BOARD EXAMQUESTIONS:DISSOLUTION:

1. When the business of the firm becomes illegal, the way of dissolution of the
firm is .

2. Disha, Preeti and Ritvik were partners in a firm sharing profits and
st
losses in the ratio of 3:2:1.The firm was dissolved on 31 March,
2019.After transfer of assets (other than cash) and external liabilities to
the Realization Account, the following transactions took place:

i) A debtor, whose debt of Rs.70,000 was written off as bad, paid

Rs.68,000 in full settlement.

ii) A creditor, to whom Rs.1,00,000 were due to be paid, accepted furniture at
Rs.56,000 and the balance was paid to him by cheque.

iii) Ritvik had g i v e n a l o a n of Rs.21,000 to th e f i r m . He a c c e p t e d

Rs.19,000 in full settlement of his loan.

iv) Stock was worth Rs. 88,000 out of which stock worth Rs. 78,000 was taken
over by Disha at Rs.60,000 and the balance of the stock was sold for
Rs.12,000.
v) Expenses on dissolution amounted to Rs.23,000 and were paid by the
firm.
vi) Profit on dissolution amounted to Rs.18,000.

Pass the necessary journal entries for the above transactions in the books
of the firm.

3. Simar, Raja and Rita were partners in a firm sharing profits and losses
st
in the ratio of 2:2:1. The firm was dissolved on 31 March, 2019. After
the transfer of assets (other than cash) and external liabilities to the
Realization Account, the following transactions took place:

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i) A debtor whose debt of Rs.90,000 had been written off as bad, paid

Rs.88,000 in full settlement.

ii) Creditors to whom Rs. 1,21,000 were due to be paid, accepted stock at
Rs.71,000 and the balance was paid to them by a cheque.

iii) Raja had given a loan to the firm of Rs.18,000. He was paid Rs.17,000

in full settlement of his loan.

iv) Investments were Rs.53,000 out of which investments worth

Rs.43,000 were taken over by Simar at Rs.52,000 and the balances of the
investments were sold for Rs.12,000.
v) Expenses on dissolution amounted toRs.19,000 and the same were paid
by the firm.
vi) Profit on dissolution amounted to Rs.30,000.

Pass the necessary journal entries for the above transactions in the books
of the firm.

4. Harish and Gopal were partners in a firm sharing profits in the ratio of
3:2.On 31st March, 2018, their Balance Sheet was as follows:

Balance Sheet of Harish and Gopal as at March 31,2018

Amount Assets Amount

Liabilities
Creditors 36,000 Cash 47,000
Outstanding expenses 10,000 Bank 93,000
Gopal’s wife’s loan 50,000 Debtors 76,000
Capitals: Stock 2,00,000
Harish 2,80,000 Furniture 20,000
Gopal 1,60,000 4,40,000 Lease hold premises 1,00,000
5,36,000 5,36,000

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 On the above date the firm was dissolved. The various assets were
realized and liabilities were settled as under:
(i) Gopal agreed to pay his wife’s loan.
(ii) Leasehold premises realised Rs.1,50,000 and Debtors Rs.12,000 less.
(iii) Half of the creditors agreed to accept furniture of the firm as
full settlement of their claim and remaining half agreed to
accept 10% less.
(iv) 50% stock was taken over by Harish on payment by cheque of
Rs.90,000 and remaining stock was sold for Rs.94,000.
(v) Realization expenses of Rs.10,000 were paid by Gopal on
behalf of the firm.
Prepare Realization Account.

5. Vasudha and Dewan were partners in a firm sharing profits and losses
st
in the ratio of 2:3. The firm was dissolved on 31 March, 2019. After
transfer of assets (other than cash) and external liabilities to Realization
Account, the following transactions took place:
i) Investments of the face value of Rs.60,000 were sold in the open market
for Rs. 63,000 for which a commission of Rs. 700 was paid to the broker.

ii) Creditors worth Rs. 65,000 were settled by handing over the entire stock
to them along with a payment of Rs.23,000 by cheque.

iii) There was old furniture which had been completely written off from the
books of the firm. It was taken over by Vasudha at Rs.2,000.

iv) Dewan undertook to pay Ms. Dewan’s loan of Rs.45,000.

v) Dewan was appointed to look after the process of dissolution for which
he was allowed a remuneration of Rs.7,000. He agreed to bear the
dissolution expenses. Actual expenses incurred by Dewan were
Rs.11,000, which were paid by the firm.

vi) Loss on realisation amounted to Rs.9,000.

