->--!:-:: h:!j;:!~ ~
B, B::..7).. l :is., A ~ I :\.:::k"'>:.:-.1 f'.i, rn cnt of P1I1T1er' s Loa
I ~e~~ J' e-d 0:i :-e .'.? ....~ n)
of ~~ )
- : - , ..... 5:} !., ..
__ ,.~ r. ,~ o:- 3 , B.::::J.. l as::i ..\ .:: ( _-\.::;xn.
:::I Afte r the transfer of profit
-e:e, . ed c::-,x:i t.:::.-e.::onied ~ __ .._, l'n. und1~tnbu ted profits. res ene or loss on
I s etc. to the Capital Accoun ts
- ~ f,= ~ . !.... •·-: .. _ .J1 ~ e of Ca pita
l Ac cou nts are closed in the of the partners
B: ?:. ;-~ !-> C...;i::ll A.::
!...l:._""r- -...: ~ :.- ==-~ - followi ng manner :
-= a; ~ =~. ..:.=: ;::.....: - \
.\~ e: ~e :i
rl • ?--.:...-1:::r ·" L ::;-:~ ..\
O\ e-:- ~ :i ~
..::S
•
. \\h en par tne r is require
, -';-\ \ \ 11 he
3 d to bring in cash to clear off
his debit balance , the
f<,r ::-.:...~:-e =; loss an
r d.s "!!W il l C. bn. Ba nk. Ac Dr.
- ~r- ~ ! -C.! .~ .A. •"'! 1 o Par tne r's Cap ital Ne
F..r ~ = ;r=:-f:l cc Req um :d cas h bro ugh t in
by the partner)
' I \\h en a par tne
r is paid the Credit balance
of his account :
P,;.rtrn:r ' " (' ap1. ta 1 Al c Dr.

,
To Ca sh Ba nk A,c
( f- ,ce ss cas h pai d to par tne
r)
d h
nm ac::-o::m is pq :w ed ,.):J t.11e P,..15 x.:-ou:rt is pte
(-4 ) , ...... , •,l · - Ope
nin balance of Cash and Ban
g k an a 11 t e
dal lth epa vm ent sar eentere
~ :::.SS.OC.. ~ .i .~ or d~ pa.cd on the 't'ce1pts are ent er:d o~ the d
dissolution of ~...nersfrip deb it side of this accoun t bean
a? p:a::m,::-. U:- n the cre dit sid e of thi s acc hi prepared a~d closed last of all
•
ount.. T s a cco unt mus t
;!..-:d the tota l of bot h the t be equal. In this \\ ay t I11.s acc t
sid es of thi s acc o~ t ~:c ura oun
~:,0 hel ps 111 the c, of the accounts.
ver ific atio n of the ari th met
1ca ,
&.H
DISSOL~~- O_: ~ ~~~~ ~ l
ce both are given in the balance sheet, 0
....__
~
.
S)oL
1
L n o N OF A !~~E~~ !I~ _- - ___ _
.
-•
- If Cash bal:ince and Bank:ancount is prepared. If cash account is Pren..°!:. ooe D (Amount realised on sale of Assets : - - - - - -
' tt ·mer a Cash account or a Bank :iance and if a Bank account is prepared, .. lhl:Q'
an Stock 6.15
accounL
entn· et
is passed ~the B
for \ \ 1'thdrawin£ e Cash Machinery
Debtors
4s,ooo
· •IS deposited mto the
b:tl:mce ·
32,000
3s,ooo
- - - - yiffoit4 Land & Buildings
1,so,000
IUUST . . th ratio of 3 : 2. Their Balance Sheet as at 3 J st M ;:;-:--:.:..:.:
arch,
4 :ind 8 shared profits m e
Realisation Ne ~
2018 w:is as fo llows : - - ~ - Assets To Bank Ne Dr.
t 19,000
(Creditors paid at a discount of 5%)
20.000 Cash at Bank 19,000
Creditors
Debtors 40,000
7,ooo Realisation Ne
Capittls To Bank Ne Dr.
4 I.50.000 Less : Provision for 1,200
Doubtful Debts (The payment of realisation expenses)
B 90,000 2AO.OOO
~ 38,200 Realisation Ne
1,200
Stock
s4.8oo To A's Capital Ne Dr.
i 1achinery 8,800
40,000 To B' s Capital N e
Land & Buildings 5,280
1,20,000
:!.60.000 ::;-;-;:-..._ (Pro fit on realisation transferred to partner's capital 3,520
2,60,00 0 accounts)
~
A's Capital Ne
Partners decide to dissolve the finn on the above date. Assets realised as Dr.
B' s Capital Ne 1,55,280
iollows:- Dr.
To Bank Ne 93,520
Stock t ~5.000: ~1achinery 20% less than book value, Debtors n S,000. Land and (Final payment made to partners) 2,48,800
Buildings t 30.000 more than the book value .
Creditors agreed to accept 5% less. Expenses of realisation of assets amounted to
f 1.200. LEDGER ACCOUNTS
Dr. REAL ISATION ACCOUNT
Pre~ Journal entries and giYe necessary accounts. Cr.
Particulars
Particulars t
To Debtors N e 40,000 By Creditors Ale 20,000
To Stock N e 54,800 By Provision for Doubtful
JOURXAL 8{TRJES To Machinery Ne 40,000 Debts Ale 1,800
PaniaJars To Land & Buildings Ne 1,20,000 By Bank Ale (Assets realised) 2,62,000
L.F Dr (f) Cr. (t)
::,:~ To Bank N e (Creditors paid) 19,000
\t:!:-_.. 3! ~ Ac To Bank Ne (Expenses paid) 1,200
Dr. 2,S4,800
To Dea.cJS A C To Profi t on realisation
Tos.ocl .\.c 40,000 transferred to :
To•.~C'I) Ac 54,800 A's Capital Ne 315 5,280
To l.aad& B:.....<i::lgsAc 40,000
B's Capital N e 2/S 3,520 8,800
•T ~ c f , 2!10'.!S assets e'.cept cash to realisation 1,20,000
c.e, at boo!. \ aluesJ 2,83 ,800 2,83,800

Crerl.~Ac
Dr. 20,000 Dr. Cr.
Pro\isioo for Do~! Dcb:s AJc CAPIT Al ACCOUNTS
To Reclisauon Afc Dr. 1,800 f f
Particulars t t Parw:ulars
'~liabili· . 21,800 A B
"?'01,;_:__ n:cs 2nd j)rO',lSIOD tra:Isferred to A B
· ~ a.c, at boo k figu:res) I.50,000 90,000
To Bank N e B) Balance b d
B~AJc
ffi nal Payment) 1,55,280 93 ,52 0 B:, Realisation Ai c
ToRealisz!:ionAic Dr. 2,62,000 5,280 3,520
{Profit)
2,62,000 1,55.280 93,520
1,55,:!80 93,520
 --
b.16

Dr
DISSOLUTION O_F ~" ' . ' ~ ~
BAN K ACCOt.r.'IT
~
: A PAR-n:'_E_I<S_fiip i'Il<M_ __
- ~ 01SS ~
1 0 , a h) the Part ner :
t Pan~ 1 6.17

To Bclanct' b'd
To Re31isaOO□ Ne
7 000 B) Reali satio n Ale
• .
(Credit ors pa1"d)
- --- -r- r-..,
Cr:
1. ~ ner take s over respo nsibi lity
If a pf the firm, it is debi ted to Real
o .
for
isatio pNayment of a credi tor or some
other
(S:ik ofnssets) 2.62.000 By Reali sat ion Ale I abtl1l)' arnp lc, if partn er 8 unde rtake s the liabT
n c and cred· ted
19,00o ~ C- For cXthe entry wi ll be • to Partn er's Capi tal
"d) :
(E>..-pens~ p31
By A ·s Capn al Ale
. 5 ooo
of t • Real isatio n Ale
I ity for paym ent of finn 's credi
tors
1..20()
1 55 To 8 Dr 5,000
B) B 's Cap ita.I N c • ,280 .
769000 9
~ 520 men tione d e ntry wi ll also be recor
ded ~ . 5,00
- • f\bO vcfan unre cord ed liabi li ty . 0
2,69nn;;
,1 ~ pJYrn
en! o
--
or taking over respo nsibi lity foc

t1
\ !,
. .
,, u sfR A TI0-N-5.
-
l the questions ii is necessary to prepare
• J In al
(a) First of all. realisation account
vano us acco unts tn the follo wing
d
- O r er •
f/;L
8 and c deci ded to disso lve the partnership firm Th ..
:L
(b) Secondly. if a partner has given
should be prepa red.
· ,o I8, the da te.. of disso l ution , was as follo w s .. · e posit ion as at 3 1st Marc h,
any loan to the firm. Partn er·s Loan Acco
prepared. unt shouJd be - Liabilities ~-.- --- --- --As
~ s'.ets
".'.'= - - - - - - -
(c ) Thereafter Partner's Capital
-f- - .
Accounts are prepa red. Cr~d1Wr5 2, 75,000 1 Furni ture
(d) Bank Accounl is prepared last of
all. an Acco unt 30,000 Stock 5,000
.,I s L' O
12) Assets are transferred to the realisation accou capital Acco unts : Debtors 1,75,000
nt on the vaJ u~ gi~en in the balance
1_11 Provision ~or Doubtful _Debts 1s transferred
sheet A 1,00, 000 2,40.000
to the Cred it side of Reali satio n Bi lls Receivable s
Thereafter no entry 1s passed for 1L Ale B 50,00 0
Cash 30,000 111 I
l·ll Cash or Bank balance is not transf · C 5,000 1,55,000 10,000
prepared for Cash and Bank . erred to realis ation accou nt. A sepa
rate acco . 4,60,000
unt is
4,60,000
Part ner's Loa n to the Firm The)' share prof it and losse s in the
= 1,I~
If any partn er has given loan to the
firm , ' Partn er ' s Loan Ne ' will be pre
ratio of A : ½; B : 130 and c : ½-
s_eparatel~ . Partn er's Lo~n Acco unt is d no.0 00 of the debt ors prov ed Bad ;
prep ared befo re C apita ] Acco unts the bills recei vable s were rea lised in
ume o~ d1sso lu t1 on Capi tals are paid beca use ~ e full ; the
off only if any baJa nce is left after stoc k. n:a lised f 1,70, 000; F urnit ure
partner s loans . paym ent of was t~e n over by B al Book value
expe nses of Reali satio n amo unte d and the
to t 20,00 0 .
Following entry is passe d for the pay Prepa re nece sssar y acco un ts in the
ment of Partn er ' s Loan : book s of the firm .
Pann er ·s Loan Ne
To Cash or Bank N e Dr. SOL UTI ON :
o, REA LISA TION ACCOUNT
Cr.
Loon laken from a partn er \\iU be passed throu Parti cular s ~ Particulars
gh Cash or B:inl,, A cco u:nt. t
Loan gl\l!o to a partner will be transferred 1 o h irrntu rc 5,000 l3y Credi tors
(d ebite d) to his Cap il:ll A ccou nt. 2,75,000
1 o Stoc k 1.75,000 By Cash Ale (Assets realised) :

