12th | Ts grewal 2021-2022 Question 33 to 36 | Dissolution of a Partnership

Page No 8.58:

Question 33:

A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. On 31st March, 2019, their Balance Sheet was:


 

 

 

Liabilities

Amount
( `)

Assets

Amount
( `)

Bank Overdraft                   

30,000

Cash in Hand

6,000

General Reserve

56,000

Bank Balance

10,000

Investments Fluctuation Reserve           

20,000

Sundry Debtor

26,000

 

A's Loan

34,000

Less: Provision for Doubtful Debtor

2,000

24,000

Capital A/c:

 

                                

 

A

50,000

Investments

40,000

 

 

 

Stock

 

10,000

 

 

Furniture

 

10,000

 

 

Building

 

60,000

 

 

B's Capital

 

30,000

 

1,90,000

 

1,90,000

 

 

 

 


On that date, the partners decide to dissolve the firm. A took over Investments at an agreed valuation of  ` 35,000. Other assets were realised as follows:
Sundry Debtor: Full amount. The firm could realise Stock at 15% less and Furniture at 20% less than the book value. Building was sold at  ` 1,00,000.
Compensation to employees paid by the firm amounted to  ` 10,000. This liability was not provided for in the above Balance Sheet.
You are required to close the books of the firm by preparing Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Realisation Account

Dr.

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Sundry Debtor 

26,000

Provision for Doubtful Debts  

2,000

Investments

40,000

Bank Overdraft

30,000

Stock

10,000

Investments Fluctuation Reserve   

20,000

Furniture

10,000

 

 

Building

60,000

A’s Capital A/c (Investments)

35,000

Bank A/c:

 

Bank A/c:

 

Compensation to
Employees

10,000

 

Sundry Debtor 

26,000

 

Bank Overdraft

30,000

40,000

Stock

8,500

 

Profit transferred to:                  

 

Furniture

8,000

 

A’s Capital A/c

29,000

 

Building

1,00,000

1,42,500

B’s Capital A/c       

14,500

43,500

 

 

 

2,29,500

 

2,29,500

 

 

 

 

 

 

Partners Capital Accounts

Dr.

 

Cr.

Particulars

A

B

Particulars

A

B

Balance b/d

–

30,000

Balance b/d

50,000

–

Realisation A/c (Investment)

35,000

 

General Reserve A/c

37,333

18,667

Bank A/c

81,333

3,167

Realisation A/c (Profit )

29,000

14,500

 

 

 

 

 

 

 

1,16,333

33,167

 

1,16,333

33,167

 

 

 

 

 

 

 

A’s Loan Account 

Dr.

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

 

 

Balance b/d

34,000

Bank A/c

34,000

 

 

 

34,000

 

34,000

 

 

 

 

 

Bank Account   

Dr.

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Balance b/d

10,000

Realisation A/c           

40,000

Cash A/c

6,000

A’s Capital A/c

81,333

Realisation A/c          

1,42,500

B’s Capital A/c

3,167

 

 

A’s Loan  A/c

34,000

 

1,58,500

 

1,58,500

 

 

 

 

 

Page No 8.58:

Question 34:


Ashok, Babu and Chetan are in partnership sharing profit in the proportion of 1/2, 1/3, 1/6 respectively. They dissolve the partnership of the 31st March, 2019 when the Balance Sheet of the firm as under:

 

 

 

Liabilities

Amount
( `)

Assets

Amount
( `)

Sundry Creditors      

20,000

Bank

7,500

Bills Payable

25,500

Sundry Debtor

58,000

Babu's Loan         

30,000

Stock

 

39,500

Capital A/cs:

 

Machinery

48,000

Ashok

70,000

 

Investments

 

42,000

Babu

55,000

 

Freehold Property

 

50,500

Chetan

27,000

1,52,000

 

 

 

Current A/cs:        

       

 

 

 

 

Ashok

10,000

 

 

 

 

Babu

5,000

 

 

 

 

Chetan

3,000

18,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,45,500

 

2,45,500

 

 

 

 


The Machinery was taken over by Babu for  ` 45,000, Ashok took over the Investments for  ` 40,000 and Freehold property took over by Chetan at  ` 55,000. The remaining Assets realised as follows:
Sundry Debtor  ` 56,500 and Stock  ` 36,500. Sundry Creditors  were settled at discount of 7%. A Office computer, not shown in the books of accounts realised  ` 9,000. Realisation expenses amounted to  ` 3,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.

Answer:

Realisation Account

Dr.

 

Cr.