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Pass the necessary journal entries to record the above transactions in the books
of the firm.

6. Niyati, Kartik and Ratik were partners in a firm sharing profits and
losses in the ratio of 5:3:2. The firm was dissolved on 31st March, 2019
by the order of the court. After transfer of assets (other than cash)and
external liabilities to Realization Account, the following transactions
took place:

i) An unrecorded liability of the firm of`Rs.45,000 was paid by Niyati.

ii) Creditors, to whom Rs.67,000 were due to be paid, accepted furniture

at Rs.35,000 and the balance was paid to them in cash.

iii) Kartik had given a loan of Rs.18,000 to the firm which was paid to
him.

iv) Stock worth Rs.85,000 was taken over by Ratik at Rs.72,000.

v) Expenses on dissolution amounted to Rs.6,000 and were paid by Kartik.

vi) Loss on dissolution amounted to Rs.40,000.

Pass the necessary journal entries for the above transactions in the books of the
firm.

7. Mala, Neela and Kala were partners sharing profits in the ratio of3 : 2 :
1. On 1.3.2015 their firm was dissolved. The assets were realized and
liabilities were paid off. The accountant prepared Realization Account,
Partners’ Capital Accounts and Cash Account, but forgot to post few
amounts in these accounts.

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You are required to complete these below given accounts by posting correct

amounts. Realization Account

Dr. Cr.
Amo Amount
Particulars unt Particulars Rs
Rs
By Provision for bad
To SundryAssets: 1,000
debts
Machinery 10,000 By Sundry Creditors 15,000

Stock 21,000 By Sheela’s Loan 13,000

By Repairs and
Debtors 20,000 1,200
Renewals Reserve
Prepaid 400 By Cash–Assets sold:
Insurance
Machinery 8,000
Investments 3,000 54,400

To Mala’s CapitalA/c
13,000 Stock 14,000
–Sheela’s Loan

To Cash–Creditors paid Debtors 16,000

15,000 38,000

To Cash By Mala’s Capital–

5,000 2,000
Investments
Dishonoured bill paid
To Cash–Expenses 800 .......... ..........

88,200 88,200

Capital Accounts

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 Dr. Cr.
Mala Neela Kala Mala Neela Kal
Particular Rs Rs Rs Particul Rs Rs a
s ars Rs
.......... ......... ......... ......... .......... ......... ......... ........
. . . . . ..
.......... ......... .......... .........
. .
To Cash 12,000 9,000 ByCash 1,000
23,000 15,000 3,000 23,000 15,000 3,000

Cash Account

Dr. Cr.
Amount Amount
Particulars Rs Particulars Rs
By Realisation A/c
To Balance b/d 2,800 15,000
Creditors paid
To Realisation A/c
38,000 By Dishonoured bill 5,000
Sale of assets
To Kala’s Capital A/c 1,000 ....... ..........
...
By Mala’s 12,000
CapitalA/c
By Neela’s Capital 9,000
A/c

41,800 41,800

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8. Girija and Ganesh were partners in a firm sharing, profits and losses in the ratio
of 2: 3. On 31st March, 2017 their Balance Sheet was as follows :

Liabilities Amount Assets Amount

Cash at Bank
Creditors 80,000 20,000
Debtors 55,000
Bank Overdraft 50,000 Less: Prov for
Girija’s Brother’s loan 77,000 Doubtful debts 53,000
2,000
Stock
Ganesh’s loan 28,000 78,000
Investments
Investment Fluctuation 15,000 89,000
Fund Buildings 2,50,000
Capitals : Profit and Loss 10,000
A/c.
Girija 1,50,000
Ganesh 1,00,000 2,50,000
5,00,000 5,00,000

On the above date the firm was dissolved. The assets were realized and the
liabilities were paid off as follows:

(a) Debtors of Rs. 6,000 were proved bad.

(b) Girija agreed to pay off her brother’s Loan.

(c) One of the creditors for Rs.10,000 was paid only Rs.3,000 in full
settlement of his account.

(d) Buildings were auctioned for` Rs.1,80,000 and the auctioneer’s

commission amounted to Rs.8,000.

(e) Ganesh took over part of stock at Rs.4,000 (being 20% less than the
book value).Balance of the Stock was handed over to the remaining

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 creditors in full settlement of their account.

(f) Investments realized` Rs.9,000 less.

(g) Realisation expenses amounted to Rs.17,000 and were paid

by Ganesh.