-~
,.-
'lo Debtors 2,40,000 Debtors
HJ u~er t~ I t' Pi.n ner:
On dis.solution., if a partn er lak 1 o Bills Rece ivables 30,000 (2,40,000 20,000) 2,20,000
wpi: al A c and credi ted . e~ over an asset of the firm, it is debi Io Cash ( Lxpe nses paid) 20,000 Bills Receivabl es
F- 10 0 11sat1 30,000
ted to his
-::r.u!llre of the book value of "'-ea
f
10 000
on Ale For e
· ~ p 1e, 1 partn er A take •r To Cash (Cred i to~ paid){IJ 2,75 ,000 Stock l,70,000 4,20,000
s over
Cl
' at n ,ooo,
follo wmg entry will be reco rded
for
13)' B's Cap1t. al N c' 2 l
{
(Furniture taken) 5,000
To Rea!J.Sation Ne Dr. By Loss uansferrcd to:
7,000
Aben ? ~!.io ned . A' s Capital Ale ~ .500
7,000
a:nt :;:.- ? ?anner entry \\1ll aJso be reco rded for takin g over
of an unre cord ed
B's Capital Ale
C s Capital Ale ~
13.500
45.000
t
7,45,000
1As.ooo
if
 L, J'll)N OF A PA RTNERSHJp FIRM
.....l )I
I

·s Loan 15,0oo Debtors 6.19

,1)'1 I Reserve 15 000
r.i ' l ess · p . . for 42,000
•'"\111ent fl uctuaL1on F'und 2,000 . rovis1on
,,i:~
,,J s CapitalI 30.00o Stock 6 00
Doubtful Debts --t._Q
36,000
· . c apita Io' ooo rnvcstmen ts 12,000
11)a s
Plant and Machinery 18,000
.
~ D1ya's Loan 39,000
1,32,000 2,000
= - -
~000
'fh tr firm was dissolved on above date d th
1 ,,e an e assets d 1·
follows : an tabilities were settled
' (i) The creditors were paid off by giving them the .
discount of I0% and the balance in cash. plant and machinery at a
(u) Rjya' s loan was paid with interest of t 500.
{ill ) Debtors realised I0% less of the amount due from them.
(TV) Stock was taken over by R.iya at t 7,000.
(1,) Investments realised 80% of their book value.
(vi ) Realisation expenses t 600 were paid by Diya
You are required to prepare :
(a) Realisation Account.
(b) Riya's Loan Account and Diya's Loan Account
(c) Capital Accounts, and
(d) Bank Accoun t. (!SC Sample Paper, 201 7)

,0LUTION :
REALISATION ACCOUNT Cr.
)r

Particulars t Particulars
42,000 By Provisions for Doubtful
'
o Debtors A c 6,000
12,000 Debts Ale
o Stock A c 60.000
18,000 8) SundI} Creditors Ale
o Investments Ne Flucruation
39,000 By lnvesanent
o Plant and Machinery Ne (I) 2.000
Fund Ne
To Cash N e (Creditors) Cash A.Jc (Assets Realised)
24.900 8
(t 60,000 ? 35, I 00) ) Debtors 37.800
500 s:.200
To Interest on R1ya 's Loan fv c rnvestments
14,400
600
To D11a's CapaaJ Ne (Expenses) B) R1ya's Capital A c ~.oon
(Sioc~ taken)
Bv Loss on Realis:ition
, tranSferred to
4.900
Diva's Capital A'c 9 ~oo
R.i~a's C:1pi1al A c -
-4.Qt10
I ; ...000
 -~
rioN o r A PARTNERSHIP FIRM
DISSOLU~.lON OF~ ~A!~~S~ lll4, ~l JI U - - - - __
R.IY A ·s LOAN Al'COUN I p\\. ,,) If goodwi ll is not appearing in th~ Bata;c~--------------6.21
( wi II not be passed. Sheet, the above mentioned entry
Dr
' ~-
15.500 By B:ilunce bid_ , , • ~T~ J
. When some amount is realised for g00c1 .
("') Wtll ·
By lnh:rest on R1yn s Loan Ne •OOo Cash/Bank ~c . Dr .
SO() To Rcaltsatton N e ·
15.500 ~00
. ) 1f goodwi11 is taken over by any of th
~ l 11' e Panncrs ·
-~----
DIVA'S LOAN ACCOUNT •
Partner's Capital Ne D ·

~
Dr
Particulars To Realisation Ne r.
2,000 By Diyu 's Capitnl N e
To 8:ilJllL'C b,d 2,0oo , If the question is silent about the realisation of . . .
~ . lised any amount. gOOdwill, it 1s assumed that goodwill
PARTN ER 'S CAPITAL ACCOUNTS 00 1 rc:i
Dr h,l~ ---
P<ll'ticulan Riya 1.,usr RATION 7.
P.zrtu:ul,v,
IL .
~
\' y and z were partners 1n a firm sharing profits and • the .
was the Balance sheet at the date of dissolution osses
To Diya·s Loan Ne 2,000 By Balance bid 30,000 ·· 1 m ra1.10 of3 : 2 : t.
By Realis:lrion Ale .fo 11owing .·
To Realisation Alc
7,000 (Expenses paid) Liabilities ~
(Stock l:lken)
By Gt:neral Reserve Ne 600 Assrts f
To RealiSltion A. c 7,500 7,soo creditors
..;,900 I8,500 Bank balance
(Loss) ~.900 1,000
M~- ,\" s Loan 5,000 Debtors
To Cash Ac 15,000
11 .200 \ s Loan 8,000 l ess : Provision
(Final Paymc!Tlt) ~5.600 1,000 14,000
\\ orkmen Compe~tion Reserve
37.500 18,1 00 moo moo ln~c-siment Fluctuation Fund
30,000 Stock
7,500 Investments
80,000
tp
Dr CASH ACCOUNT
== (Jpital Accounts : Plant
20,000
Cr. \' 75,000
60,000 Goodwill
P<Jmcu/ar.. ~ Particulars 35,000
~ )' 56,000
To Bala.nee bid 25,000 By Realis:iuo n N e z 40,000
To Realisation Ne (Creditors paid) 24,900 2,25,000
(Assets realised) 52,200 By Riya's Lron Ne 15,500
By Riya's Capital J\Je 25,600 Following transactions took place :
I3y Diya's Capit:il Ale 11100 I. .\' took over the investments at 25% more than the book value.
77,200 77,200 II.r took over debtors amounting to t S,000 at t 4,000. Remaining debtors
realised 75% of lheir book value.
, I Investment Fluctuation Fund 1s transierred to the Cr. side of realisation Ne, but
111s not to be paid, as 11 is not the actual liability Ill. Stock is sold fo r t 59,000 and plant is sold for ~40,000.
II should be noted that IV . Expenses of real isalion amounted to ~ 1,000. II was also fo und that there is a
ln"estmcnt Fluc1uat1on Fund will be transferred to Realisation Ne only if investments are liabi lity for t 8,000 fo r damages, which also had to be paid. Prepare necessary
appearing on the As~~L\ side, Otherwise. it will be Credited to Capital Accounts. accounts.

,f (, H ill SOLUTION :
Dr REALISATION ACCOUNT Cr.
Treatment of goodwi ll is vef) eas\ in case of dissolution of n fim1. ll may be
surnmanzed us under · · Parriculars f Particular; t
lo Debtors 15.000 By Provision for Doubtful Debts 1.000
(,) If goodwill is already appearing in the Balance Sheet. it is treated like any
0
fo Stock 80,000 By Creditors 18,500
'.hcr asset. and is trnnferrcd lo the Realisation Account at the value given in

'
h.1lancc shet't. Following entl') is passed for it : To Investments 20.000 By Mrs . .\"s Loan . 5.000
To Plant 75,000 By Investment Fluctuanon Fund 7,500
Reahsation Ale
Dr. · - '· A c (assets realised)
lo (iood\, ill A,c To Goodwill 35.000 BYB'""'
To Bank Ne (e;,,.l)enses) 1,000 Debtors (75•~ of
 DISSO LUT ION O F A P A R ~ ~
~ f'tR..M
~ v-r10 N or- A PAR TNE RS, flP FIRM -

S.00-0 f I 0,000 ) 7 ,5 00 ----- 1)l' ' t 11 . .

.
c·ood wtl l a ppea rs m the · balan ce sheet · 1t WJ IJ be
- /"'-23
and is
59,00 0 ' b . f 1· treated like any o ther asset
• :-i•esl
(b.,n.: Stock 1 1..:rred to the de it o rea
isati on accou nt. It Will be
ToBa nkA C ( 800dw il) has not realis ed
Tollm l- A,e
Plant ~ 1,06, soo
JO~ ~.llnL1un1.
ir.ll
assum ed lhat
18.500 B-. X's Capital Ale
Cie<iJtors 23,50 0
!",1rs \- s Low ~ , (Inve stmen ts taken ) 2s,0 00
u sTR A T ION 8.
8 , }-s Capita l Ale .
Pann ershi
- (Deb tors taken ) 4 ,0oo [LL Gurm eet , H ari nder a nd Jaga t are in in the
Bv Loss o-ans ferred to : the fi ~ shan n g profi ts a nd losses
. of 5 : 3 : 2 . T hey agre ed to disso lve on M arc h 3 I, 2018 , w he n their
- X's Capit al Ale 45 ,000
Balance Shee t s tood as follo ws :
rJIIO
rs Cap ital Ale 30 ,000
(, 1n11 , lf·,r l
• , I< < r .ind .1.,r, t
Z's Capital Ale ~ 90,oo o
BA LA NCE SH EET a:;· ar M.arch 31, 2() / ~

