Q1.

At the time of dissolution of a partnership firm, the book value of sundry assets transferred
to Realisation Account was Rs.2,00,000. 50% of these sundry assets were taken by partner
A at 20% discount, 40% of remaining assets were sold at a profit of 30% on cost. 5% of
the balance was found obsolete and realised nothing. The remaining assets were taken over
by a creditor in full settlement of his claim.
Pass necessary journal entries for the above.

Q2. Michael, Jackson and John were partners in a firm sharing profits in the ratio of 3 : 1 : 1.
On 31st March, 2017, they decided to dissolve their firm. On that date their Balance Sheet
was as follows :

Balance Sheet of Michael, Jackson and John as at 31.3.2017

Liabilities Amount Assets Amount

Creditors 11,500 Bank 6,000
Loan 3,500 Debtors 48,400
Capital Less: Provision for D.D 46,000
2,400
Michael 50,000 Stock In Trade 16,000
Jackson 25,000 Furniture 2,000
John 14,000 89,000 Sundry assets 34,000
1,04,000 1,04,000

It was agreed that :

(i) Michael was to take over Furniture at Rs.2,600 and Debtors amounting to Rs.40,000 at
Rs.34,400 and the Creditors of Rs.10,000 were to be paid by him at this figure.

(ii) Jackson was to take over all the stock in trade at Rs.14,000 and some of the other Sundry
Assets at Rs.28,800 (being 10% less than book value).

(iii) John was to take over the remaining Sundry Assets at 90% of the book value and assumed
the responsibility for the discharge of the loan.

(iv) The remaining debtors were sold to a debt collecting agency for 50% of the book value.
The expenses of dissolution Rs.600 were paid by John.
Prepare Realisation Account, Bank Account and Partners’ Capital
Accounts.

Q3. Varun and Arun are partners in a firm sharing profits and losses equally. On the date of
dissolution of the partnership firm, Varun’s wife’s loan was Rs.45,000, whereas Arun’s
loan was Rs.65,000. Which loan will be paid first and why ?

Q4. Adiraj and Karan were partners in a firm sharing profits and losses in the ratio 3 : 2. On
31st March, 2018 the firm was dissolved. After the transfer of assets (other than cash in
 hand and at bank) and third party liabilities to the Realization Account, the following
information was provided :
(i) Furniture of Rs.70,000 was sold for Rs.68,000 by auction and auctioneer’s
commission amounted to Rs.2,000.

(ii) Adiraj’s loan amounting to Rs.35,000 was paid.

(iii) Out of the stock of Rs.80,000, Karan took over 50% of the stock at a discount of 20% while
the remaining stock was sold off at a profit of 30% on cost.
(iv) A bills receivable of Rs.3,000 under discount was dishonoured as the acceptor had become
insolvent and hence the bill had to be met by the firm.
(v) Profit and Loss Account showed a debit balance of Rs.56,000.
(vi) Realization expenses amounted to Rs.2,000 which were paid by Adiraj.

Pass the necessary journal entries for the above transactions on thedissolution of the firm.

Q5. Ankit, Bobby and Kartik were partners in a firm sharing profits in the ratio 4 : 3 : 3. The
firm was dissolved on 31-3-2018. Pass the necessary Journal entries for the
following transactions after various assets (other than cash and bank) and third party
liabilities had been transferred to Realisation Account :

(i) The firm had stock of Rs.80,000. Ankit took over 50% of the stock at a discount of 20%
while the remaining stock was sold off at a profit of 30% on cost.

(ii) A liability under a suit for damages included in creditors was settled at Rs.32,000 as
against only Rs.13,000 provided in the books. Total creditors of the firm were Rs.50,000.

(iii) Bobby’s sister’s loan of Rs.20,000 was paid off along with interest of Rs.2,000.

(iv) Kartik’s Loan of Rs.12,000 was settled at Rs.12,500.

Q6. Pass the necessary journal entry for treatment of Partner’s loan appearing on the asset
side of the Balance Sheet in case of dissolution of a partnership firm.

Q7. Ashish and Kanav were partners in a 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 31st March, 2018

Liabilities Amount Assets Amount
Trade Creditors 42,000 Bank 35,000
Employees’ P.F 60,000 Stock 24,000
Mrs. Ashish Loan 9,000 Debtors 19,000
Kanav’s Loan 35,0000 Furniture 40,00
Workmen’s Compensation Fund 20,000 Plant 2,10,000
 Investment Fluctuation Reserve 4,000 Investments 32,000
Capital: Profit and Loss 10,000
Account
Ashish 1,20,000
Kanav 80,000 2,00,000
3,70,000 3,70,000

On the above date they decided to dissolve the firm.

(i) Ashish agreed to take over furniture at Rs.38,000 and pay off Mrs. Ashish’s loan.

(ii) Debtors realised Rs.18,500 and plant realised 10% more.

(iii) Kanav took over 40% of the stock at 20% less than the book value. Remaining stock was
sold at a gain of 10%.

(iv) Trade creditors took over investments in full settlement.

(v) Kanav agreed to take over the responsibility of completing dissolution at an agreed
remuneration of Rs.12,000 and to bear realization expenses. Actual expenses of realization
amounted to Rs.8,000.
Prepare Realisation Account.