Prepare Realisation Account, Partners’Capital Accounts and Bank

Account.

9. Give the necessary journal entries for the following transactions on

dissolution of the firm of Anita and Ravion 31stMarch 2016, after the
various assets (other than cash) and the third party liabilities have been
transferred to Realisation Account. They shared profits and losses in the
ratio 3:2.
(a) Ravi was to get a remuneration of` Rs.23,000 for completing the
dissolution process. He also agreed to bear realization expenses.
Realisation expenses of` Rs.10,000 were paid by Ravi from the firm’s
cash.
(b) Amitesh, an old customer whose account for Rs.60,000 was written
off as bad debt in the previous year, paid 90%.
(c) Creditors of Rs.40,000, accepted furniture valued at Rs.38,000 in full
settlement of their claim.
(d) Land and Building was sold for Rs.3,00,000 through a broker who
charged 2% commission.
(e) There were 500 shares of Rs.40 each in Vision Ltd., acquired at a cost
of Rs. 22,000 and had been written off completely from the books.
These shares are now valued at` Rs.50 each and divided among the
partners in their profit sharing ratio.
(f) Profit on realization was Rs.45,000.

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10. Parul, Payal and Priyanka were partners. They decided to dissolve their firm. Pass
necessary Journal Entries for the following after various assets ( other than cash and
bank) and the third party liabilities have been transferred to Realization Account:
i) Parul agreed to pay off her husband’s loan of Rs.7000 at discount of 5%.
ii) A machine which was not recorded in the books of accounts was taken over by
Payal at Rs.3000.
iii) A contingent liability (not provided for) of Rs .4000 was also discharged.

iv) The firm had a debit balance of Rs. 27,000 in the Profit and Loss Account on the
date of dissolution.
v) Niyati, Kartik and Ratik were partners in a firm sharing profits and losses in the ratio
of 5:3:2.The firm was

11. Dissolved on 31 st March,2019 by the order of the court. After transfer of assets
(other than cash) and external liabilities to Realization Account, the following
transactions took place:
i) An unrecorded liability of the firm of` Rs.45,000 was paid by Niyati.

ii) Creditors to whom` Rs.67,000 were due to be paid, accepted furniture at Rs.35,000
and the balance was paid to them in cash.

iii) Kartik had given a loan of`Rs.18,000to the firm which was paid to him.

iv) Stock worth Rs.85,000 was taken over by Ratik atRs.72,000.

V ) Expenses on dissolution amounted to Rs.6,000 and were paid by Kartik.

vi) Loss on dissolution amounted toRs.40,000.

Pass the necessary journal entries for the above transactions in the books of the firm.

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12. Rakesh, Ram and Rohan were partners sharing profits in the ratio of
5:3:2.On31st March, 2018, their Balance Sheet was as follows:
st
Balance Sheet of Rakesh, Ram and Rohan as at 31 M arch, 2018

Amount Amount
Liabilities Rs. Assets Rs.
Sundry Creditors 70,000 Land and Building 3,50,000
Rohan’s Loan 20,000 Stock 3,00,000
Mrs.Rohan’s Loan 20,000 Debtors 2,00,000
Less:Prov for doubtful
Capitals: debts 10,000 1,90,000
Rakesh 4,00,000 Cash 70,000
Ram 3,00,000
Rohan 1,00,000 8,00,000
9,10,000 9,10,000
The firm was dissolved on the above date on the following terms:
i) Land and building and stock were sold for Rs.6,00,000. Debtors were
realised at 10%less than the book value.
ii) Mrs.Rohan’s loan was settled by giving her an unrecorded computer of
Rs.22,000.

iii) Rakesh paid off one of the creditors Rs.20,000 in settlement of Rs.30,000.

iv) Rohan’s loan was fully settled at Rs.18,500.

Prepare Realisation Account.

13. Mona and Sona were partners in a firm sharing profits in the ratio of 2:3.
st
On 31 March, 2019, their Balance Sheet was as under:
Balance Sheet of Mona and Sona as at31st March ,2019
Amount Amount
Liabilities Rs. Assets Rs.
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 Capitals: Land and Building 6,00,000

Mona 4,00,000 Stock 2,00,000

Sona 6,00,000 10,00,000 Debtors 3,10,000
Empl’ Provident
Fund Less: Provision
2,00,000 For bad debts 10,000 3,00,000
Creditors
2,10,000 Bank 3,10,000

14,10,000 14,10,000

The firm was dissolved on1stApril,2019 and the assets and

liabilities were settled as follows:
i) Half of the creditors accepted 50% of the stock. Remaining creditors
were paid in full.

ii) The remaining stock was realized at 90% and debtors realized 80% of
their book value.

iii) Sona took over the responsibility to realize the assets and discharge
the liabilities at a remuneration of Rs.20,000 and was to bear all expenses
of realisation. She paid realisation expenses of Rs.18,000 out of her
personal account.

iv) Land and Building realized Rs.7,00,000.