Dr
Pamc ulars
2.57. 500

.rs LOA N ACC OUN T

f Parti cular s
~
2.s1.so0
-

"
-=
C r.
]',otes Paya bk
Liab ilitie s

S ndry C red nors

-
Amou nr
(
Asse u

50,80 0 Land and Build ing

29,20 0 Cash
AmQu 111

f
80,00Q
30,00 0
8.000 By Balan ce b/d 8,00( ) ~~\a nce from Hari nder 40,00 0
To Bank Ne Marketable Securi ties 20,00 0
curre nt Acco unts : Sundry Debtor.;
CAP ITAL ACC OUN TS Cr. 2,4 00 50,00 0
Gurm eet
Dr y Less · Provision fo r
X y z Parti cular s Harin der ~ 3,860
Panzc ulan Doubtful Debts 11,76 0 38,24 0
f
' " By Balan ce bid 60,00 0
"
56,oo o 40,oo o
Capitals ·
Gurm ee t 50,00 0
Stock
34,3 60
TO Realtsauon Ne Equip ment 23,00 0
25.000 4,000 By Work men Hann der 30,00 0
(Asse ts rak.en) Curre nt Account : Jag.it 1,740
Com pen-
To Realisation Ne Jaga t ~ 1,03,480
(Loss) 45.000 30,000 15,00 0 sation
2,27,340
Reser ve 15,00 0 I 0,000 5,000 2,27.340
To Bank Ne
(Final payment) 5.000 32,000 30,00 0
75,000 66,000 45.00 0 75,00 0 66,00 0 45,00 0 Debt ors
etabl e Secu rities fl 8,000 ; Sundry
Land an d bu ildin gs n 0,00 0; Mark 22 ,240.
~-t7,000 ; Stoc k n0 ,000 ; Equi pmen t t
Dr BAN K ACC OUN T Cr.
the neces sary led ger acco unts.
Parti cular s Clos e the book s of the fi rm show ing
Panu-ulars
To Balance b.d '
1,000 By Reali satio n Ale (ex pens es)
"1.000
To Reahsauon N e By Reali sation Ale (dam ages) 8,000 SOL UTION :
!sale of as= ) 1,06,500 By Realisat.Jon Ale (liab ilitie s) 23,50 0 Dr REAL I SATI ON ACC OUN T Cr.
By Xs Loan Ale 8,000
Part icula rs Parti culars
'
(
By X Capit al Ale 5,000 ll°l\
80,000 By Provision for Doubtful Debts 11,760
By Y Capit al Ale
By Z Capit al Ale
32,00 0
To Land and Build ing
To Mark etabl e Secu rit ies 20,000 By Notes Payab le 50,80 0 ,,,
30,00 0 29.20 0
To Sund f) De btors 50,000 By Sundry Creditor.;
1.07.500 1,07, 500 To Stock 34 .360 By Cash Ne (Assets realis ed) 1,87,.240

"
~~
;

~hsa
1

If no!hmg ts mentJ oned in the question

~se are paid in full Henc
i1on Ale
fo Banx A.c
e Cred
quesuoa. Follow1ng enlr) "ill be Passed fo
about the paym ent of o uts ide li abilit
itors and Mrs. Xs
r their pa) ment .

Dr
Loan are
ies, it is
to be paid in full in
To Equip

paid
ment
To Cash Ale
fNote s Payable and C redito rs
off)
23,00 0 By Loss on realisation

80,00 0
transferred to :
Gurmeet" s Capital Ale

Harin
5/10
der·s
3110
Capit al A 'c
4.180

2.508
,
Jaga1· s Capit.:ll Ac
 DISSOLUTION O F A PARTNERSH]p
~ . .-nON OF A PARTNERSHIP FIRM
2/1 0 1,672
--- - ~-.... ~l1l U ' ' 6.25
- 8,36() fll " 1.,oan fro m Manoj (a partner) f I,OO,OOO .,
(.J..'c; Debit Balance l'70,000. · Mano1 s Capital Account
'2 .87 160 ~ 1.,oan fro m Manoj (a partner) f 1,00,000, Man ., .
~ L.J..'c ·' Debit Balance f 1,25,000, OJ s Capital Account

I Dr
H.,ARJNDER ·s ADVANCE ACCOUNT
f Particulars r
Cr.
soLUTfON :
-
f.rt -,Jar
4o,0OO By Balance bid 40,ooo JOURNAL
foLa.-..lJAC io,oOO ~ Particulars
~ == [),:JIC
Manoj's Loan Ne Or__ _
l.F Dr. (r)
• 'Y;,Rf,Ow
Cr. (r)

l J..''' I ..,-_I 815Nl.A 'fv ._,

1,00,000
CAPITAL ACCOUNTS 1....r.
(Repayment of Manoj 's loan)
Particulars (Jurmeet Harinder Jagai
,, r.,r
pa,1inlfar1
G,mne£1 Harmder Jagat
f t
t
50,000
t
30,000
t case 2
Manoj 's Loan Ne
To Manoj 's Capital Ne
Dr. 1,00,000
70,000
t By Balance bi d 23,480
To Bank Ale 30,000
To lagat's J, 74-0 By Partner's (Manoj 's loan adusted against debit balance of his
Currenc Ales 2,400 1,460
Current Ne Capital Account and balance repaid)
To Realisation 2,508 1,672 Dr. 1,00,000
AJe(LosS) 4,180 Manoj's Loan Ne
48,220 28,952 20,068 case 3 Dr. 25,000
ToCasb Ne 52,400 31,460 23,480 Bank Ale
52,400 Jf:460 23,480 To Manoj's Capital Ne 1,25,000
(Balance in Manoj 's loan transferred to his Capital
Account and deficiency brought in)
CASH ACCOUNT Cr.
Dr Pamculars
Par1tc11lar.1
t
30,000 By Reabsation Ale ILLUSTRAT ION 9.
To Balznce bid (Notes Payable and Creditors Followi ng was the Balance Sheet of D, G and Tas at 29.2.~
To Realisation Ne 80,000 Amount
1,87,240 paid of1) Amount Assets
(Sale of Assel5/ By Harinder's Advance Ale 4-0,000 Liabilities f
48,220 ~
By Gunneet 's Capital Ale 26,000
28,952 50,000 Bank
By Hannder's Capital Ale Creditors 30,000
20,068 I 0,000 Debtors 20,000
By Jagal' s Capital Ale Bills Payable
2,17,240 8,000 Stock 15,000
2,17.:!40 c·s Loan 12,000 Furniture 2,45,000
R's Loan 26,000 Land and Building
\\ orkmen Compensation Reserve 20.000
G's Capital
,,f Partner·~ I oan ·
f'a,me:if Capita ls .
1,00,000
Partners ' Loan is to be paid aft.er payment ofoutside liabilities but before payment D
1,50,000 2,50,000
of capitals of the partners. J/owever, if the Capital Account of the partner from whom T
3, 56,000
loan has been taken by the firm shows a Dr. Balance after al l adjustments, his lo~
accoun l will be transferred 10 the credil of his Capital Acco unt to the extent of debit . -
he above date on the following tenns :
The fi rm was di ssolved on t . d b'lls payable were paid at a
balance of Capita I Account. . ?8 ooo· and creditors an '
(1) Debtors realized t - , '
f (1r (·1 .. mplc disco unt of I 0%. T for t 15,000 and furniture was sold to N for
Give necessary journal entries for setllement of Partner's Loan at the time of (ii) Stock was taken over by
dissolution of firm under the followi ng al ternative cases :
t 12,000. ·1d· g was so Id 1:io r t2 ,80,000.
Case I Loan from ManoJ (a partner) t 1,00,000. Manoj 's Capital Account ( iii) Land an d bw 111 fi the same amount.
Cre<l11 Balance ~40,000. (iv) R's loan was paid by a cheque or
 u fiO N OF A PA RT NE RSH
o 1ssoLLJ110 N OF ~ ~~ ~s~~ ~ ,L)~ IP FIRM
-
wh ich wa s sold for f 1.0 0,0 L ,:,
A)c -
,,_:b s~o 00 am r,1 00. 03115 at1on
oun ted to f 20. 00 o.
- cor ded asset o . 6.27
an unre .d by the firm 1 ' F- f Ass ets) (Lia bilities paid )
(vl The re " 35 . n w work.m -,3lc 0 3.2 0.00 0
en pal d C api tal Ac cou nts of
1
a1i sati on Ac By Realisation Ne 66.0()0
(ti) cornrcnsa110 D, G and T
unt Bank Acc oun t an r. F- ord ed Ass et l
PrcJJ3l"C Rea J_ l ·c;:i tion A cco . . i l 11rec 1.00 .000 (Wo rkmen Compensation
Pai dJ
By G's Loan Ne 20.{)0Q

L - 10AT"
- - -UT !SA no N AC CO VN T By D's Capital Ne 8.000
SO REAL Cr.
By G' s Capital N e !.45 .667
Dr p ar11 cul ars

30.000
t
By c redi tors '
so.ooo 4. ~
By T' s Cap ital Ne 25.6 6';
1,80 .666
I,, [:>.;rll•r- 20.0 00 B} Bills Pay able 10,000 = -H 6.0 00
1o ~ l 15.000 By R's Loan 12,0 00
.
ro f-u.~iure . 2,45.00U
•-~e n Com pen sau on
By Woriu "
Ent ry for Wo rkm en Com
pen sation Reserve
To 1.anJ and Bwlding w ork.men Com pen sati on
Res erve 20. 000 Res er.e Ac
To Bar.k Ac Ban k Ale (ass ets real ised To Rea lisa tion A/ c Dr 26.000
45 000 By )
Clt'lCiiu,r.; 28 000 To D"s Cap ita l A c
9.00 0 Deb tors 20.0 00
Bills Pa)able • To G's Cap rta l Ac
furn itur e 12,0 00 2.00 0
12.0 00 66.0 00
R ' sLo 8D Land and Bui ldin g To Ts Cap ital Ac
2,8 0,0 00 3.2 0.0 00 2.00 0
To Bank A '~ (Wo n.m en
CocJpeT.sauon Pa.Id off) 20.0 00
By rs
Cap ital Ale (Sto ck Taken) 15.0 00 E:.ntr: for Pa) me nt o f Com 2.00 0
By Bank Ale (Un rec ord ed pensa11on
lo Profit Transferred to Ass et) 1.0 0.0 00 Rea l1sa uon Ac
To 8::ink Ac Dr
o·s ~p1 tal AA 43,6 67 20.000
G·s Capital A,c 43,6 67 c, · 5 Cap ital Accol.Dlt show 20 .000
'S a Cr bab .nce of t :!5.66
rs Capital Ne ~ 1.31,000 . ,_,-, r.:!S txe n paid off ~ L I ) OnA 7 af..er- all a.djc s=e nt.s .. Hen
ce his
".d ,~O" n a Dr balance. ill-'> lhe cor.:ra."':. 1fh :s uqn:al
~.:!7,00IJ Acw um (af.e:- all 2dju stm eru
~, cco unt "-O uld h:l\ e bee n =..sc""e:-red to !:us sl
. ,;..,: e,:t enl of deb it b:lb Capital Acc OWit
...,ce ot Cap ital Ac.::oum
., ~ .i t-..:i, c: txe n p:11d off a.""ld the btl:!..-:ic.e. ,fan :-. i~ bs Loa n ..\.cc oum
C', LOA N AC CO UN T Cr
Parr ula n t Pan1c11lars Baffi. 0,. ~ tS m or
? ( /) t~ ~- m g_ f! IS llIS ~
,B zi Ac 8.000 By Bal ance b d 8.000
side of Realis:nioo Ac and CO d;e ~
dr.J peid off.
8.00 0 8,u<JO 8:iD k Lo. -n tS abo uan
sfttred_to R.ealiza:don -\.:.: .c:=
:__ _

