No. 1 COMMERCE INSTITUTE – XI-XII, CA, CMA, CS, B.

COM, GD, PI, PUBLIC SPEAKING

DR. SANTOSH RAI INSTITUTE (PC)

196, Zonal Market, Sector -10, Bhilai Ph. 0788-4012438
Class – XII – TEST M.M - 35

1. MULTIPLE CHOICE QUESTIONS [1 Marks – Each]

i. When an asset is taken over by a a. Cash account
partner, his capital account is: b. Bank account
a) Debited c. Realisation accounts
b) Credited d. Partners’ capital account
c) No entry will be passed iv. On dissolution of a firm, partner’s
d) None of above loan account is transferred
ii. Amount realised from sale of a. Realisation account
assets is recorded on the ______ b. Partners’ Capital account
side of cash/bank account . c. Partners’ Current account
a) Debit d. None of the above
b) Credit v. Unrecorded assets when taken
c) Not shown in cash/bank over by a partner are shown in:
account a) Debit of Realisation account
d) None of the above b) Debit of Bank account
iii. On dissolution of a firm bank c) Credit of Realisation account
overdraft is transferred to d) Credit of Bank account

2. Arnab, Ragini and Dhrupad are partners sharing profits in the ratio of 3 : 1 : 1. On 31st
March, 2015, they decided to dissolve their firm. On that date their Balance Sheet
was as under: [6]
Balance Sheet
As at 31st March, 2015
Liabilities Amt. (Rs.) Assets Amt (Rs.)
Creditors 60,000 Bank 50,000
Arnab’s Brother Loan 95,000 Debtors 1,7,000
Dhrupad’s Loan 1,00,000

No. 1 COMMERCE INSTITUTE – XI-XII, CA, CMA, CS, B.COM, GD, PI, PUBLIC SPEAKING
No. 1 COMMERCE INSTITUTE – XI-XII, CA, CMA, CS, B.COM, GD, PI, PUBLIC SPEAKING

Investment Fluctuation Fund 50,000 (-) Provision for Bad Debts

Capital A/cs (20,000) 1,50,000
Arnab 2,75,000 Stock 1,50,000
Ragini 2,00,000 Investments 2,50,000
Dhrupad 1,70,000 6,45,000 Building 3,00,000
Profit and Loss A/c 50,000
9,50,000 9,50,000
The assets were realised and the liabilities were paid as under:
a. Arnab agreed to pay his brother's loan.
b. Investments realised 20% less.
c. Creditors were paid at 10% less.
d. Building was auctioned for Rs 3,55,000. Commission on auction was Rs 5,000.
e. 50% of the stock was taken over by Ragini at market price which was 20% less
than the book value and the remaining was sold at market price.
f. Dissolution expenses were Rs 8,000. Rs 3,000 were to be borne by the firm and
the balance by Dhrupad. The expenses were paid by him.

Prepare Resolution Account, Bank Account and Partners' Capital Account

3. Following is the balance sheet of Vinit and Yogesh as on 31st March, 2015 [6]
Balance Sheet
As at 31st March, 2015
Liabilities Amt. (Rs.) Assets Amt (Rs.)
Creditors 3,60,000 Bank 80,000
Mrs. Vinit Loan 60,000 Stock 70,000
Yogesh’s Loan 1,00,000 Investments 1,00,000
Investment Fluctuation Fund 30,000 Debtors 2,00,000
Capital A/cs (-) Provision for Bad Debts
Vinit 2,00,000 (20,000) 1,80,000
Yogesh 1,00,000 3,00,000 Fixed Assets 3,80,000
Profit and Loss A/c 40,000
8,50,000 8,50,000

No. 1 COMMERCE INSTITUTE – XI-XII, CA, CMA, CS, B.COM, GD, PI, PUBLIC SPEAKING
No. 1 COMMERCE INSTITUTE – XI-XII, CA, CMA, CS, B.COM, GD, PI, PUBLIC SPEAKING

