PARTNERSHIP DISSOLUTION PRACTICE QUESTIONS

1. Pass necessary journal entries for the following transactions on the dissolution of the firm of Paresh and Ramesh
after assets (other than cash) and outside liabilities have been transferred to Realisation Account
(1) Stock of ₹ 2,00,000. P took over 50%of stock at a discount of 10%. Remaining stock was sold at profit of 25% on
cost.
(2) Land and building (book value. ₹ 12,50,000) sold for ₹ 15,00,000
(3) Realisation expenses ₹5,000 paid by the firm on behalf of partner Q
2. What Journal Entries Would be passed for the following transactions on the dissolution of a firm, after various assets
(other than cash) and third parties’ liabilities have been transferred to Realisation Account?
(i) A took over the Stock worth ₹ 80,000.
(ii) Firm paid ₹ 40,000 as Compensation Employees.
(iii) Sundry Creditors amounted to ₹ 36,000 which was settled at a discount of 15%.
(iv) There was an Unrecorded Bike of ₹ 40,000 which was taken over by B at ₹ 30,000.
(v) Bills payable ₹ 5,000.
(vi) Profit on Realisation of ₹ 42,000 was to be distributed between A and B in the the ratio of4:3.
3. A and B are partners sharing profits and losses equally. They decided to dissolve their firm. Assets and Liabilities have
been transferred to Realisation Account. Pass necessary Journal entries for the following.
a) A was to bear all the expenses of Realisation for which he was given a commission of ₹ 4000.
b) Advertisement suspense account appeared on the asset side of the Balance sheet amounting ₹ 28000
c) Creditors of ₹ 40,000 agreed to take over the stock of ₹ 30,000 at a discount of 10% and the balance in cash.
d) B agreed to take over Investments of ₹ 5000 at ₹ 4900
e) Loan of ₹ 15000 advanced by A to the firm was paid off.
f) Bank loan of ₹ 12000 was paid off.
4. Following is the Balance sheet of X and Y who share profits in the ratio of 4:1 as on 31st march 2010

Balance Sheet
Liabilities Amount Assets Amount
Sundry Creditors 8,000 Bank 20,000
Debtors 17,000
Bank Overdraft 6,000 Less: Provision (2,000) 15,000
X's Brother's loan 8,000 Stock 15,000
Y's loan 3,000 Investments 25,000
Investment Fluctuation Fund 5,000 Building 25,000
Capitals:
X 50,000
Y 40,000 90,000 Goodwill 10,000
Profit and loss a/c 10,000
1,20,000 1,20,000

The firm was dissolved on the above date and the following was decided—
a) X agreed to pay off his brother’s loan
b) Debtors of ₹ 5000 proved bad.
c) Other assets realized as follows—Investments 20% less, and Goodwill at 60%.
d) One of the creditors for ₹ 5000 was paid only ₹ 3000.
e) Building was auctioned for ₹ 30,000 and the auctioneer’s commission amounted to ₹ 1000.
f) Y took over part of the stock at ₹ 4000(being 20% less than the book value) Balance stock realized 50%
g) Realisation expenses amounted to ₹ 2000.
Prepare Realisation account, Partners capital accounts and Bank account.
5. Anun, Anupama and Vanraj were partners in a firm sharing profits and losses in the ratio of 2:2:1. On 31-3-2022 their
balance sheet was as follows:

Balance Sheet
Liabilities Amount Assets Amount
Creditors 50,000 Cash 60,000
Bank loan 35,000 Debtors 75,000
 Provident fund 15,000 Stock 40,000
Investment fluctuation fund 10,000 Investments 20,000
Commission received in advance 8,000 Plant 50,000
Capitals:
Anuj 50,000
Anupama 50,000
Vanraj 30,000 1,30,000 Profit and loss a/c 3,000
2,48,000 2,48,000

On this date the firm was dissolved.