'a,tl CWD rS /J (i
lAP ll AL ACCOU-:--:TS
T p..v,,. uiu rs D G T
Cr
JLL [;STRA TION -JO. -- -
t { 4 B :1nd ( · are par tne rs sharing pro fits and ! . , ., . •
Baho,.:.e b, d 20.000 8) Balance b-d
~

I 00.000
? t
1,50.00'>
..,;r.:ed to dl.sso l•e
, the firm _ The Bal ance Sht i!
~ m the ran o o f - - .
0 1 the firm :is a l trw
1. To;:_
Rc:1hsauon l date was =
B) Wo rkm en
-\., f:S:o d Com pen- ! ,ab, ,tie s f
lliT '
'kn.i.A:c 1.45.667
15,0 00
15 ,bb1 U,0 ,66 6
sau on
Res ene 2.0 00 :?,0 00 2.000
EL"lk (h ~dr aH
Cn:d1:or,
4.0 00 l)d' (or. , '
4C. ".JO
30.000 ~w.:k 51),(,.
B} Reahsa t,on BP o.00!, F ~ :..( )0
A,.; ( Pro fit) -13,667 43, 667 43.666 s· , \.1r de LC-31 10.000 (O il'~ -..oc•
IAi ,66 7 -iS.667 1,95 .666
1,45 ,66 7 45-:6 67 ......
1.9..,...
5.6_66 .◄ -o 000 t .>!d ,\sS dS - t 1)00
BAN K AC CO UN T 8 1 JJ00 Prep!!ld E~ 1.000
Cr. p.--fu & Loss Ac ..:. :.,.000
t pan ..."1ilan C s Capltll ... ()c)O

:u,,ooo By Renlisa uon /\Jc -- -- ~. .,. ._ ,--t --

 ir-J () F /I PA KTN
[) J5$LlL u·n oN ERSHIP FIRM
OF A PA~l"N ii LI I j(
-ER
-SHlP FIR~1 1I' , ,I

o.2 k r ooo: fi xed Ass<~ W 1 l

~till ~ 50,00/J ByC- "'
1
..,d us1011 0• ' : St o< ·"
1 ,000 a d ,..
l'i " (lire 2( •~lion J(J,()()0
I /.5'>un '~<«:""ii' •rec'·,·
' ed fiOOl. l)<blOI " ru1 1
11' ,,,,. ptitcr .)00 By um
,, r,.(#J
> 00 an I,, lI ,, J ;\ ~sets K,IJIJIJ B•vB"• w
:,1110 __,., ,,« tiJJ!i
ltu r<, 111•6 d :i) so agrees to make the Pa Ii' i J !'.~pen 41 ,0fJ<I By Ba ,,
1,..,
,re !Of/JO
•( l'J' scs n, Ne l!ial f 1,11/YIJ
, 4aert-ed Yn10n, 1,,1 \ ,p ,wl( Bll'I I,OQO B B
~· ~f13IY- to l;JJ' 6,000 yB,IIankd'NI,e IR
. e o l.00.5/
~
3. Ba ~ hi s ,,; 1e ·s 10:in- 1' I' ·tal (Wife
.-->11vto disdt~ · (aP Loan ) """"l' frum 3/iJ-0
erd ·' ,sset of 1!•' S' n31yf!1ent fo r 10 000 B A ts
,n unf" O eu
I I0.000. ,due· h ' y •~c )OOuredJ 1/f!J
'" '' tak·en over 11,rt( I,,..

~
by C 8 C' .apital /Fur
o,00 niture)
~ Th ere0,,-:is 11 J -co tlf1 te
1 ;,ti " ; ov d) y 1' Cap,• I
.. d fiO , ( IBafl erdr.afl p~d)
, d> R jor ,~'--ooo was ~ e1, e n' 3 ,uswmer Mohan and the bi 5,0
4 00000 /I 7.f"IIJ
,. _, Moha!l \J<Ca . I ll i!J ( 1credil0~
f•'j,• B ' By Los,nrt1J
<On!ol a"'1 )
!U' ,nso vent an d 60 . " paid) am
28,500 A' sCa foroi
per ruwas ~
· · · rol fi:01!1 th patse ·ta
dJSCoun ' r, a, -
. __,i fro 8 s Capita1l Ne to
,
nt his estate . 66,7
,?(f60.)
1135 t,cen rt « l\ n<it'I.J
C's Capital Ne
of t I.)·oo.
id al a discount pe, J,3&0 16,900
b cre<fi1ors ,, er 1,95 ,500
e r-- 1.95,500
Prepare n~.,... ~,~ " accounts-
.., ()> "' •
=--==--
CAPI TAL ACC O
UNTS Cr
or C B
pt){ricll/ars PartltUlan A B C
1,600 f f
Dr. f t f
1,600 8,000 By Bal. bid 70,000 70,000
To Reali¢ion A, fo Bal. bid 16,000 J6,000 8,000 ByRealisation
c
disChafge the liabi fo p& L A}c (Bf P) 6,000
.
£ntr' for Aagreein lity of B/P : By Realisation
fo Realisa tion
gto ::, ~ ~00 (f urnit ure) 1,600 (Wife Loan ) 10.000
Re:itisation A, c 6,000 roReali sation(asset) 7,000 B y Bank Ale
~ B.ITTl'£ in
ToA
to cfischarge
fo Real isatio n (L
oss)
6,760 6,760 3,380 (Cash brought 10 ) 2hJ 80
: 1 £nil: ,o.r au
A' 0 hi s \\ife's Ioan :
-· ::, fo sank A}c
Dr I0,000 (fi nal payrne nt )
R.eafuaUOD 10,000 SJ,6-
- 40-57:
,240~ -
C
76,000 80,0 00 26,380
IJI [nll)' ror
To B
an w,reco
~
C rd ed ass< I r,ken ov 7,000
er by C: BANK ACCOUN Cr.
Dr. 7,000 Dr. p~ T
lli BIR To
rec Realisati on
eived from MA/C PortL.Wort
ha" JO be paid ohan had 1,een diseounted fro T Realisation Af
e
JO (he bank 1,e m the l,ank, meo,fo
eause or the dishon
our of th e bill, re, I 5,000 .ill TOoReal isa tio n Ale I,I7,000 By Realis 5,000
' "' '" "' 61)% ,i
ll
be recovered fro but aut or this (R aUoo (p:tpneo<
m lhe official re
ceiver of Mohan fromBIR dishonouecoverJ for bill discO"'tedl ~.000 a:,
• Followrng red)
entries will be passe To C's Ca pit>l Afe J,000 ByReaJisati 28.500
d fo r it : 3, on (BaIT' Qveidraf ...
Dr. 000 By Realisalion (Cred tl
51,640
(1) Bank Ale
To Realisation Al
3,000 (Cash brought in
) i<o<S I
57.240
"''
e 26,380 BByyA'
B's C
caappititaall A,Ne'c
(ii) Realisati onAl Dr. 5, 000 I,46,)80
e s,ooo ~
1,46,380 -; ;,- -
To Bank Ale ---
(II ii .ill be assum
ed lha< Compu•r ha 'Bank overdntft
. ~ ed IO (h"red iio fR
eaiisa<iOO
(6) C's Ca pim s not realised any is short·""" borro
amount.
h"
'
l account shows a Nean dth en paid wing. first uans
b<ings in neoessa<Y debit ba]ance (i.e., olf just Iike othe '"
casb to cIear off hi deficit). It will be r outside liabilill CS
s debit bal•"'• assumed

'T .
me ntioned in the qu
estion that he has
RFA LI SATIO
become insolven
t.
uni ess it is spec (hal he
ificailY
er. ------ -----
ILLUSTRATIO
N Jl.
.
.• :~ " 1irrn
. rofilS and tosses in
,he ratio of
 .t2.ooo snni... / --.,,...,~ • ;s Loan (K anav 's Loan)
3s,0o ner . Ale will be prepared
, oOO Stock 0 ,1 ,,r 1
0 0• 24,ooo ('. p,u
workm en co mpens
v
ati on Re separately.
. serve will be transfe rred to p
•

rrade Credi.tor5 ,;dent fUJ1 d 1 .

9_0oo Debtors
5
19,ooo (Ii)
- ere ' viii be no entry of taking over of Inv artner ,s Ca pita
. l Accounts
.
£n1plo) ee5 Pfi1 estments by T d Ce d.
.,hish 35,000 Furniture 40,ooo ra e r ttors.
Mrs -~ µ ·s Lo3fl 1 11
Plant 2,Io,ooo l''') ~ -- - -
·s Lo3fl
!{an3 ,
,.,0 000 rnvesr.rnents - ']?.AfJO N 12.
'< (ornpc:n.'3000
WorkJJ.len · - · Profit and Loss Acco unt 32,ooo .-,iv us
I.he
1' .ng is the Ba lan ce Sheet of
4, 000 io,ooo fol 1ow• . . A and B as at 3 1st M
Rese0·e . Resen e l f h 2o18 .
ent fiuct1J300n ua bibtieS arc_, _ _ _ . _ __.. .
Jn, e5an
Assets
30,000 Cash in Hand f
C:ipit:tls
,\5Jli5h
1.~o.ooo c reditors 500
80.000 2.00.0 00 8,000 Cash at Bank
_::.. ....c -- ~ S1)11di: . ble 8,000
3 10.000 Bills pa) a 5,000 Stock in Trade
_:.. = rv{r.> .
. fs 1.,oan I0,000 Investments
5,000
- d _· g·s 1.,oan 10.000
On the abo,e . date the)' ect•ded to dissolve the firm. rv{r.> · I Reserve
I0,000 Debtors 20,000
ak over furniture at t 38,00 G,ner:i 1,000 Less : Pro vision
(i) AS hish agreed to t e 0 and pa y of f Mrs. Ashis f luctuation Reserve 2,000 18,000
h' .-.,i;: nt
In' ,st.. , 10,000 Plant
s {s capital
20,000
loan . 1· d i 18 500 and plant rea 10,000 Build i.ng
lised l 0% more. 15,000
(ii) Debcors rea ,se
0 1 ' of the stock
o·s capita l Goodwill 4,000
at 20% less than the book
( ...) Kanav took over 40 1 0 value . Remainin g Advertisement Suspense Ale
"' stock was sold at a gain of
(iv ) Trade creditors took
I 0%.
over investments in full set
tle ment.
84 ,000
3,500
84,000 -
=
(v) Kanav agreed to take The firm wa s dis so lve d
over the responsibility of on 3 1st Ma rch , 20 I 8 on
aQTeed remuneration of t I2,0 con:ipI~ting clissolution at the following ter ms :
00 and to bear reallzat1 an (a) A pro mi sed to pa y
0n ex pe ns es. Actual M rs. A's loa n an d took aw
e;penses of realization amoun ay stock in-trade at t4 ,00
ted to t8 ,000. (b ) B wo k aw ay ha lf of 0.
the inv est me nts at 10% dis
Prepare Realisation Account. (C B.S E. 2019, Rajasthan) count.
(c) De bto rs rea liz ed
t 19,00 0 (including bad debts rec
-------
SOLUTION : (d) Cr ed ito rs an d bil ls
paya ble we re du e on an
overed t6 ,00 0).
average basis of on e mo
REALISATION ACCOUNT 31 st M arc h, bu t the y we nth aft er
Dr. Cr. re pa id immediately on
31st March at 6% clis co un
t,
---- Particulars
To Sund!)' Assets : By Sun dry Liabilities :
Particulars p.a.
(e) Pla nt rea liz ed t
25 ,00 0, bu ild ing t4 0,0
00 , goodwill t6 ,00 0 and
Stock 24,000 Trade Creditors rem ain ing
42 ,000 inv est me nts at t4 ,50 0.
Debtors 19,000 Employee 's Provideal If) Th ere was an old typewriter in
Furniture the firm wh
ich had been ""irten o IT co mp
40,000 Fund from the bo ok s, it was lete IY
Plant 60,000 est im ate d to realize t30
2,10,000 Mrs. Ashish's Loan 0, it was taken aw ay by
9,000 1,11,000 B at
Investments 32,000 3,25,000 By Investme nt this es tim ate d pri ce .
To Ashish' s Capital Ale Flu ctuation You are required to prepare
Reserve the (a) realisation Ne (b) parm
(Mrs. Ashish 's Loan) 4,000 ers capital Nc s and
9,000 By Ashisb 's Ca pital Al (c) bank Al e to clo se bo ok
To Kanav's Capital Ale e s of the firm.
(Furniture)
(Remuneration)
12,000 By Bank Ale :
38.000 SOLUTION:
To Bank A'c (Payment made)·
:o Employee' s f>rovident Fun~
fo Partner 's Ca ·,_,
ptLi:UNCS :
60.000
Debtors
Pla nt
18,500
2,3 1,000
Dr.

