12th | Ts grewal 2021-2022 Question 25 to 28 | Dissolution of a Partnership

Page No 8.54:

Question 25: P,Q and R were partners in a firm sharing profits and losses in the ratio of 5:3:2.They agreed to dissolve their partnership firm on 31st March, 2021. P was deputed to realise the assets and pay the liabilities. He was paid T 1,000 as commission for his services. The financial position of the firm was:

BALANCE SHEET as at 31st March, 2021
Liabilities	`	Assets	`
Creditors Bills Payable Investments Fluctuation Reserve Capital A/cs: P- 37,550 Q- 15,000	10,000 3,700 4500           52,550	Stock Investments Debtors 7,100 Less: Provision for Doubtful Debts 450 Cash R's Capital A/c Plant and Machinery	5,500 15,000   6,650   5,600 8,000 30,000
	70,750		70,750

P took Investments for R 12,500. Stock and Debtors realized `11,500. Plant and Machinery were sold to Q for 22,500 for cash. Unrecorded assets realised `1,500. Realisation expenses paid amounted to ` 900.

Prepare necessary Ledger Accounts to close the books of the firm.

 

Answer:

Revaluation a/c
Dr.			Cr.
Particulars	`	Particulars	`
To plant and machinery To Stock To Investment To Debtors To P’s capital a/c(Commission) To Cash a/c (expenses) To Cash a/c (liabilities paid) Creditors 10,000 Bills payable 3,700	30,000 5,500 15,000 7,100 1,000 900     13,700	By Provision for Doubtful Debts By Creditors By Bills payable By Investment fluctuation reserve By P’s capital a/c (Investment taken) By Cash a/c (Assets realised) Stock, debtors 115,00 Unrecorded assets 1,500 Plant and machinery 22,500 By Capital a/c -transferred to; P=6,550×5/10=3,275 Q=6,550×3/10=1,965 R=6,550×2/10=1,310	450 10,000 3,700 4,500 12,500         35,500       6,550
	73,200		73,200

1

	Partners Capital Accounts
	Dr.														Cr.
	Particulars				P	Q	R	Particulars			P		Q	R
	Balance b/d				–	–	8,000	Balance b/d			37,550		15,000	–
	Realisation A/c (Investment taken) Realisation A/c				12,500   3,275	1,965	1,310	Realisation A/c Cash A/c			1,000		–	– 9,310
	(Loss transferred)
	Cash A/c				22,775	13,035
					38,550	15,000	9,310				38,550		15,000	9,310
Cash  Account
Dr.									Cr.
Particulars				Amount ( `)		Particulars				Amount ( `)
Balance b/d				5,600		Realisation A/c (expenses)				900
Realisation A/c				35,500		Realisation A/c (liabilities paid)				13,700
R’s Capital A/c				9,310		P’s Capital A/c				22,775
						Q’s Capital A/c				13,035
				50,410						50,410

 

Page No 8.55:

Question 26:

Shilpa, Meena and Nanda decided to dissolve their partnership on 31st March, 2019. Their profit-sharing ratio was 3 : 2 : 1 and their Balance Sheet was as under:
 

BALANCE SHEET OF SHILPA, MEENA AND NANDA as at 31st March, 2019
Liabilities		`	Assets	`
Capital A/cs:			Land	81,000
Shilpa	80,000		Stock	56,760
Meena	40,000	1,20,000	Debtor	18,600
Bank Loan		20,000	Nanda's Capital	23,000
Creditors		37,000	Cash	10,840
Provision For Doubtful Debts		1,200
General Reserve		12,000
		1,90,200		1,90,200

It is agreed as follows:
The stock of value of  ` 41,660 are taken over by Shilpa for  ` 35,000 and she agreed to discharge bank loan. The remaining stock was sold at  ` 14,000 and Debtor amounting to  ` 10,000 realised  ` 8,000. Land is sold for  ` 1,10,000. The remaining Debtor realised 50% at their book value. Cost of realisation amounted to  ` 1,200. There was a typewriter not recorded in the books worth of  ` 6,000 which were taken over by one of the Creditors  at this value. Prepare Realisation Account, Partners' Capital Accounts, and Cash Account to Close the books of the firm.

Answer:

Realisation Account
Dr.								Cr.
Particulars			Amount ( `)	Particulars			Amount ( `)
Land			81,000	Bank Loan			20,000
Stock			56,760	Creditors			37000
Debtor			18,600	Provision for doubtful debts			1,200
Shilpa’s Capital A/c			20,000	Shilpa’s Capital A/c (Stock)			35,000
Cash:				Cash:
Creditors		31000		Stock		14000
Realisation Expenses		1,200	32200	Debtor		12300
Realisation Profit				Land		1,10,000	1,36,300
Shilpa’s Capital A/c		10,470
Meena’s Capital A/c		6,980
Nanda’s Capital A/c		3,490	20,940
			2,29,500				2,29,500

 

Partners Capital Account
Dr.							Cr.
Particulars		Shilpa	Meena	Nanda	Particulars	Shilpa	Meena	Nanda
Balance b/d		–	–	23,000	Balance b/d	80,000	40,000	–
Realisation		35,000			General Reserve	6,000	4,000	2,000
(Stock)					Realisation	20,000
Cash		81,470	50,980		(Bank Loan)
					Realisation (Profit)	10,470	6,980	3,490
					Cash			17,510
		1,16,470	50,980	23,000		1,16,470	50,980	23,000

 

