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HARDIK MISHRA
 DISSOLUTION OF A PARTNERSHIP FIRM
Question 1: Pass Journal entries in the following cases?
(a) Expenses of realisation ₹ 1,500.
(b) Expenses of realisation ₹ 600 but paid by Mohan, a partner.
(c) Mohan, one of the partners of the firm, was asked to look into the
dissolution of the firm for which he was allowed a commission
of ₹ 2,000.
(d) Motor car of book value ₹ 50,000 taken over by Creditors of the
book value of ₹ 40,000 in full settlement.

Question 2: Pass Journal entries for the following:

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

Question 3: Pass necessary Journal entries on the dissolution of a firm in

the following cases:
(a) Dharam, a partner, was appointed to look after the process of
dissolution at a remuneration of ₹ 12,000 and he had to bear the
dissolution expenses. Dissolution expenses ₹ 11,000 were paid by
Dharam.
(b) Jay, a partner, was appointed to look after the process of dissolution
and was allowed a remuneration of ₹ 15,000. Jay agreed to bear
dissolution expenses. Actual dissolution expenses ₹ 16,000 were paid by
Vijay, another partner on behalf of Jay.
(c) Deepa, a partner, was to look after the process of dissolution and for
this work she was allowed a remuneration of ₹ 7,000. Deepa agreed to
bear dissolution expenses. Actual dissolution expenses ₹ 6,000 were paid
from the firm's bank account.
(d) Dev, a partner, agreed to do the work of dissolution for ₹ 7,500. He
took away stock of the same amount as his commission. The stock had
already been transferred to Realisation Account.
(e) Jeev, a partner, agreed to do the work of dissolution for which he was
allowed a commission of ₹ 10,000. He agreed to bear the dissolution
expenses. Actual dissolution expenses paid by Jeev were ₹ 12,000. These
expenses were paid by Jeev by drawing cash from the firm.
(f) A debtor of ₹ 8,000 already transferred to Realisation Account agreed
to pay the realisation expenses of ₹ 7,800 in full settlement of his
account.

Question 4: Pradeep and Rajesh were partners in a firm sharing profits

and losses in the ratio of 3 : 2. They decided to dissolve their partnership

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HARDIK MISHRA
 firm on 31st March, 2018. Pradeep was deputed to realise the assets and
to pay off the liabilities. He was paid ₹ 1,000 as commission for his
services. The financial position of the firm on 31st March, 2018 was as
follows:

BALANCE SHEET as at 31st March, 2018

Amount Amount
Liabilities ( ₹) Assets ( ₹)
Creditors 80,000 Building 1,20,000
M ₹. Pradeep's Loan 40,000 Investment 30,600
Rajesh's Loan 24,000 Debtor 34,000
Investment Fluctuation Less: Provision for
Fund 8,000 Doubtful Debts 4,000 30,000
Capital A/cs: Bills Receivable 37,400
Pradeep 42,000 Bank 6,000
Rajesh 42,000 84,000 Profit and Loss A/c 8,000
Goodwill 4,000
2,36,000 2,36,000

Following terms and conditions were agreed upon:

(a) Pradeep agreed to pay off his wife's loan.
(b) Half of the Debtor realised ₹ 12,000 and remaining Debtor were used
to pay off 25% of the Creditors .
(c) Investment sold to Rajesh for ₹ 27,000.
(d) Building realised ₹ 1,52,000.
(e) Remaining Creditors were to be paid after two months, they were
paid immediately at 10% p.a. discount.
(f) Bill receivables were settled at a loss of ₹ 1,400.
(g) Realisation expenses amounted to ₹ 2,500.
Prepare Realisation Account.

Question 5: Ashish and Kanav were partners ina firm sharing profits and
losses in the ratio of 3:2.On 31st March, 2018 their Balance Sheet was as
follows:
BALANCE SHEET OF ASHISH AND KANAV as at 315t March, 2018
Liabilities ₹ Assets ₹
Trade Creditors 42,000 Bank 35,000
Employees' Provident Fund 10,000 Stock 24,000
Mrs. Ashish's Loan 9,000 Debtors 19,000
Kanav's Loan 35,000 Furniture 40,000
Workmen's Compensation Fund 20,000 Plant 2,10,000
Investment Fluctuation Reserve 4,000 Investments 32,000
Capitals:
Ashish: 1,20,000
Kanav: 80,000 2,00,000 Profit and Loss A/c 10,000
3,70,000 3,70,000
On the above date they decided to dissolve the firm.

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 (a) Ashish agreed to take over furniture at 38,000 and pay off Mrs.
Ashishis loan.
(b) Debtors realised 18,500 and plant realised 10% more.
(c) Kanav took over 40% of the stock at 20% less than the book value.
Remaining stock was sold ata gain of 10%.
(d) Trade creditors took over investments in full settlement.
(e) Kanav agreed to take over the responsibility of completing
dissolution at an agreed remuneration of 12,000 and to bear realisation
expenses. Actual expenses of realisation amounted to 8,000.
Prepare Realisation Account

Question 6: Yogesh and Naresh were partners sharing profits equally. They
dissolved the firm on 1st April, 2019. Naresh was assigned the
responsibility to realise the assets and pay the liabilities at a
remuneration of ₹10,000 including expenses. Balance Sheet of the firm
as on that date was as follows:
Amount Amount
Liabilities ( ₹) Assets ( ₹)
Creditors 40,000 Cash/Bank 6,000
Bills Payable 40,000 Investments 30,000
Naresh's Loan 44,000 Debtor 40,000
Less: Provision for
M ₹. Yogesh's Loan 42,000 Doubtful Debts 4,000 36,000
Investment
Fluctuation Reserve 8,000 Bills Receivable 33,400
Capital A/cs: Profit and Loss A/c 1,10,600
Yogesh 21,000
Naresh 21,000 42,000

2,16,000 2,16,000

The firm was dissolved on following terms:

(a) Yogesh was to pay his wife's loan.
(b) Debtor realised ₹30,000.
(c) Naresh was to take investments at an agreed value of ₹ 26,000.
(d) Creditors and Bills Payable were payable after two months but were
paid immediately at a discount of 15% p.a.
(e) Bills Receivable were received allowing 5% rebate.
(f) A Debtor previously written off as Bad Debt paid ₹15,000.
(g) An unrecorded asset realised ₹10,000.
Prepare Realisation Account, Partners' Capital Accounts, Partners' Loan
Account and Cash/Bank Account.

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 Question 7: Following is the Balance Sheet of Arvind and Balbir as at 31st
March, 2019:

Amount Amount
Liabilities ( ₹) Assets ( ₹)
Trade Creditors 45,000 Cash 750
Bills Payable 12,000 Bank 12,000
M ₹. Arvind's Loan 7,500 Stock 7,500
M ₹. Balbir's Loan 15,000 Investments 15,000
Reserve Fund 15,000 Book Debts 30,000
Investments Less: Provision for
Fluctuation Reserve 1,500 Doubtful Debts 3,000 27,000
Capital A/cs: Building 22,500
Arvind 15,000 Plant 30,000
Balbir 15,000 30,000 Goodwill 6,000
Profit and Loss A/c 5,250
1,26,000 1,26,000

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

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