The firm was dissolved on 31st March, 2015. The assets were realised and the liabilities
were paid as under:
a. Vinit promised to pay off Mrs. Vinit's Loan and took away stock at 20% discount.
b. Yogesh tool away 90% of the investments at 10% discount.
c. Sunil, a debtor of Rs 50,000 had to pay the amount due 3 months after the date
of dissolution. He was allowed a discount of 5% for making payment
immediately. The remaining debtors were collected in full.
d. Creditors were paid Rs 3,50,000 in full settlement of their claim.
e. Fixed Assets realised Rs 2,82,000 and remaining investment realised Rs 7,500.
f. There was an old furniture which has been written-off completely from the
books. Yogesh took away the same for Rs 4,000.
g. Realisation expenses Rs 2,000 were paid by Vinit.

Prepare Realisation Account, Bank Account and Partners' Capital Accounts.

4. Pass necessary Journal entries for the following transactions on the dissolution of a
partnership firm of Mita and Sonu on 31st March, 2022 after the various assets other
cash and third-party liabilities have been transferred to the Realisation Account.
a. Creditors of ₹ 90,000 took over Land and Building of ₹ 2,00,000 in full settlement of
their claim.
b. Sonu took over debtors amounting to ₹ 50,000 at ₹ 40,000.
c. Realisation expenses ₹ 1,800 were paid by Sonu.
d. A machine which was not recorded in the books was taken over by Mita at ₹
11,000 while its expected market value was ₹ 15,000.
e. Sonu agreed to pay off his wife's loan of ₹ 20,000.
f. Profit on dissolution amounted to ₹ 50,000. [6]
5. Pass the Journal entries for the following transactions on dissolution of a firm of
partners A and B: [6]
i. Old furniture which had been written off in the books was sold for ₹ 20,000.
ii. 'Z' an old customer whose account for ₹10,000 was written off as bad debt in the
previous year, paid 70% of the amount.
iii. 'A' agreed to takeover firm's (Name) goodwill (Not recorded in the books of a firm)
at ₹ 50,000.

No. 1 COMMERCE INSTITUTE – XI-XII, CA, CMA, CS, B.COM, GD, PI, PUBLIC SPEAKING
No. 1 COMMERCE INSTITUTE – XI-XII, CA, CMA, CS, B.COM, GD, PI, PUBLIC SPEAKING

iv. There was an old computer which had been written off from the books. It was
estimated to realise ₹ 5,000. It is taken by 'B' a partner at the estimated price less
30%.
v. Stock costing ₹ 20,000, had been written off from the books being obsolete. The
stock was valued at ₹ 5,000 and taken by the partners in their profit-sharing ratio.
6. X, Y and Z who were sharing profits in the ratio of 3 : 2 : 1 decided to dissolve the firm
on 31st march, 2024 when their Balance Sheet was as follows: [6]
Liabilities Rs. Assets Rs.
Creditors 34,000 Cash 25,000
Capital A/cs Debtors 62,000
X 1,20,000 Stock 37,000
Y 90,000 Tools 8,000
Z 60,000 2,70,000 Car 12,000
Computers 60,000
Building 1,00,000
3,04,000 3,04,000

Following transactions took place at the time of dissolution:

Assets realised are: Tools ₹ 5,000; Computers ₹ 82,000; Building ₹ 84,000; Car ₹ 25,000;
Goodwill ₹ 60,000; Debtors ₹ 59,000.
Creditors accepted Stock in settlement of their dues. There was an unrecorded asset
valued at ₹3,000, which was taken by X for ₹2,000.
There was an old furniture which had been written off from the books. Y took it at ₹
8,000. Firm had to pay ₹ 8,000 for outstanding salary which were not provided earlier.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account.

No. 1 COMMERCE INSTITUTE – XI-XII, CA, CMA, CS, B.COM, GD, PI, PUBLIC SPEAKING