 

Particulars

Amount

( `)

Particulars

Amount

( `)

Sundry Debtor

58,000

Sundry Creditors

20,000

Stock

39,500

Bills Payable

25,500

Machinery

48,000

Ashok’s Current A/c (Investment)

40,000

Investment

42,000

Babu’s Current A/c (Machinery)

45,000

Freehold property

50,500

Chetan’s Current A/c

55,000

Bank:

 

(Freehold property)

 

Sundry Creditors

18,600

 

Bank:

 

Bills Payable

25,500

 

  Sundry Debtor

56,500

 

Expenses

3,000

47,100

  Stock

36,500

 

Realisation Profit

 

  Unrecorded Computer

9,000

1,02,000

Ashok’s Current A/c

1,200

 

 

 

 

Babu’s Current A/c

800

 

 

 

 

Chetan’s Current A/c

400

2,400

 

 

 

 

 

 

 

 

 

 

2,87,500

 

2,87,500

 

 

 

 

 

 

Partners' Current Account

 

Dr.

 

Cr.

 

Particulars

Ashok

Babu

Chetan

Particulars

Ashok

Babu

Chetan

Realisation

40,000

45,000

55,000

Balance b/d

10,000

5,000

3,000

(Assets taken)

 

 

 

Realisation (Profit)

1,200

800

400

 

 

 

 

Ashok's Capital A/c

28,800

 

 

 

 

 

 

Babu's Capital A/c

 

39200

 

 

 

 

 

Chetan's Capital A/c

 

 

51600

 

40,000

45,000

55,000

 

40,000

45,000

55,000

 

 

 

 

 

 

 

 

 

Partners' Capital Account

Dr.

 

Cr.

Particulars

Ashok

Babu

Chetan

Particulars

Ashok

Babu

Chetan

Ashok's Current A/c

28,800

 

 

Balance b/d

70,000

55,000

27,000

Babu's Current A/c

 

39200

 

Bank A/c

 

 

24,600

Chetan's Current A/c

 

 

51600

 

 

 

 

Bank A/c

41,200

15,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70,000

55,000

51,600

 

70,000

55,000

51,600

 

 

 

 

 

 

 

 

 

Babu’s Loan A/c

Dr.

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Bank A/c

30,000

Balance b/d

30,000

 

 

 

 

 

30,000

 

30,000

 

 

 

 

 

Bank Account

 

Dr.

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Balance b/d

7,500

Realisation A/c (Payment of Expenses& Liabilities)

47,100

Realisation A/c (Assets realised)

102,000

and Liabilities)

 

Chetan’s Capital A/c

24,600

Babu’s Loan

30,000

 

 

Ashok’s Capital A/c

41,200

 

 

Babu’s Capital A/c

15,800

 

 

 

 

 

1,34,100

 

1,34,100

 

 

 

 

 

Page No 8.59:

Question 35:


Rita and Sobha are partners in a firm, Fancy Garments Exports, sharing profits and losses equally. On 1st April, 2019, the Balance Sheet of the firm was:

 

 

 

Liabilities

Amount
( `)

Assets

Amount
( `)

Sundry Creditors

75,000

Cash

6,000

Bills Payable

30,000

Bank

30,000

Rita's Loan

15,000

Stock

75,000

Reserve      

24,000

Book Debts

66,000

 

Capital A/cs:    

 

Less: Provision for Doubtful Debts

6,000

60,000

Rita

90,000

 

 

 

 

Sobha

30,000

1,20,000

Plant and Machinery

 

45,000

 

 

Land and Building

48,000

 

 

 

 

 

 

2,64,000

 

2,64,000

 

 

 

 


The firm was dissolved on the date given above. The following transactions took place:
(a) Rita took 25% of the Stock at a discount of 20% in settlement of her loan.
(b) Book Debts realised  ` 54,000; balance of the Stock was sold at a profit of 30% on cost.
(c) Sundry Creditors  were paid out at a discount of 10%. Bills Payable were paid in full .
(d) Plant and Machinery realised  ` 75,000. Land and Building  ` 1,20,000.
(e) Rita took the goodwill of the firm at a value of  ` 30,000.
(f) An unrecorded asset of  ` 6,900 was handed over to an unrecorded liability of  ` 6,000 in full settlement.
(g) Realisation expenses were  ` 5,250.
Show Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.

Answer:

Realisation Account

Dr.

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Stock

75,000

Provision for Doubtful Debts

6,000

Book Debts

66,000

Sundry Creditors

75,000

Plant and Machinery

45,000

Bills Payable

30,000

Land and building

48,000

 

 

 

 

Rita’s Capital A/c

30,000

 

 

(Goodwill taken over)

 

Bank A/c:

 

Rita’s Loan A/c (Stock taken over)

15,000

Sundry Creditors

67,500

 

 

 

Bills Payable

30,000

 

Bank A/c:

 

Expenses

5,250

1,02,750

Book Debts

54,000

 

Profit transferred to:

 

Stock

73,125

 

Rita’s Capital A/c

70,688

 

Plant and Machinery

75,000

 

Sobha’s Capital A/c

70,687

1,41,375

Land and Building

1,20,000

3,22,125

 

4,78,125

 

4,78,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners Capital Accounts

Dr.