Pa rti cu lar s
REALISATJON ACCO UN
t
T
Porth ,Jars
_00O Bv Provision for Doubt
- t
Cr.

Stock 1 '- R.d ? 115 1 To Stock in Trn ciP 1 ful De!:J'; )r ii!:,){p"
 OISSOLU110N OF A PARlNcD" ~ c--l11
~' l 1-r10N o_FA PAR.2°~E~~I~ ~IR
- _M_
(,J2 - _ ~ Iii}) J:ih . 111- -, iculat1on of discount on Cred"t - - _
10,000 By Sundry Creditors - . ~1 la 1
1 . d. ors and Bills p b
To Invcsunen ts 20.000 By Bills Payable 30,00o , · Crc 1tors _ aya le 6JJ
30 ,000 x -1 x 6
To Debtors 20,000 By Mrs. A's Loan 8,11n. 12
To Plant 15,000 By Mrs. B's an
Lo
5
vU\l Bills Payable _ R,00O )( 1._ 10Q "' '1 50
To Building By Investment Fluctuation
•Ooo 12 x ioo
6 "' ' 40
4,000 I0,oOo
To Good\\111
,.,. usT;-,1 rioN-13.
Reserve
To ,4's Cap1tJI 5,000 By A's Capital (Stock in trade) DP .
I,ooo
(Mrs. A's loan)
By B's Capital (half of riL nowi ng 1s the Balance Sheet of X and Y
To Banh (Sundr: Creditors ) 4,ooo O
29,850 investments at I0% discount ) f 5 at 31st March, 20 13 : ' Who share profits d .
(Note I l 1f ~ I. a ---- an 1osses m the ratio
To Banh (Bills Payable) (Note l ) 7,960 By Bank : 4,soo t Liabilities t
To Bank (Mrs. B's Loan) Io,000 Debtors 19,ooo tll) creditors
Plant 8,000 Bank
To Profit u-ansfcrred to : 25,ooo sunk Q\ erdrafl
Building 6,000 Debtors
,rs Capital Ne 16-2-1 5 40,000 B:Jll ther's Loan
( , Bro 8,000
20,000
16.2-IS 32,490 Goodwill Less . 17,000
B's Capital Ne 6,000
Investments
·•5 Loan 3,000 Stock . Provision 2QQQ
4,S_QQ l ent Fluctuation Fund 15,000
By B' s Capital (unrecorded asset) 94 5 ln' cstrn S,000 Investmen ts 15,000
, 00
cap11al : Furniture 25,000
1,59,300 300 I
X
-- ~
S0,000 Buildings 6,000
- ~ 40,000 Goodwill 19,000
Dr PARTNE R'S CAPITAL ACCOUNTS
- - Profit and Loss Ne 10,000
B Particulars Cr.
Particulars A A 1,20,000 10,000
{ t B
t t 1,20,000
The finn was dissolved on the above date and th r
To Advertisement By Balance b/d 10,000 . 11
. - ·=
1,750 1,750 By General Reserve 10,000 decided upon . 10
e owmg arrangements were
Suspense Ne 5,000
To Realisation By Realisation s,ooo (i) X agreed to pay off his brother's Loan.
(Stock in trade) 4,000 (Mrs. A' s Loan) 5,000 (ii) Debtors of~ 5,000 proved bad.
To Realisatio n By Realisation (Profit) 16,245 16,245 (iii) Other assets realised - Investments 20% less; and Goodwill at 60%.
(Investme nts) 4,500
To Realisation (iv) One of the creditors of ~5,000 was paid only n ,000.
(Unrecorded asset) 300
To Bank (v) Buildings were auctioned for ~30,000 and the auctionee
30,495 24,695 r's commission
amounted to ~ 1,000.
36,245 31,245 36,245 31,245 (l'i) Y took over part of stock at ~4,000 (being 20% less than the
book value).
Balance stock realised 50%.
Dr. BANK ACCOUNT
Cr. (vii) Realisation expenses amounted to ~2,000.
Particulars t Particulars t Prepare :
To Balance bid
8,000 By Reali sation (Sundry Creditors) 29,850
To Cash (Cash balance deposited (i) Realisation Acount
By Realisation (Bills Payable) 7,960
into bank) (ii) Partner' s Capital Accounts, and
S00 By Real isation (Mrs. B's Loan) 10,000
To Realisatio n: {iii) Bank Account. (C.B.S.E. Sample Paper 2013)

,
1
By A' s Capital Ne 30,495
Debtors 19,000
Plant By B's Capital Ne 24,695
25,000 SOLUTION:
Building 40,000 D REALISATION ACCOUNT Cr.
Goodwill r· .
- - - - - - ~~ ~~~:.:_:_priJ;j;;;- - -~
6,000
Particulars
t Particulars
Investments
4,500 94,500 To Debtors 17,000 By Provision for doubtful debts !:~~~
1,03,000 To Stock l 5,000 By Sundry Creditors
-=
 ~ , arced tl1at:-
Jt '""· il,.... A is to take over F Uffilture
. at ,~ 8,000 and Debtors amounting to f2 ,00,000 at
(,) f 1,82 ,000; the Creditors of t60,000 to be paid by him at this figure .
. ) B is to take over all the Stock in Trade at f70,000 and some of the Sundry
11
( Assets at ? 72, 000 ( being I 0% less than book value).
(iii) c is to take over the remaining Sundry Assets at 90% of the book value, less
<1,000 as discount and assume the responsibility for the discharge of the loan
together with accrued interest of f30 0 which has not been recorded in the
books.
(iv) The expenses of dissolution were f2,700. The remaining debtors were sold to
a debt collecting agency for 50% of the book value.
(v) i 40,000 had to be paid for Workmen Compensation.

Prepare necessary accounts to close the books of the fmn.

-=---c.J- _..
SOLUTION:
Dr. REALISA TlON ACCOUNT Cr.
 mo
Di>SOWll ON OF APAR'fNE ••

15.300 By B's Cnpital N e:

~
''\.)lil.J.> r-t
~I l
.
11 L' 1It
)N l)I· A PA RTNER.SHLP PIR
_ _ _ M
Accrued lnterest 1 11
n , \ . ( L , rv•n.'<.''- l
Tll n:lll~ 1 '
2,700 Stock in Tmdc 70,000 1 '"' ,.:; 1,ot.T!
w • ON 15. .
, .•
Sundf) Assets 72 ,000 1 ,il •
B k \ 1ra, ml'nt ,,1 l ,42,on" 1 I ifll1 /J wen.: partners in a firm sh . 6.37
fo :lll ' •
\\\ Hkntt·n ( ,unJX "·
, ,.Jlll1TT) 40,000 Bv Cs Capital Ne :
.
---=. · . . Sheet O f thc fimn was as foll anng prOfills in
th .
2 "" .11-1l,tflL L . ows : c ratio of) : 2 0
Sundry Assl'tsl l 111, BALANCE SI- • • .
80 · n 31.3.2018
By Bank Ne (Dt:btors) (3l ,Ooo IEEl
cis ai J OF 11 AND B
B) Loss transferred to : 2 l,OOo 31 20
f,iabil ittes ? . . 18
A's Capital Ne 3/S 40,800
B' s Capital Ne l /5 13,600 ilsrers
3,00,000 Building ~
Cs Capital Ne 1/S 13,600
-....c. FUrniturc 2,40,000
o.18,000 68,ooo 2,00,000 5,00,000 Debtors
- o'::--... R d. . 1,75,000
~
e r.: 1tors
~\)J1J0 97,000 Stock
80,000
Or
CAPITAL ACCO UNTS j-, 1,,0.lfl 20,000 Cash
75,000
r. . ui..1 'S B C Parlic11/ars A Cr ~ 47,000
8
C --=
t ~ ~ ~ li rni was d1.sso 1ve d on 1.4.2018 and h - 6,17,ooo
To RcahSJtJOn By Balance bid 2, 75 ,000 1,00,000 The t e assets and 1· b' • - -
?O,ooo In " : ta tltties were settled as
By Realisation fo!IOII "' .
A,'c .) Building was taken over by the crect·t
80,000 Ale (Liabi- (t
.
(Assets takc:n ) t.90.000 1,42.000 t ors as their full d ti
.) A accepted an unrecorded asset of t . an mal payment;
To Reahsanon lities taken) 60,000 25 000
. ) furniture was taken over by B for c , h m full sett! ement or his · loan.
(11
40.800 13,600 13 ,600 By Bank Ne 15,300
Ale (Loss ) (II' value; as payment at 5% less than the book
To Bank Ne (Deficit
(Final brought (ii') Debtors were collected by a debt collection a e
. d ,"'70 , 500
(i·) Stoc k rea 11se g ncy at a cost of <5 000·
Payment ) 1,04,200 in Cash) . • •
55,600 8,300
(vt ) 8 agreed to bear all realisation expenses. For this servic
3,35,000 I ,55,600
=
93,600 3,35,000 ~ 93Joo <500. Actual expenses on realisation t I 000 w
.
'd be Bis to be allowed
Dr BANK ACCOUNT
=:= , ere pa1 y B.
Pass necessary journal entries for dissolution of the finn .
Cr.
Parriculars ~ Particulars
~ soWT!ON : JOURNAL
To Balance b/d 52,000 By Realisation A/c (Expenses)
2,700 Dare Particulars
To Cash N e (Cash balance By Realisation Ne (Payment L.F. Dr. Ct) Cr. (~)
deposited into bank) 1.n o1 8 Realisation Ne
10,000 of Workmen Compensation) Dr. 5,70,000
40,000 To Building Ale
To Real isation Ale (Debtors) 21,000 By A's Capital Ne 2,40,000
1,04,200 To Furniture Ne
To B's Capital Ale 55,600 1,75,000
To C's Capital Ale To Debtors Ne
8,300 80,000
To Stock Ne
75,000
1,46,900 (Assets transferred to Real isation Ne on dissolution)
= --- --
1.4.2018 Sundry Creditors Ale Dr. 97,000
,11tc . I I l B has taken over some of the Sundry Assets at an agreed value of t72,000. This
amount is 90% of the book value of Sundry Assets taken over by B. To Realisation Ale 97,000
(Liabilities transferred to Realisation Ne on
Thus, if agreed value is 90, book value ~ I 00
di ssolution)
if agreed value is 72,000 book value
= J..QQ. x 72 000 = 80 000 20.000
' 1.4.2018 A' s Loan Ne Dr.
90 ' '
Remaining Sundry Assets have been taken over by C. Book value of the remaining
(!) To Realisation Ale 20,000
nd
Su rr Assets = ~I ,70,000 - t 80,000 = t90,000. .