Prepare Realisation Account.

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14. Prateek, Neeraj and Umang were partners in a firm, sharing profits
and losses in the ratio of 7:2:1.The firm was dissolved on31st
March,2019. After transfer of assets (other than cash) and external
liabilities to the Realisation Account, the following transactions took
place:

i) Furniture of Rs.45,000 was sold by auction for Rs.66,000 and the auctioneer’s
commission amounted to Rs.2,000.

ii) Office equipment of Rs.90,000 was taken over by creditors of the book
value of Rs.82,000 in full settlement.

iii) Umang had given a loan of Rs.1,09,000 to the firm. He accepted Rs.1,00,000 in
full settlement of his loan.

iv) Investments were Rs.53,000 out of which Rs.23,000 was taken over by
Neeraj at Rs.25,000.Balance of the investments were sold for Rs.35,000.

v) Expenses incurred on dissolution were Rs.21,000 and were paid by

Prateek.

vi) Loss on dissolution amounted to Rs.40,000.

Pass the necessary journal entries for the above transactions in the books
Of the firm .

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15. Namita and Akhil were partners in a firm sharing profits and losses in
the ratio of 4:3.The firm was dissolved on31st March,2019.After
Transfer of assets (other than cash) and external liabilities to Realization
Account, the following transactions took place:
i) Akhil undertook to pay a bank loan of Rs.49,000.

ii) There was an old computer which had been completely written off from
the books. It was taken over by Namita at Rs.3,000.

iii) Investments of Rs.39,000 were sold in the open market for Rs.32,000.A
commission of Rs.600 was paid to the broker for the same.

iv) Creditors worth Rs.46,000 accepted stock of Rs.40,000 at a discount of 10%

and the balance was paid to them by cheque.

v) Akhil was appointed to look after the dissolution process for which he
was allowed a remuneration of Rs.13,000. He agreed to bear dissolution
expenses. Actual expenses incurred by Akhil were Rs.21,000 which were
paid by the firm.
vi) Profit and Loss Account showed a credit balance of Rs.14,000 which
was distributed between the partners.
Pass the necessary journal entries to record the above transactions in the
books of the firm.

16. Naina,Uday and Tara were partners ina firm sharing profits and
losses in the ratio of 5:3:2.The firm was dissolved on31-3-2019. After
transfer of assets (other than cash) and external liabilities to Realization
Account, the following transactions took place:

i) A typewriter completely written off from the books was sold for Rs.4,000.

ii) Loan of Rs. 30,000 advanced by Uday to the firm was paid back.

iii) Tara was to get remuneration of Rs.42,000 for completing the

dissolution process and for bearing realization expenses. Actual realization
expenses amounted to Rs.51,000 and were paid by the firm.
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Iv )Creditors of Rs.23,000 took over all the investments
atRs.12,000.Remaining amount was paid to them incash.

v) Uday agreed to payloanof Mrs. Uday Rs .45,000.

vi) Profit and Loss Account balance of Rs.20,000 appeared on the asset side
of the balance sheet.

Pass necessary journal entries for the above transactions in the books of
the firm.

17. Muskaan, Priya and Rohan were partners in a firm sharing profits and
losses in the ratio of 2:3:1. The firm was dissolved on 31-3-2019. After
transfer of assets (other than cash) and external liabilities to realization
account, the following transactions took place:
i) Furniture of` Rs.70,000 was sold for`Rs.74,000 by auction and
auctioneer’s commission amounted to` Rs.3,000.
ii) There was an unrecorded computer which was taken over by Priya for
Rs.7,000.

iii) Creditors were paid Rs.44,000 in full settlement of their account of

Rs.49,000.

iv) Rohan’s sister’s loan Rs.20,000 was paid off by Muskaan.

v) Expenses on dissolution were Rs.15,000 and paid by Rohan.

vi)Loss on dissolutionamountedto`24,000.

Pass necessary journal entries for the above transactions in the books of the
firm.