 

Cr.

Particulars

Rita

( `)

Sobha

( `)

Particulars

Rita

( `)

Sobha

( `)

Realisation A/c (Assets)

30,000

–

Balance b/d

90,000

30,000

 

 

 

Reserve Fund

12,000

12,000

Bank A/c

1,42,688

1,12,687

Realisation A/c (Profit)

70,688

70,687

 

 

 

 

 

 

 

1,72,688

1,12,687

 

1,72,688

1,12,687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rita’s Loan A/c

Dr.

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

To Realisation A/c

15,000

Balance b/d

15,000

 

 

 

 

 

15,000

 

15,000

 

 

 

 

 

 

 

 

 

Bank Account

Dr.

 

Cr.

Particulars

Amount

( `)

Particulars

Amount

( `)

Balance b/d

30,000

Realisation A/c

1,02,750

Cash A/c

6,000

Rita’s Capital A/c

1,42,688

Realisation A/c

3,22,125

Sobha’s Capital A/c

1,12,687

 

 

 

 

 

3,58,125

 

3,58,125

 

 

 

 

Working Notes:

WN1: Value of Stock Taken Over by Rita

Stock taken over by Rita=Book Value of Stock×25100×80100                       

[Since stock is taken over at a discount of 20%]Stock taken over by Rita=75,000×25100×80100=15,000

WN2: Value of Stock Sold

Book Value of Balance of Stock Sold=Value of Stock - Stock Taken over by RitaBook Value of Balance of Stock Sold

=(75,000 - 18,750)= 56,250

Value of Stock Sold=56,250×130100=73,125  [Sold at 30% Profit]


Page No 8.59:

Question 36:


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

Liabilities

Amount

( `)

Assets

Amount

( `)

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 Fluctuation  Reserve

1,500

Less: Provision for 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.

Answer:

Realisation Account

Dr.

 

Cr.

Particulars

Amount

 `

Particulars

Amount

 `

Stock

7,500

Provision for Doubtful Debts

3,000

Investments

15,000

Trade Creditors

45,000

Book Debts

30,000

Bills Payable

12,000

Building 

22,500

M `. Arvid’s Loan

7,500

Plant

30,000

M `. Balbir’s Loan

15,000

Goodwill

6,000

Investments Fluctuation Reserve

1,500

Arvind’s Capital A/c (M `. Arvind’s Loan)

7,500

Arvind’s Capital A/c (Stock)

6,000

Bank A/c:

 

Balbir’s Capital A/c (Investments 7500 × 90%)

6,750

Trade Creditors

44,925

 

Balbir’s Capital A/c (Unrecorded Typewriter )

450

Bills Payable

11,980

 

Bank A/c:

 

Expense

1,500

 

Book Debts

28,500

 

M `. Balbir’s Loan

15,000

73,405

Plant

37,500

 

Profit transferred to:

 

Building

60,000

 

Arvind’s Capital A/c

23,522.50

 

Goodwill

9,000

 

Balbir’s Capital A/c

23,522.50

47,045

Investments

6,750

1,41,750

 

 

 

 

 

2,38,950

 

2,38,950

 

 

 

 

 

Partners Capital Accounts

Dr.

 

Cr.

Particulars

Arvind

Balbir

Particulars

Arvind

Balbir

Profit and Loss A/c

2,625

2,625

Balance b/d

15,000

15,000

Realisation A/c (Assets)

6,000

7,200

Realisation A/c

7,500

–

Bank A/c

44,897.50

36,197.50

Reserve Fund

7,500

7,500

 

 

 

Realisation A/c (Profit)

23,522.50

23,522.50

 

 

 

 

 

 

 

53,522.50

46,022.50

 

53,522.50

46,022.50

 

 

 

 

 

 

 

                                            Bank Account   

Dr.

 

Cr.

Particulars

Amount

 `

Particulars

Amount

 `

Balance b/d

12,000

Realisation A/c

73,405

Cash A/c

750

Arvind’s Capital A/c

44,897.5

Realisation A/c

1,41,750

Balbir’s Capital A/c

36,197.5

 

 

 

 

 

1,54,500

 

1,54,500

 

 

 

 


Working Notes:
 

Creditors

45,000

Less:2% discount for 1 month

(75)

Payment made to Creditors

44,925

 

 

Bills Payable

12,000

Less: 2% discount for 1 month

(20)

Payment made for Bills Payable

11,980