1. Anuj was appointed to realize the assets. Anuj was to receive a commission on the sale of assets (except cash) and
was to bear all expenses of realization. Anuj realized the assets as follows:
Debtors: ₹ 60,000, Stock: ₹ 35,500, Investments: ₹ 16,000, Plant-90% of the book value.
2. Expenses of realization amounted to ₹ 7,500, commission received in advance was returned to the customers
after deducting ₹ 3,000.
Firm had to pay ₹ 8,500 for outstanding alary not provided for, earlier.
3. Compensation paid to employees amounted to ₹ 17,000. This liability was not provided for in the above balance
sheet.
4. ₹ 20,000 had to be paid for provident fund.
Prepare Realization Account and Partners’ Capital Account.
6. A , B and C are partners in a firm sharing profits in the ratio of 2:1:1. Their balance sheet as on 31st March 2022 was
as follows:

Balance Sheet
Liabilities Amount Assets Amount
Creditors 1,00,000 Goodwill 60,000
Capitals: Land and building 1,60,000
A 1,60,000 Plant and machinery 1,12,000
B 1,60,000 Car 1,08,000
C 1,20,000 4,40,000 Debtors 96,000
Cash 4,000
5,40,000 5,40,000

The firm was dissolved and the assets realized:

Goodwill ₹ 40,000
Land and Building ₹2,00,000
Plant and Machinery ₹1,00,000
Car ₹ 56,000
Debtors 50% of their book value
Realization expenses ₹ 4,000
Prepare realization account, partner’s capital accounts and cash account