L
(Unrecorded asset of n S,000 accepted by A in fu 11
C takes over these Sundry Assets at 90,000 x
(~) Out of total Debtors of ti 42 000 Ah 00
t°
= 81 ,000 less I ,000 = t80,000 senlement of hi s loan)
1.4.2018 C~h Ne- - --
-
Dr. 1,66,250
balance is ~42 OOO h' h ' ' • as taken over Debtors of <'2,00,000. Hence, th e To Realisation Ale
1,66,250
w " SO%" ni.ooo "'"ece;,00 (Furniture taken over by B for .:_ash)
 DISSOLUTlON_O_! A PJ\.R.INl:
~ >N o F 1\ PA RTNERSHIP FIR.M
"_,s - - - - - ~ !) il L l[t -

t i ZOIR CashA/c
To Rcalisat.10n Ac
·cted thruu<lh
.
debt collectton agency at a
Dr.
l 75 0
. 00 , , ~ll..\
1
[ll'''l
,1111 •
i1,e
•ti!Cllll'lll) 2,14,9S0 l,43 800
--- '
3,oo,ooo i]or -
00
--.;,..;.:
6.39

(Debtors co11 c I '

---
e- 7s,00o
cost of f 5,000)
Dr. , ,51 JlP .
,nt.ri0tt 17i 3]o]oo 2]oJoo
7o,s 00
I 4 2018 Cash A,c . 1itL , 1and Y1cha l we re partners in a
r:
ro Rt::1.hsat10n Ne \cha
\! their Balance
Sh
eet was as foll
i1rm sha .
nng profits . h .
(Stock realised) 7o,soo ,;:Lll" ows: tnterat1o of 3 : 5. 0n
Dr. ,1 iwb1ltt1es t
I .l 2018 Real1sauon Ale soo ,foets
To B's Capital Ne .
3,00 ,000 Land and 8Ut'Idtng
(Amount allowed to B for bearing all realisation so0 l,
5 00 00 ,v1achinery 4,00,000
ex~nses) ~ 8,00,000 Debtors 3,00,000
I 4 2018 •l's Capital Ne Dr.
85,oso 1,79,000 Cash at 8 k 2,22,000
Dr. 21,000 an
B's Capital Ale 56,700 78,000
~
To Realisation N e
(Loss on realisation transferred to partner's capital
accounts in their profit sharing ratio of 3 : 2) (Note 2)
1,41 ,750
. I d
, fi rm was d1sso ve on 1.4.2018 ad th
- -
10,00,000
==
rhe n e assets a d I' b...
n ta thttes were settled as
1.4.2018 A's Capital Ale Dr. 2, 14,950 foliOII .S·
B's Capital Ale Dr. 1,43,800 .) Land and Building realised ~4 30 OOO·
(1 . ' ' '
To Cash Ne ..) Debtors reali sed ~2.25,000 (with inte st
3,S8,7so (// re ) and t 1 000
(final payment made to partners on dissolution) debts written off last year; • were recovered for bad
(Note 3) I . i) There was an unrecorded investment wh· h
-L___ (11 • tc was sold for f25 000·
\\ orkln:: \ott,: (ll'l Vichal took-over machinery at ~2.80,000 for cash· • ,
No entry is to be passed for building taken over by the creditors. (r) 50% of the credjtors were paid N 000
1 .'
2. Calculation of Profit/Loss on realisation : remaining creditors were paid full am;unt. ess in full settlement and the
Dr. REALISATION ACCOUNT Pass necessary journal entries for dissolution of the fi,rm.
:::------;- ---~----;;- =:-;--"--- -~Cr.
Particulars t Particulars
To Building
t soiurION .- JOURNAL
2,40,000 By Sundry Creditors
To Furniture 1,75,000 By A' s Loan
97,000 oa,e Particulars
L.F. Dr. (f) Cr. (f)
20,000 t20 I 8 Realisation Ale
To Debtors 80,000 By Cash (Furni ture) 1 Dr. 9,22,000
1,66,250 To Land and Building Ne
To Stock 75,000 By Cash (Debtors) 4,00,000
75,000 To Machinery N e
To B's Capital Ne By Cash (Stock) 3,00,000
70,500
(Realisation Expenses) 500 By Loss on Realisation To Debtors Ale 2,22,000
trans ferred to : (Assets transferred to Realisation Ne on dissolution)
A's Capital Ale 85,050 1.-1.20 18 Creditors Ale Dr. 1,79,000
B' s Capital Ale 56,700 1,41,750 Employees Provident Fund Ale Dr. 21,000
5,70,500 5,70,500 To Realisation Ale 2,00,000
= = (Liabi lities transferred to Realisation Ne on
.\. Calculation of final payment made to the partners on dissolution : dissolution)
Dr. 1.42018 Bank Ale Dr. 6,55,000
PARTNER'S CAPITAL ACCOUNTS Cr. 6,55,000
Particulars To Realisation Ale
A B B
Particulars A (Amount realised from Land and Building N ,3o,OOO
To Realisation Ne and Debtors , 2,25,000)
I ' t - - ------ Dr. 1,000
(Loss) By Balance b/d 3,00,000 2,00,000 1.4.20 18 Bank Ale
85,050 56,700 By Realisation Ale 1,000
To Cash To Realisation Ale
(Realisation Exp.) _I 500 (Bad debts recovered in cash)
 ~
\

DISSOLUTION OF A PAR
40 - - - !Ncb
-. ~l-h11]1
<\;I , lll)N OF A PARTNERSHrr F
Dr. 1 2 - t:'111. ··l1l \) IRM
I 4 10I ~ Ltmk 1\ c 5,ooo '"',! I'-'
11 · 1,cttlCillCnt) 13,16,125 ' 526
Io Rcahs:ition A/, (l°in.l • I ,875 B I YRealisat' - 6. ◄ J

I -I :n Il'i
l \ lnn•,·ordcd investment sold)

Ran~ A (:
Io Realis:iuon Ne
Dr. i 2,so,000
2s.00o

," usrRATJON 17.

- - -
-

-~
,16,125 ~
3 =--- (

Profit)
ionN
c
16,125
DUis
26 875
si-
~
(~ \achiner) taken over by Yichal for cash) 2,ao,ooo ---
Dr. I
1ii1wr,1. Singh and0Ibrahi m were partncrs . --
I 4 ~() 18 l{eah~ation Ne I.7s.ooo _ 0 11 2-3-2 !S theirfi rm w . a firrn sh .
10

Io Bank Ne (85.500 + 89,500) \

1 . 1· •d ff .
.• - ,ere pat o . Given belo
as d1ssOI
Vcd. The
anng
profits in th .
l,7s,ooo i,r11111.~ 11 w are th R assets c ratio of
(Creditors p:iid) 11.1 s , nd Bank Account of the finn Th e ealisation A were realized and th
Dr. .,11ll'11 · 1 y • e ac ccount p e
I 4 2018 Realisation Ne 21,000 .\, o,lcJ ,11 these accounts. ou are required coun1an1 of the ft , artncrs' Capital
i111r-~t :11nounts. to complete these ac~ left a few amounts
To Bank Ne ,11ffl ounts by posting th
(Amount of provident fund given to employees) 21,000
R.Ei\LISATION c
Dr. ACCOUNT
I 4.20 IS Realisation Aic 43,000 pr Cr.
portic11lors Amou111
To Achal 's Capital Ne 16,125 Particulars
Amoull/
To Yichal's Capital Ne 26,875 l0,000 By Prov" .
(Profit on realisation transferred to partner's capital fll Stli,h 25 000 B iston for bad debts 5,000
accounts in their profit sharing ratio of 3 : 5) (Note I) rn 1xtitors . ' YSundry c d.
40 000 . re llors 16,600
, . nt and Machmcry ' By Bills Payable
3, 16,125 fll 11,l 3,400
1.4.201 8 Aehal's Capital Ne Dr.
fll ll!Ulh : ' By Mortgage Loan
Vichal's Capital Ne Dr. 5,26,875 15,000
Siuidr) Creditors 16,000 By Bank - Assets rea1·1zed •
To Bank Ne 8.43,ooo 11, Pa) able 3,400 Stock ·6,700
01
(Final payment made to partners on dissolution) Mortg.age Lonn 15,000 34,400 Debtors 12,500
(Note 2) fo oanh (Outstanding repairs) 400 Plant & Machinery 36,000 55,200
\\i o:inh (Expenses)
620 By Bank-unrecorded
\\ orl.ing 'iotc, : assets realized 6,220
1 Calculation of Profit on realisation : By
REALISATION ACCOUNT Cr. l,10,420
Dr.
----------
Particulars
~ Particulars t
CAPITAL ACCOUNTS Cr.
I 4,00,000 By Credi tors 1,79,000
To Land & Building Or
3,00,000 By Empl oyees Provident Fund 21,000 Si11gh lbrahim Particulars Bora Singh Ibrahim
Particulars Bora
To Machinery {
2,22,000 By Bank (Land & Bui ld ing ~
To Debtors & Debtors realised) 6,55,000 By Balance bid 22,000 18,000 10,000
To Bank (Creditors paid) 1,000 By General
1,75,000 By Bank (Bad debts recovered) 500
(85 ,500 + 89,500) Reserve 2,500 1,500
By Bank (Unrecorded investment
To Bank (Employees provident 25,000 24,500 19,500 !0.500
21,000
1
sold) 24,500 I 9,500 l0,500
fund paid) --- --1.
Cr.
By Bank (Machine!)' taken by
To Profit on Realisation 2,80,000 BANK ACCOUNT
Vichal for cash)
transferred to : Dr Particulars
Achal's Capital Ne 16, 125 34,400
Particulars , By Realisation (Liabilities)
Viehal 's Capital Ale 26,875 43,000 19 500
- - 1- -1 To Balance bid SS,200 By Realisation ... 400
I I J,61,000 ! To Realisation (Assets Realized) ············· (Unrecorded Liab1hnes)
By ··· ·······
2. Calculation of final payment made to the partners on dissolution :
Cr. By···· ·····••"
Dr. PARTNER'S CAPITAL ACCOUNTS
go,920
Particulars Achal Vichal Particulars Achal Yicg]
f f
= (C BS.£. 20/5)

