CHAPTER-7 – Dissolution of Partnership Firm

Solution 1
Please find below the journal entries for the transactions:
Journal Book
Date Particulars L.F. Amount Amount
Cash/Bank A/c Dr. 2,94,000
To Realisation A/c 2,94,000
(Being land and building
sold after 2% commission)
Total 2,94,000 2,94,000

Solution 2
Please find below the journal entries of the transactions:
Journal Book
Sr. Particulars L.F. Amount Amount
No.
(a) Realisation A/c Dr. 1,500
To Cash A/c 1,500
(Being payment of
realisation)
(b) Realisation A/c Dr. 600
To Mohan’s Capital A/c 600
(Being Mohan paid for
realisation expenses)
(c) Realisation A/c Dr. 2,000
To Mohan’s capital A/c 2,000
(Being commission given to
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 Mohan on firm dissolution)
(d) No entry
No journal entries are passed
because motor car a/c and
creditor a/c has already been
entered in the realisation a/c
Total 4,100 4,100

Solution 3
Please find below the journal entries of the transactions:
Journal Book
Sr. Particulars L.F. Amount Amount
No.
(a) Realisation A/c Dr. 7,500
To Alok’s Capital A/c 7,500
(Being Alok is given
remuneration)
Alok’s capital A/c Dr. 10,000
To Bank A/c 10,000
(Being payment of expenses
by the firm on behalf of
Alok)
(b) Realisation A/c Dr. 5,000
To Ravinder’s Capital A/c 3,000
To Bank A/c 2,000
(Being payment of
realisation expenses)
(c) Realisation A/c Dr. 10,000
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 To Amit’s Capital A/c 10,000
(Being payment of
realisation by Amit on the
behalf of the firm)
Total 32,500 32,500

Solution 4
Please find below the journal entries of the transactions:
Journal Book
Particulars L.F. Amount Amount
(a) Realisation A/c Dr. 40,000
To Cash A/c 40,000
(Being accepted creditors as
cash and paid ₹43,000 worth
investments in full settlement
of their claim)
(b) No Entry
(No entry will be passed as
creditors accepted machinery
in full settlement of their
claim and machinery, being an
asset, is already transferred to
realisation account)
(c) Cash A/c Dr. 30,000
To Realisation A/c 30,000
(Being received cash ₹30,000
from creditors after they
accepted building at ₹1,20,000
in full settlement of their
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 claim of ₹90,000)
Total 70,000 70,000

Solution 5
Please find below the journal entries of the transactions:
Journal Book
Sr. Particulars L.F. Amount Amount
No.
(a) Cash A/c Dr. 50,000
To Realisation A/c 50,000
(Being sale of assets in
exchange for cash)
(b) Realisation A/c Dr. 10,000
To Cash A/c 10,000
(Being payment of
liabilities)
(c) Realisation A/c Dr. 2,500
To X’s Capital A/c 2,500
(Being commission of 5%
allowed to partner, Mr. X)
(d) Realisation A/c Dr. 10,000
To Amrit’s Capital A/c 10,000
(Being firm reimbursing
Amrit for payment of
realisation expenses)
Amrit’s Capital A/c Dr. 15,000
To Cash A/c 15,000
(Being payment of
realisation expenses by the
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 firm on behalf of Amrit)
(e) Cash A/c Dr. 3,600
To Realisation A/c 3,600
(Being old customer pays
60% of old bad debts)
(f) Cash A/c Dr. 15,000
To Realisation A/c 15,000
(Being realisation of
investments)
Total 1,06,100 1,06,100

Solution 6
Please find below the transactions under the journal book:
Journal Book
Sr. Particulars L.F. Amount Amount
No.
(a) Partner’s Loan A/c Dr. 10,000
To Bank A/c 10,000
(Being refund of loan worth
₹10,000)
(b) X’s Capital A/c Dr. 300
To Realisation A/c 300
(Being unrecorded asset
taken over by partner, X)
(c) X’s Capital A/c Dr. 10,000
Y’s Capital A/c Dr. 10,000
Z’s Capital A/c Dr. 10,000
To Profit & Loss A/c 30,000

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 (Being undistributed profit
worth ₹30,000 distributed
amongst partners)
(d) Bank A/c Dr. 1,25,000
To Realisation A/c 1,25,000
(Being realisation of assets)
(e) Realisation A/c Dr. 2,000
To Y’s Capital A/c 2,000
(Being payment of
dissolution proceedings)
(f) Realisation A/c Dr. 28,000
To Bank A/c 28,000
(Being payment of creditors
₹28,000 in full settlement of
their claim)
Total 1,95,300 1,95,300