Cash Account
Dr.					Cr.
Particulars		Amount ( `)	Particulars	Amount ( `)
Balance b/d		10,840	Realisation (Expenses)	32,200
Realisation (Assets)		1,36,300	Shilpa’s Capital A/c	81,470
Nanda’s Capital A/c		17,510	Meena’s Capital A/c	50,980
		1,64,650		1,64,650

 

Page No 8.55:

Question 27:

A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2019, their Balance Sheet was as follows:

BALANCE SHEET as at 31st March, 2019
Liabilities			( `)	Assets	( `)
Creditors			38,000	Cash at Bank	11,500
Mr. A's Loan			10,000	Stock	6,000
B's Loan			15,000	Debtor	19,000
Reserve			5,000	Furniture	4,000
A's Capital	10,000			Plant	28,000
B's Capital		8,000	18,000	Investments	10,000
				Profit and Loss A/C	7,500
			86,000		86,000

The firm was dissolved on 31st March, 2019 and both the partners agreed to the following:
(a) A took Investments at an agreed value of  ` 8,000. He also agreed to settle M `. A's Loan.
(b) Other assets realised as: Stock −  ` 5,000; Debtor  −  ` 18,500; Furniture  −  ` 4,500; Plant  −  ` 25,000.
(c) Expenses of realisation came to  ` 1,600.
(d) Creditors  agreed to accept  ` 37,000 in full settlement of their claims.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.									Cr.
Particulars				Amount ( `)		Particulars		Amount ( `)
Stock				6,000		Creditors		38,000
Debtor				19,000		M `. A’s Loan		10,000
Furniture				4,000
Plant				28,000		A’s Capital A/c (Investments)		8,000
Investments				10,000		Bank A/c:
A’s Capital A/c (M `. A’s loan)				10,000		Stock	5,000
Bank A/c :						Debtor	18,500
Expenses		1,600				Furniture	4,500
Creditors		37,000		38,600		Plant	25,000	53,000
						Loss transferred to:
						A’s Capital A/c	3,960
						B’s Capital A/c	2,640	6,600
				1,15,600				1,15,600
Partners Capital Accounts
Dr.									Cr.
Particulars			A		B	Particulars	A	B
Realisation (loss)			3,960		2,640	Balance b/d	10,000	8,000
Realisation A/c			8,000		–	Reserve A/c	3,000	2,000
Profit and Loss A/c			4,500		3,000	Realisation A/c	10,000	–
Bank A/c			6,540		4,360
			23,000		10,000		23,000	10,000

 

B’s Loan Account
Dr.					Cr.
Particulars		Amount ( `)	Particulars	Amount ( `)
			Balance b/d	15,000
Bank A/c		15,000
		15,000		15,000

 

Bank Account
Dr.					Cr.
Particulars		Amount ( `)	Particulars	Amount ( `)
Balance b/d		11,500	Realisation A/c	38,600
Realisation A/c		53,000	A’s Capital A/c	6,540
			B’s Capital A/c	4,360
			B’s Loan A/c	15,000
		64,500		64,500

 

Page No 8.56:

Question 28:

Balance Sheet of P, Q and R as at 31st March, 2019, who were sharing profits in the ratio of 5 : 3 : 1, was:
 

Liabilities		Amount ( `)	Assets		Amount ( `)
Bills Payable		40,000	Cash at Bank		40,000
Loan from Bank		30,000	Stock		19,000
General Reserve		9,000	Sundry Debtor	42,000
Capital A/cs:			Less: Provision for Doubtful Debts	2,000	40,000
P	44,000
Q	36,000		Building		40,000
R	20,000	1,00,000	Plant and Machinery		40,000
		1,79,000			1,79,000

 
The partners dissolved the business. Assets realised − Stock  ` 23,400; Debtor 50%; Fixed Assets 10% less than their book value. Bills Payable were settled for  ` 32,000. There was an Outstanding Bill of Electricity  ` 800 which was paid off. Realisation expenses  ` 1,250 were also paid.
Prepare Realisation Account, Partner's Capital Accounts and Bank Account.

Answer:

Realisation Account
Dr.						Cr.
Particulars			Amount ( `)	Particulars		Amount ( `)
Building			40,000	Provision for Doubtful Debts		2,000
Plant and machinery			40,000	Bills Payable		40,000
Stock			19,000	Loan from Bank		30,000
Sundry Debtor			42,000
Bank A/c:				Bank A/c:
Bills Payable		32,000		Stock	23,400
Outstanding Bill		800		Debtor	21,000
Expenses		1,250		Building	36,000
Loan from Bank		30,000	64,050	Plant and Machinery	36,000	1,16,400
				Loss transferred to:
				P’s Capital A/c	9,250
				Q’s Capital A/c	5,550
				RCapital A/c	1,850	16,650
			2,05,050			2,05,050

 

Partners Capital Accounts
Dr.									Cr.
Particulars		P	Q	R	Particulars	P	Q	R
Realisation A/c (Loss)		9,250	5,550	1,850	Balance b/d	44,000	36,000	20,000
					Reserve Fund	5,000	3,000	1,000
Bank A/c		39,750	33,450	19,150
		49,000	39,000	21,000		49,000	39,000	21,000

 

Bank  Account
Dr.					Cr.
Particulars		Amount ( `)	Particulars	Amount ( `)
Balance b/d		40,000	Realisation A/c	64,050
Realisation A/c		1,16,400	P’s Capital A/c	39,750
			Q’s Capital A/c	33,450
			R’s Capital A/c	19,150
		1,56,400		1,56,400

 

 

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Chapter-8: Dissolution of Partnership Firm | 2021-2022

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