~ ~
IRv Ralance b/d 3,00,000 s,oo,000 ; • l ~ G' •
-- ........ ' ~
z,
 6.42
soiuiioN.-
- D
[SS OLU
TION OF A PAR'rNJ::~ L,l
- -· - - -
~
< ' ''¾ 1
1
oi~• , u.,,,N'
lf AP~R:'"_E_l\"._H~
5alar1 -
~~
--------
--- --- ---
6.<J
---
Dr REALI SA
TION ACC OUN T
Particulars
,
..--
. . --- iatl1s.
-
;;e Sheet at the Date of Dissolution not Gi;;;;;
,tmount
6
. .
,,<r flJI 1. tmu and Mahesh are >n P3nne~h,p •haring
~ 00 By provisio n for bad debts -~[ ,,,,. y,s erslup fi nn. Al the date
;n J cJ , 4. They &dd ol
To Stock 10,0000 01 of dissolutioo ll>ei, e"<Jitorn amo""ted to
15 By Sun dry Creditors I1 01»r,h • th' partn ou= of dissolution a oontiogen
To Debtors hiner) ~40 •000 BY Bills Payable s,ooo t liability of ?2 650 "" bm,ght
o1 oO •· in lhe
Js, ':nd ctured and had to be met. Their capitals
To Plant and Mac 16,601) ,na Stood at ~•I 2 000· ~IO ooo
' B Mortgage Loan <'
,._o ' ,oOO
,.
.,.oun ecuv ely . Vish . ..
re~Pts d .t40,
, •. ' '
To Bank · . 3Aoo ·n1olhg ISO. nu had lent to the firm, m add1t1on to capital , 14 ,ooo.
16.000 y Bank _ Assets realized : t dt .
Swi dry Creditors is,Ooo alt se th '
By Stock '[11' ass . 1so
Bills Payable 3.400 6' 700 iJJl ets rethe rea 1.isation acco unt and e
15,000 prepa re t Partner s capital accounts. A show the
rtga gc Loan 34,400 Debto rs ccoun.
Mo - . -)-
ding repairs
12,soo
To Bank (Outs tan 400 Plant & Machinery ~ caSna - -
To Bank (Expenses) 620 By Bank-unrel_co~ded ss.200
assets rea 1ze , , ""u""r/ON '
"OL on the date of dissolutioo is 001 giveo ;" >he qt>e•;oo, fim of all,
B Loss Transferred to : 6,220 S balances heel .1 rop<' fonn shou ld be P'<pa fi d th . .
y Bora 's Capital Ale aalaO .Shee ques ~ p B alance Shee i-ed;,, ord« to m out e unssmg
5,000 I this . t tion
tJie If aIn ce t wi ll disclose the figure of Sundry Assets
Singh 's Capital Ale on the
3,000 figure-f disso lutt0n . BALANCE SHEET