Q8. State any two grounds on the basis of which court may order for the dissolution of
partnership firm

Q9. A, B and C were partners sharing profits and losses in the ratio of 2 : 2 : 1. Their Balance
Sheet as at 31st March, 2018 was as follows :

Balance Sheet of A, B and C as at 31st March, 2018

Liabilities Amount Assets Amount

Capital: Cash at Bank 3,00,000
A 7,50,000 Sundry Debtors 1,95,000
B 3,00,000 Less: Provision for B.D 5,00,000 1,90,000
C 2,50,000 13,00,000 Stock 3,00,000
Creditors 2,00,000 Fixed Assets 7,10,000
15,00,000 15,00,000

On the above date they dissolved the firm and following amounts were realised : Fixed
Assets Rs.6,75,000; Stock Rs.3,39,000; Debtors Rs.1,35,000; Creditors were paid
Rs.1,85,000 in full settlement of their claim. Expenses on Realisation amounted to
Rs.19,000.
Pass the necessary journal entries on the dissolution of the firm.
Q10. Shirish, Harit and Asha were partners in a firm sharing profits in the ratio of 5 : 4 : 1.
Shirish died on 30th June, 2018. On this date their Balance Sheet was as follows :

Balance Sheet of Shirish, Harit and Asha as at 31st March, 2018

Liabilities Amount Assets Amount

Capital: Plant And 5,60,000
Machinery
Shirish 1,00,000 Stock 90,000
Harit 2,00,000 Debtors 10,000
Asha 3,00,000 6,00,000 Cash 40,000
Profits for the year
2017 – 18 80,000
Bills Payable 20,000
7,00,000 7,00,000

According to the partnership deed, in addition to deceased partner’s capital, his executor is
entitled to :

(i) Share in profits in the year of death on the basis of average of last two years’ profit. Profit
for the year 2016 – 17 was Rs.60,000.

(ii) Goodwill of the firm was to be valued at 2 years’ purchase of average of last two years’
profits.
Prepare Shirish’s Capital Account to be presented to his executor.

Q11. Giriija, Yatin and Zubin were partners sharing profits in the ratio 5 : 3 : 2. Zubin died on
1st August, 2015. Amount due to Zubin’s executor after all adjustments was Rs.90,300.
The executor was paid Rs.10,300 in cash immediately and the balance in two equal annual
instalments with interest @ 6% p.a. starting from 31st March, 2017. Accounts are closed
on 31st March each year.
Prepare Zubin’s Executors Account till he is finally paid.

Q12. Dinkar, Navita and Vani were partners sharing profits and losses in the ratio of 3 : 2 : 1.
Navita died on 30th June, 2017. Her share of profit for the intervening period was based
on the sales during that period, which were Rs.6,00,000. The rate of profit during the past
four years had been 10% on sales. The firm closes its books on 31st March every year.
Calculate Navita’s share of profit.

Q13. Meera, Sarthak and Rohit were partners sharing profits in the ratio of 2 : 2 : 1. On 31
March, 2018, their Balance Sheet was as follows :
 Balance Sheet of Meera, Sarthak and Rohit as at 31 March, 2018

Liabilities Amount Assets Amount

Creditors 3,00,000 Fixed Assets 7,00,000
Contingency Reserve 1,00,000 Stock 2,00,000
Capital : Debtors 1,50,000
Meers 4,00,000 Cash at bank 3,50,000
Sarthak 3,50,000
Rohit 2,50,000
14,00,000 14,00,000

Sarthak died on 15th June, 2018. According to the partnership deed, his executors were
entitled to :
(i) Balance in his Capital Account.
(ii) His share of goodwill will be calculated on the basis of thrice the average of the past 4
years’ profits.
(iii) His share in profits up to the date of death on the basis of average profits of the last two
years. The time period for which he survived in the year of death will be calculated in
months.
(iv) Interest on capital @ 12% p.a. up to the date of his death.

The firm’s profits for the last four years were :

2014 – 15 Rs.1,20,000, 2015 – 16 Rs.2,00,000, 2016 – 17 Rs.2,60,000 and
2017 – 18 Rs.2,20,000.
Sarthak’s executors were paid the amount due immediately. Prepare
Sarthak’s Capital Account to be presented to his executors.

Q14. Ashish and Kanav were partners in a 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 31st March, 2018

Liabilities Amount Assets Amount
Trade Creditors 42,000 Bank 35,000
Employees’ P.F 60,000 Stock 24,000
Mrs. Ashish Loan 9,000 Debtors 19,000
Kanav’s Loan 35,0000 Furniture 40,00
Workmen’s Compensation Fund 20,000 Plant 2,10,000
Investment Fluctuation Reserve 4,000 Investments 32,000
Capital: Profit and Loss 10,000
Account
Ashish 1,20,000
Kanav 80,000 2,00,000
3,70,000 3,70,000
 On the above date they decided to dissolve the firm.
(i) Ashish agreed to take over furniture at Rs.38,000 and pay off Mrs. Ashish’s loan.

(ii) Debtors realised Rs.18,500 and plant realised 10% more.

(iii) Kanav took over 40% of the stock at 20% less than the book value. Remaining stock was
sold at a gain of 10%.

(iv) Trade creditors took over investments in full settlement.

(v) Kanav agreed to take over the responsibility of completing dissolution at an agreed
remuneration of Rs.12,000 and to bear realization expenses. Actual expenses of realization
amounted to Rs.8,000.
Prepare Realisation Account.

Q15. The firm of Manjeet, Sujeet and Jagjeet was dissolved on 31st March, 2018. It was agreed
that Sujeet will take care of the dissolution related activities and will get 10% of the value
of assets realised. Sujeet agreed to bear the realisation expenses. Assets realised
Rs.10,00,750 and realisation expenses were Rs.90,000, which were paid from the firm’s
cash. Rs.4,50,000 were paid to the creditors in full settlement of their claim.
Pass necessary journal entries for the above transactions in the books of the firm.