Solution 7
Please find below the journal entries for the transactions:
Journal Book
Sr. Particulars L.F. Amount Amount
No.
(a) Realisation A/c Dr. 12,000
To Bank A/c 12,000
(Being payment of bank
loan)
(b) Q’s Capital A/c Dr. 16,000
To Realisation A/c 16,000
(Being partner, Q took over
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 stock worth ₹16,000)
(c) Realisation A/c Dr. 4,000
To P’s Capital A/c 4,000
(Being payment of creditor
by partner, P)
(d) Bank A/c Dr. 1,200
To Realisation A/c 1,200
(Being realisation of
unrecorded assets)
(e) Realisation A/c Dr. 2,000
To Q’s Capital A/c 2,000
(Being payment of
realisation expenses by Q)
(f) Realisation A/c Dr. 36,000
To P’s Capital A/c 20,000
To Q’s Capital A/c 16,000
(Being distribution of profit
on realisation between
partners, P and Q)
Total 71,200 71,200

Solution 8
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Please find below the journal entries for the transactions:
Journal Book
Sr. Particulars L.F. Amount Amount
No.
(a) Profit and Loss A/c Dr. 18,000
To X’s Capital A/c 9,000
To Y’s Capital A/c 6,000
To Z’s Capital A/c 3,000
(Being distribution of profit
and loss account balance
between the partners of the
firm)
(b) X’s Capital A/c Dr. 50,000
To Realisation A/c 50,000
(Being X took over
unrecorded asset)
(c) Realisation A/c Dr. 4,000
To Bank A/c 4,000
(Being payment of creditors
₹4,000 in full settlement of
their claim)
Total 72,000 72,000

Solution 9
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Please find below the journal entries of the transactions:
Journal Book
Sr. Particulars L.F. Amount Amount
No.
(a) Cash/Bank A/c Dr. 3,000
To Realisation A/c 3,000
(Being sale of written off old
furniture)
(b) Cash/Bank A/c Dr. 600
To Realisation A/c 600
(Being payment of 60% of
written off old bad debts by a
customer)
(c) Paras’s Capital A/c Dr. 30,000
To Realisation A/c 30,000
(Being Paras took over
unrecorded goodwill of the
firm)
(d) Priya’s Capital A/c Dr. 300
To Realisation A/c 300
(Being Priya took over
written off typewriter at less
than 25% of its price)
(e) Paras’s Capital A/c Dr. 300
Priya’s Capital A/c Dr. 300
To Realisation A/c 600
(Being partners took over
100 written off shares of ₹6
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 each)
Total 34,500 34,500

Solution 10
Please find below the journal entries of the transactions:
Journal Book
Sr. Particulars L.F. Amount Amount
No.
(a) Aman’s Capital A/c Dr. 22,500
Bank A/c Dr. 32,500
To Realisation A/c 55,000
(Being sale of assets)
(b) Profit & Loss A/c Dr. 15,000
To Aman’s Capital A/c 7,500
To Harsh’s Capital A/c 7,500
(Being credit balance of profit
and loss account distributed
among the partners)
(c) Harsh’s Loan A/c Dr. 6,000
Realisation A/c Dr. 200
To Bank A/c 6,200
(Being Harsh’s loan
discharged)
(d) Harsh’s Capital A/c Dr. 5,000
To Bank A/c 5,000
(Being payment of realisation
expenses by the firm on
Harsh’s behaf)
(e) Bank A/c Dr. 300
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 To Realisation A/c 300
(Being bills received)
Realisation A/c Dr. 1,200
To Bank A/c 1,200
(Being payment of bill)
(f) Realisation A/c Dr. 1,250
To Bank A/c 1,250
(Being payment of creditors)
Total 83,950 83,950

Solution 11
Please find below the journal entries of the transactions:
Journal Book
Date Particulars L.F. Amount Amount
(a) Realisation A/c Dr. 6,000
To Kunal’s Capital A/c 6,000
(Being payment of Kunal’s
wife’s loan by Kunal)
(b) Realisation A/c Dr. 27,000
To Cash A/c 27,000
(Being payment of creditors
and discount received)
(c) Rohit’s Loan A/c Dr. 70,000
To Cash A/c 70,000
(Being payment of loan)
(d) Kunal’s Capital A/c Dr. 3,000
To Realisation A/c 3,000
(Being Kunal took over
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 unrecorded asset)
(e) Rohit’s Capital A/c Dr. 5,000
Kunal’s Capital A/c Dr. 5,000
Sarthak’s Capital A/c Dr. 5,000
To Profit and Loss A/c 15,000
(Being distribution of debit
balance of profit and loss
account)
(f) Realisation A/c Dr. 15,000
To Sarthak’s Capital A/c 15,000
(Being Sarthak is given
remuneration of ₹15,000 for
completing the dissolution
process)
Total 1,36,000 1,36,000