~
fbrahim 's Capital Ale
1QQQ 1
9,ooo date o
Liabilities -- --Assets
-- -- -- --e,-il
-;
D¾o ,
~ credito~ 16,000 Sundry Assets
Dr. ·s Loan 14,000 (Balancing figure )
Vishnu ts :
Cr. . I Accoun
(apllll 60,000
Bora Bora Singh I~ Brahma 12,000
t ~ f 10,000
By Realisation t l t Vishnu
By Balance b/d 22,0001 1s,000 Mahesh 8,000 30,000
Ale 5,000 3,000 I,000 By Gene ral
; 10,000
To Bank Ne 60,000
19,500 16,500 9,500 Reserve 2,500 =
1,soo 1
500
24,500 19,500 10,500 REALISATION ACCOUNT
~~~
Dr.
-- Particulars
Cr.
t Particulars f
T Sundry Asset
Dr.

~ T-- -:- -~ : - - - ~ -AAi;m,;ou~ntntCr.

BAN K ACCOUN
r:Cash Accounts : 60,000 By Credi tors Ne
By Cash Ne
16,000
Particulars Amount Particulars I Credi tors 16,000 By Loss transferred to :
40,150
Contin gent Brahma's
To Balance b/d ~
19f 500 / By Reali.satio
. n Alc (Liabilities) Liability 18,65 0 Capital Ne 6,750
To Realis ation Ale 34,400
' By Realisation Ale . . . Vishnu's
(Assets Realized)
- (Unrecorded Liab1ltt1es) Capital N e 6,750
To Realisation Ale :>5,20 0 400
By Reali sation Ale (Exp enses) Mahesh's
(Unrecorded assets) 620 Capital Ne 9,000 22,500
6 220 By Bora 's Capital Ale
19,500 78,650
' By Singh 's Capital Ale 78,650
16,500
By Ibrahim 's Capital Ale 9,500 Dr. - ANACCO UNT Cr.
VISHNU'S LO Particulars
so,920 Particulars ~
=- t
To Cash Ne 14,000 By Bal. bId 14,000
-
- ·~
I
 D ISSO LUTl ON
OFA p
C. \ PITA L A CCO U N T S
l)r
~ - ...... -,.
T 1.' 1'c.11ls.1t1,'n \ ,
__ ..... _ _ a
..,..__
i ·~ '--•·
·- \ r~1 :,..sh
t
Parti cular s
AR1·1 \J¾ ,
Si--ttf)
BroJr n,a ~··
~llJ.I 111' ' '
ll Li rtL)N
-
or
- - - - - -
A P AR.,-... , .,
' " "- R.sl--1
IP l'lR_
l~h,,1, iJSTR A T ION 20. M
(LL'&' ) 0, 7:-0 Q,000 By B ahm c e bi d I I, [,
~ 1 ,111 d B. who w e re sha .
r ..~ C.ish .-\, By C as h N e 12 ,0 00
io,ooo ~,11<--.:ti ' ..:I). deci de d to diss o 1nng
ve thProfits and 1
l l-!P..:tl f'.3~ ~:.:nt l 3.250 ( Amo unt
th~ ti;itan ccs w e re as fo llows ._ e firm oSSes .
on 3 ls1••
6.H
brou g ht in) inthe
,v1arch .
1.::.000 I 0.000 9.0 00
.rs
•
Capit a l
2 rati o of 60<l
' OJ s on Whi h 1/o and 40%
IT:OOo ~
10,00 0
s·s Capit a l ( Debit Ba lance ) C ~~
some o f
Dr CAS H ACC OUN T ~ profit & Loss Ale ( Debit B I
rade C red ito rs 2 40?
1
a ance ) •25 .ooo
,ooo
Part icula rs I 0 an firo m M rs. A
Cr 30,0oo
To Re-.il1$lnon A..: By Reali satio n Ne cash a t Bank
40,0oo
( •..\....«set s real 1sed ) 40,15 0 (Liab ilitie s pa id) rhe asse ts ( oth e r tha n cas h b
~ i/ d' 20,0oo
To ~ l:ih~ ·s Cap1t :tl Ac 1.000 B y V ishn u ·s Loan Ale
18,6so o
tl iess )o/ o iscou nt . Reali satioat ank) realise ·
d f I9 IS 000
. . n expen se ' 0,000 and ,
By B rahm a 's Capi ta l Ne prepare Reali sati o n Ac cou t C . s amounted II
14,ooo n , ap1 I to ,.' 4 000a credito r~ w _
By V ishnu 's C a p ital Ne t,oth the partn e rs are solve nt. ere paid
s.2so ta Accounts and ' ·
41,15 0 Bank Accou nt .
3,250 oLUT JON :
assuming that
ILL USTRAT ION 19. ==,;; 4i1so 5 BALA NCES
as at 3 /
st HEET
L iabilit ies March, 20 /5
A . B_ and C \.\:ere p ~ ers in a firm s hari n g ~
profi ts in the ratio of 4 .
! +20 I::, the y decid ed to disso lve the f urn 3 . Tr11de Credit ors 40,000 Cash
Assets
. On tha t date A ' s c apita l was t 1 · at Bank t
capit al was t -45,0 00 and Cs capit al w 25 · 3. On Loan fro m Mrs. A
20,000 B' s Capital
as t 15,00 0 (Dr. ) . Thecredi tors • ,ooo, B's .4·s Capita l
15,000
t23, I 50 and cash in h and was t 3,92 0. The 2,40,000 Profit
& Loss Ale 25,000
asset s r e alise d t 1,44, 91 o and ~oun ted
of disso lutio n we re to 30,000
t I.860 . Pre pare R ealiz ation Acco unt and
s how y oure :~~nses
Sundry Assets (Balancing figure )
clear )) . ~ 2,30,000
3,00,000
ngs
BAL ANC E S HE ET as a t 1st Apr il, 20 15 Dr. REAL ISATI ON ACCOUNT
S OL UTI ON : Partic ulars Cr.
~
t Particulars f
Liabi lities Asse ts t To Sund ry Asset s Ale 2,30,000 By Trade Creditors
To Bank Ale (T rade C reditors 40,000
C redito rs 23,15 0 C ash in hand 3,920 By Loan from Mrs. A 20,000
Capit al Acco unts : Cs Capi tal (Dr. ) 15,000 paid off: t40,0 00 less 5%) 38,000 By Bank Ale (Assets Realise d) 1,90,000
S undry Asse ts ( Balan cing Figur e) To Bank Ale (Loan from Mrs. A By Loss on Realisation
A 1.25,0 00 1,74,230
paid off : ~2 0,000 less 5%) 19,000 transferred to :
B 4 5,000 1,70 ,000
To Bank Ale (Expe nses of A' s Capital Ale 60% 24,600
1,93 , 150 1,93,150 Reali sation ) 4,000 B' s Capital Ale 40% 16,400 41 ,000
2,9 1,000 2,9 1,000
REA L ISAT IO N ACC OUN T Cr.
Dr. Cr.
P a rtic u lars t CAPITAL ACCO UNTS
P articu lars t Dr.
A A B
23, 150 B Parriculars
T o S undry Asse ts 1,74 ,2 30 By Credi tors Partic ulars f f
1,44,91 0 ~
To Cash ( C redito rs paid) 23 , 150 By Cash (Asse ts realis ed) ?S 000 By Balanc e bid 2,4 0,000
T o Cash (Expe nses) 1, 860 By Loss on Reali satio n To Balanc e b/d ~ 7, 000 Bv Bank Ale 53.400
To Profi t & Loss Ale 18,000 16:400 , (Amount brought in)
u--ans ferred to :
12,47 2 To Realis ation Ale (Loss ) 24 ,600
A ' s Capit al Ale
B ' s Capit al Ale 9,354 To Bank Ale sDo6
31 ,180 (Final Paym ent) 1,97,4 00 ~

C's Capit al Ale 9,354

_-::-;
1992;:;40 24<),000
~ '
l ,99 ,240 ~
 , , -r:1..'> 1..'lf :\
.._,,. PARTh'ERsttr
_P~\I
CAPIT
AL ACcou -
B ~'TS
~ p~
, l ,u.n .\. ' A
•· .: , --.!U''n .-\ c l Loss) ~ Bv R,, __
, :",- ~......- L0,000 B~- ~ b d f
• - c.:--' " .\ , 30,00o · Cash Ne 1.00.000
1,02,000 ~
2.000

CASH ACCOUNT
___________ ._. pJr(iculars f
-~:; -STf?),TIOS 21 . ,,,n,eb d - panicid
:::~ B ... a ~ m ma t,usJ..:1-;!'SS saanng profit5 and loss.."'S in I\.' 6-~• ),OOO By Rear ·

~
th 0 .ISaUonN ll7!
r-.:: c.."'·derl <o d'5SOI" ti-.< parrn,r,lup on ~ h 31. 10 15. On "'". of J . 1 ,· R,_tlt53UOO ..\.C 64 By Rea!isa .
(
c Creditors) 25,000

~ ~
,, \-~.;sets realised) .000 Bv B' Uon Ale (Expe

~
C;; :;i:, ,:,_,od "' r 1.00.000 and ?50.000 respective!\ . Amount owin• , 00 . s Loan N 1,000
nses)
bv date, T,, f; Capital /vc -, 0 By B's Ca . c 15,000
., , ': 000 and the ,mount o• ,d b) th, firm to B was 11 5. ooo'. ( ~ pnal AJc
C . ,;J ,nd c,sh ?5.000 Th, assets other than the amount o"in•0 i, 10to the """
30,000

~ <d ! (>l .000 Thw<penses of n,alisation amounted to r 1, ooo.

Y
~ditors ,,,
the finn
- 71 ,000

Prepare the \temorandum Balance Sheet of the firm immed

dJs<oluuon and necessar: ledger accounts to close the books Of
iatelv iiLdrRArioti22.
the !inn. , prior o ,On 1st April, 2017,X . . Yand Zstarted busmess
. 5
cii ; .. _.., I : l th . vely. They contn.buted ~ hari
respecti I. Ong profit and
1
.mthe rati
tciP"u,·e Y as "' Capital which was d . . , 0,000, <80,000osses
-. - ...
SOLUTION .
MEMORANDUM BALANCE SHEET (15.000 during the year. . The fi rm was ct·1ssolved
a,d
epos1ted into Bank. Each Partner ~th40,000
w1 drew
c
as at Jfarch 31 . ]015 31 st
c~ at an agreed pnce of <25 ' 000 · y oo k uponfumi March, 2018
Assets t · Xtook up the
~
I
I btlll
t debtors
510 at <I8,500. Creditors were paid off and ture at 5,000 and z took up
5,000 the Bank Account. ilieo ternamed a b,la,cc ofll 4,000 a
25.000 Cash
Creditor; 15,000 A's Loan 42,000
B's Loan Other Assets (Balancing figure) 1,43,000 Prepare the necessary accounts to sho\ th d' .
further cash brough t in by any of the Prum:,.' ,s<nbmioo of rnh at Baru< a,d of
1hc
l Jp1uls
A 1.00,000
50,000 1,50.000
8
1,90,000 soiUT[ON.· BALANCE SHEET
as at 31st March. 2018
Cr. f Assets
REALISATION ACCOUNT Liabilities
Sundry AsseIS
l)r t Particulars t .rs Capital : 1,75,000
(Balancing figure)
Pnrt1r11/arr 25,000 1,00,000
Opening
ro Sundry Assets
To Cush A1c (Credilors paid)
1.·U.000 By Creditors
25,000 By Cash N e (Assets realised )
I ,000 By Loss transferre<i to :
64,000 Less : Drawings
rs Capital :
-15,000 85,000

ro CJSh 1Vc (E:qienscs) A' s Cnpital Ale 314th 60,000 80,000

Opening
B's Capital N e I/4th ~
80,000
-::-::
1,69,000
~
Less : Dra\\~ngs
ls Capital :
-15.000 65,000

______________
J.69,000
40,000

D:
r ,-wid:Jn
B's LOAN ACCOUNT
t P<Jffjcu/OTS
Cr.
__,
Opening
Less : Drawings
-
15,000 25.000

05.000
;;==

15,000 B: B~Jnnce b'd

 01 ss oL U TJ . N O F A PA
ON_ 0! ~ ~~ T ~ ~ S ~ IP .l11..U RTNERSHIP
R£ALiSA n o N Fr pt ~' IO O1r10
_a. in te rest is - - - - - -
FIRM

~
6:18 ,c c o uNT to be credited
t t;ea
- ch
11111 or. Partic11lars - - 0 - pa
- -rtn-er_on
_ h"
_
1.75,000 By X' Cr. l)JltS · 1s- ca-pi-ta-l p- - -
rc necess"·'
p.;rti<'li/.;rS
,,l , To sund0 AsSe
ts
s Ca pita
By f's Ca pita l Ale (S tock)
l Ale (F urnitu
re)
'
2s,ooo
J' .;ll
,50[., uiJ of'l _.
·a Ba .
· repa - ' y9
ar
L

By Z's C ap ita
By Bank A fc (
l Ale (Debto
rs )
s. ooo s>"'II sho ul1ad riebee prShepeeart ed
m proper form
is not
I) 18,soo to fm d out any rrugi. .
By Loss cransf ss~e
mn m the th estion fi
erred to 14 ,00Q BALANCE g figure qu . • "" of all,
X's C apital Al erem : a B,Jance
e 56,250 SHEET
(as at 30th Ju
Y"s C apital Al 37,5 00 ne, 20/8)
e Liabilities
,, Z's C apital Ale [8,750
t, 12,soo 15 ' '
OOO
Assets
0f OO
=.o= ~
I Bank Ba
5,000 Debtors ce
lan
'
7,000
c.APITAL AC Bills Receivable 40 ,000
COU NTS 60 ,000
Dr. Z Cr. Stock 5,500
r Part ic ulars X y 40 ,000
parnaJars z Furniture 43 ,000
X t 30,000 1,30,000 Prof
{ t ~
,\' .it & Loss (Bal 2,500
To ReaJjsariOD Al , 1,50,000 is assumed as loancm. g fi1gure
e s, ooo 18,500 By 85 ,000 65,000 ss)
(AsSers taken ) 25 000 Balance bid zs,ooo 52,000
Iso:
To Realisation Al By Bank ooo
e S6,250 37,5 00
J 8, 750 (Def
12 ,250
,;,.ooo, as Insotecreh'st'"
. on Cap C
ital is al.
(LoSS) icit brought in " " " on ap,"lowed. only in cas e of profits In this

=--=- =--=- ----

3,7so 22.soo )
or 1 ~n not b< ,n . th
To Bank Ale owot. . .
,~..o~
85 ,000 65 ,000
37,250 SS:000 65 ,000
~
REALISATIO
N AJC
" " ' ' " "'
Cr.
Particulars '
BANK ACCOUN Particulars
Dr.
farric ufars f
T
Particulars
t
Cr. To Debtors
To Bills Receiva
ble
40,000 By Sundry
5, 500 By Bills
Creditors
Payable
'
15 ,000
43 ,~oo By L's Capital Al
By X's Capita S,000
To Realisation l Ale To swck
Ale 3,750 e (Debtors) 30 ,000
(Nel Assets re By Y' s Capital Ale To furnit e 2 ,)00 By M's Capital N
al ise d) 14,000 22,500 To L's Caur
pital Ale (C re 15,000 By N's e (Stock) 13 ,000
To l' s Capital
Ale

CredilDffl m"' ' h

---
12,250
26,250 26,250
To Bank Ale (B
IP paid)
ditors)
4,850
Capital Ne
(BIR and Furnitu
By Lo ss transfe
re)
rred to :
L's-Capital Ne
7,200

"' ""
" paid offoot of 16 ,260
I4,000 is the ne th< cash realis M's Capital Ne 12 ,\95
t amount realise ed oo sale o f as
earu< Ale d on the sale
of assets . En sets. Hence, N's Capital Ne 12,\95 40 ,650
try will be : ----c
Dr. 14,000
l, I0 ,850 l,lQ,850
To Real isa tion 14,000
Al e

\,UM
STan -
RdATION 23.
Dr. CAPITAL ACC
OUNTS Cr.
N entered into partnershi Pari ic ulars L M N Particulars L M N
· Capitals were p on Ist July 20 t t t ~ ~ ~
t60 ,000 ; N 0 I 7 ,haring in
,000 and B 0,0 the ratio of 4 : l : l To P& L By Bal. bid 60,000 40 ,000 30,000
ve on 30th Ju 00 respectively
ne 2018, on whi . T hey decided w \S,600 By Real
ink n ,000; Deb ch date Ale 20 ,800 l S,600 isation
tors N 0,000 ; B their position was : To Realisation (Creditors) !S,000
IR tS,500 ; Sto 795 4,99 5
m ~15,000 and ck N J ,000; F (Assets Taken 30,000 13 ,000 7,200 By Bank
B /P urniture i2,soo ) Al e
iok over Debtors t5,000 . ; To Real is ation
at 25% discou
~-" · Mtook over nt and took over the liab (Loss) 16,260 12,195 12,195
stock at f Il ,000 ilities o f the pa
tton. B/P were
JaymenJ.
due after 2 mon . N take
ths; As such, a
s BIR at f 5,00
re
0 and furnitur
bate o f J8% p.a e
. was re
yment
at 12%
ceived
To Bank Ale 7,940
~

--=-
_.....-::-;
75,0 00 40,795 34,995
= = = ===