18. Aman and Harsh were partners in a firm. They decided to dissolve their firm.
Pass necessary Journal entries for the following after various assets(other than
Cash and Bank) and third party liabilities have been transferred to Realisation
Account:
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(a) There was furniture worth ₹50,000. Aman took over 50% of the furniture at10%
discount and the remaining furniture was sold at 30% profit on book value.
(b) The firm paid realisation expenses amounting to ₹5,000 on behalf of Harsh who
had to bear these expenses.
(c) There was an outstanding bill for repair for Rs.2,000 which were paid off.

d)Creditors, to whom the firm owed ₹6,000, accepted stock of ₹5,000 at a discount of 5%
and the balance in cash.

19. Pass necessary journal entries on the dissolution of a partnership firm

in the following cases:
i) Dissolution expenses were Rs.800.

ii) Dissolution expenses Rs.800 were paid by Prabhu,a partner.

iii) Geeta, a partner, was appointed to look after the dissolution work,for
which she was allowed a remuneration of Rs.10,000. Geeta agreed tobear
the dissolution expenses.Actual dissolution expenses Rs.9,500 werepaid
by Geeta.

iv) Janki, a partner, agreed to look after the dissolution work for a
commission of Rs.5,000.Jankia greed to bear the dissolution expenses.
Actual dissolution expenses Rs.5,500 were paid by Mohan, another partner,
on behalf of Janki.

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 v) A partner, Kavita, agreed to look after the dissolution process for a
commission of Rs.9,000. She also agreed to bear the dissolution
expenses.Kavita took over furniture of Rs.9,000 for her
commission.Furniture had already been transferred to realisation
account.

vi) A debtor, Ravinder,for Rs.19,000 agreed to pay the dissolution

expenses which were Rs.18,000 in full settlement of his debt.

20. Srijan, Raman and Manan were partners in a firm sharing profits
st
and losses in the ratio of 2: 2:1. On 31 March, 2017 their Balance
Sheet was as follows:
Balance Sheet of Srijan, Raman and Mananas on 31.3.2017

Amount Amou
Liabilities Rs. Assets nt
Rs.
Capitals: Capital:Manan 10,000
Srijan 2,00,000 Plant 2,20,000
Raman 1,50,000 3,50,000 Investments 70,000

Creditors 75,000 Stock 50,000

Bills Payable 40,000 Debtors 60,000
Outstanding Salary 35,000 Bank 10,000
Profit and Loss
80,000
Account
5,00,000 5,00,000
On the above date they decided to dissolve the firm.
i) Srijan was appointed to realise the assets and discharge the
liabilities. Srijan was to receive 5% commission onsaleof assets
(except cash) and was to bear all expenses of realisation.

ii) Assets were realised as follows:

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(Rs.)

Plant 85,000
Stock 33,000
Debtors 47,000
 iii) Investments were realised at 95% of the book value.
iv) The firm had to pay Rs.7,500 for an outstanding repairbillnot
provided for earlier.
v) A contingent liability inr espect of bills receivable, discounted
with the bank had also materialised and had to be discharged for
Rs.15,000.

vi) Expenses of realisation amounting to Rs.3,000 were paid by Srijan.

Prepare Realisation Account, Partners’ Capital Acct and Bank
Account.
21.Give the journal entry for the treatment of partner’s loan appearing on the
asset side of the Balance Sheet, on dissolution of a partnership firm.
22.Sonu, Monu and Ashu were partners in a firm sharing profits and
losses in the ratio of 5 : 3 : 2. On 31 st March, 2022 their Balance
Sheet was as follows :
Balance Sheet of Sonu, Monu and Ashu as at 31st March, 2022
Amount Amount
Liabilities Rs. Assets Rs.
Creditors 35,000 Bank 22,000
General Reserve 25,000 Stock 25,000
Debtors 20,000
Capitals : Less : Provision
Sonu 50,000 for bad debts 2,000 18,000
Monu 30,000 Furniture 15,000
Ashu 20,000 1,00,000 Land and Building 80,000
1,60,000 1,60,000
On the above date, the firm was dissolved on the following terms :
i)Land and Building realised for Rs. 85,000, Furniture realised for
Rs. 6,000 and Debtors realised full amount.

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 ii)Stock was taken over by Sonu at book value. There was an
unrecorded asset which was taken over by Ashu for Rs. 3,000.

iii)Monu agreed to bear all realisation expenses. For his services

Monu was paid Rs. 2,000. Actual expenses on realisation amounted
to Rs. 2,200.

iv)Creditors were paid at 2% less.

Prepare Realisation Account.

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