Solution 12
Please find below the journal entries of the transactions:
Journal Book
Date Particulars L.F. Amount Amount
Realisation A/c Dr. 1,00,000
To Sundry Assets A/c 1,00,000
(Being transfer of assets to
realisation account)
Atul’s Capital A/c Dr. 40,000
To Realisation A/c 40,000
(Being assets worth
₹1,00,000 taken over by
Atul at a discount of 20%)
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 Bank A/c Dr. 26,000
To Realisation A/c 26,000
(Being assets worth ₹20,000
sold at profit)
No entry because assets have
already been transferred to
the realisation account)

Solution 13
Please find below the journal entries for the transactions:
Journal Entry
Date Particulars L.F. Amount Amount
(a) Bank A/c Dr. 1,40,000
To Realisation A/c 1,40,000
(Being a creditor of
₹3,60,000 accepted
machinery worth ₹5,00,000
and paid ₹1,40,000 to the
firm)
(b) No entry will be made as
assets have already been
transferred to realisation
account
(c) Realisation A/c Dr. 45,000
To Cash A/c 45,000
(Being paid a creditor
₹45,000 in cash)
(d) Lal’s Capital A/c Dr. 4,500
Pal’s Capital A/c Dr. 10,500
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 To Realisation A/c 15,000
(Being loss on dissolution is
distributed between partners)
Total 2,00,000 2,00,000

Solution 14
Please find below the transactions under journal book:
Journal Book
Date Particulars L.F. Amount Amount
(a) P’s Capital A/c Dr. 90,000
Bank A/c Dr. 1,25,000
To Realisation A/c 2,15,000
(Being stock sold at 25%
and remaining taken over
by P at a discount of 10%)
(b) Bank A/c Dr. 2,05,000
To Realisation A/c 2,05,000
(Being realisation of
debtors)
(c) Bank A/c Dr. 14,70,000
To Realisation A/c 14,70,000
(Being sale of land and
building and commission
charged)
(d) No entry will be made
here as assets have been
transferred to realisation
account.
(e) Bank A/c Dr. 75,000
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 To Realisation A/c 75,000
(Being realisation of
investments)
(f) No entry will be made
here as assets have
already been transferred to
realisation account.
(g) Bank A/c Dr. 10,000
To Realisation A/c 10,000
(Being sale of written off
furniture)
(h) Bank A/c Dr. 12,000
To Realisation A/c 12,000
(Being customer paid 60%
of written off bad debts)
(i) Realisation A/c Dr. 50,000
To P’s Capital A/c 50,000
(Being P’s wife’s loan
paid by P)
(j) Realisation A/c Dr. 82,000
To Bank A/c (10,000 + 82,000
72,000)
(Being payment of creditors)
Total 21,19,000 21,19,000

Solution 15
Please find below the journal entries of the following transactions:
Journal Book
Date Particulars L.F. Dr. Cr.
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 (a) Bank A/c Dr. 1,250
To Realisation A/c 1,250
(Being bills received)
Realisation A/c
To Bank A/c Dr. 2,500
(Being settlement of liability) 2,500
(b) Realisation A/c Dr. 50,000
To A’s Capital A/c 50,000
(Being liability paid by partner
A)
(c) Realisation A/c Dr. 10,000
To Bank A/c 10,000
(Being discharge of liability)
(d) Realisation A/c Dr. 3,500
To Bank A/c 3,500
(Being settlement of damages)
Total 67,250 67,250

Solution 16
Please find below the journal entries of the transactions:
Journal Book
Date Particulars L.F. Dr. Cr.
(a) Bank A/c Dr. 1,250
To Realisation A/c 1,250
(Being bills received)
Realisation A/c

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 To Bank A/c Dr. 2,500
(Being settlement of liability) 2,500
(b) Realisation A/c Dr. 50,000
To A’s Capital A/c 50,000
(Being liability paid by partner
A)
(c) Realisation A/c Dr. 10,000
To Bank A/c 10,000
(Being discharge of liability)
(d) Realisation A/c Dr. 3,500
To Bank A/c 3,500
(Being settlement of damages)
Total 67,250 67,250

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