7. following is the balance sheet of Virat and Yogi as on 31st March , 2022
Balance Sheet
Liabilities Amount Assets Amount
Creditors 3,60,000 Bank 80,000
Mrs. Virat’s loan 60,000 Stock 70,000
Yogi’s loan 1,00,000 Investments 1,00,000
Investment fluctuation fund 30,000 Debtors 2,00,000
Capitals: Less: Provision (20,000) 1,80,000
Virat 2,00,000 Fixed Assets 3,80,000
Yogi 1,00,000 3,00,000 Profit and loss A/c 40,000
8,50,000 8,50,000
 The firm was dissolved on 31st March 2022. The assets were realized and the liabilities were paid as under:
1. Virat promised to pay off Mrs. Virat’s loan and took away stock at 20% discount
2. Yogi took away 90% of the investments at 10% discount
3. Sunil, a debtor of ₹ 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.
4. Creditors were paid ₹ 3,50,000 in full settlement of their claim.
5. Fixed assets realized ₹ 2,82,000 and remaining investment realized ₹ 7,500
6. There was an old furniture which has been written off completely from the books. Yogi took away the same for ₹
4,000
7. Realization expenses ₹ 2,000 were paid by Virat.
Prepare Realisation Account, bank account and partners’ capital accounts
8. J, K and L were partners in a firm sharing profits in the ratio of 4 : 5 : 1. On 31st March, 2018 their firm was dissolved.
On this date the, balance sheet showed a balance of ₹ 1,34,000 in debtors account and a balance of ₹ 14,000 in
provision for bad debts account. Both the accounts were closed by transferring their balances to realisation account.
₹ 4,000 of the debtors became bad and nothing could be realised from them on dissolution. K agreed to look after
the dissolution work for which he was allowed a remuneration of 116,000. K also agreed to bear dissolution
expenses for which he was allowed a lumpsum payment of ₹ 4,000. Actual dissolution expenses were ₹ 6,500 and
the same were paid from the firm’s cash. Less on dissolution amounted to ₹ 37,000.
Pass necessary journal entries for the above transactions in the books of tlie firm on its dissolution.
9. 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 ₹ 10,00,750 and realisation expensed were ₹ 90,000, which were paid from the
firm’s cash. ₹ 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.
10. Jain, Sharma and Verma were partners in a firm sharing profits in the ratio of 1 : 2 : 1. On 31st March, 2018 their firm
was dissolved. It was agreed that Sharma will look after the dissolution work and will be paid ₹ 15,000 as
remuneration. The dissolution expenses were ₹ 5,000. ₹ 2,84,000 were paid to the creditors in full settlement of
their claim of ₹ 3,00,000. Dissolution of the firm resulted into a loss of ₹ 18,000. Pass necessary journal entries for
the above transactions.
11. Ravi, Shankar and Madhur were partner in a firm sharing profits in the ratio of 7 : 2 : 1. On 31st March, 2018, the
firm was dissolved, after transferring sundry assets (other than cash in hand and cash at bank) and third party
liabilities in the realisation accounts the following transactions took place
(i) Debtors amounting to ₹ 1,40,000 were handed over to a debt collection agency which charged 5% commision. The
remaining debtors were ₹ 47,000 out of which debtors of ₹ 17,000 could not be recovered because the same
become insolvent.
(ii) Creditors amounting to ₹ 5,000 were paid ₹ 3,500 in full settlement of their claim and balance creditors were
handed over stock of ₹ 90,000 in full settlement of their claim of ₹ 95,000.
(iii) A bills receivable ₹ 2,000 discounted with the bank was dishonoured by its acceptor and the same had to be met
by the firm.
(iv) Profit on realisation amounted to ₹ 6,000. Pass necessary journal entries for the above transactions in the books
of Ravi, Shankar and Madhur.
12. Gaurav, Saurabh and Vaibhav were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. They decided
to dissolve the firm on 31st March, 2018. After transferring sundry assets (other than cash in hand and cash at bank)
and third party liabilities to realisation account, the assets were realised and liabilities were paid-off as follows
(i) A machinery with a book value of ₹ 6,00,000 was taken over by Gaurav at 50% and stock worth ₹ 5,000 was taken
over by a creditor of ₹ 9,000 in full settlement of his claim.
(ii) Land and building (book value ₹ 3,00,000) was sold for ₹ 4,00,000 through a broker who charged 2% commission.
(iii) The remaining creditors were paid ₹ 76,000 in full settlement of their claim and the remaining assets were taken
over by Vaibhav for ₹ 17,000.
(iv) Bank loan of? 3,00,000 was paid alongwith interest of ₹ 21,000.
Pass necessary journal entries for the above transactions in the books of the firm.
13. 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 ₹ 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 ₹ 32,000 as against only ₹ 13,000 provided
in the books. Total creditors of the firm were ₹ 50,000.
(iii) Bobby’s sister’s loan of ₹ 20,000 was paid-off alongwith interest of ₹ 2,000.
(iv) Kartik’s loan of ₹ 12,000 was settled at ₹ 12.500.
14. 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
Liabilities Amount Assets Amount
Capital A/Cs Cash at bank 3,00,000
A 7,50,000 Debtors 1,95,000
B 3,00,000 Less: Provision (5,000) 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 ₹ 6,75,000; Stock ₹ 3,39,000; Debtors ₹ 1,35,000; Creditors were paid ₹ 1,85,000 in full settlement of
their claim. Expanses on realisation amounted to ₹ 19,000.
Pass the necessary journal entries on the dissolution of the firm.
15. 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
Liabilities Amount Assets Amount
Trade creditors 42,000 Bank 35,000
Employees Provident Fund 60,000 Stock 24,000
Mrs.Ashish's loan 90,000 Debtors 19,000
Kanav's loan 35,000 Furniture 40,000
Workmen's compensation fund 20,000 Plant 2,10,000
Investment fluctuation reserve 4,000 Investments 32,000
Capitals Profit and loss A/c 10,000
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 funriture at ₹ 38,000 and pay-off Mrs Ashish’s loan.
(ii) Debtors realised ₹ 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 ₹ 12,000 and
to bear realisation expenses. Actual expenses of realisation amounted to ₹ 8,000.
Prepare realisation account.
16. Pass necessary journal entries on the dissolution of a partnership firm in the following cases
(i) Dissolution expenses were ₹ 800.
(ii) Dissolution expenses ₹ 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
₹ 10,000. Geeta agreed to bear the dissolution expenses. Actual dissolution expenses ₹ 9,500 were paid by Geeta.
(iv) Janki, a partner, agreed to look after the dissolution work for a commission of ₹ 5,000. Janki agreed to bear the
dissolution expenses. Actual dissolution expenses ₹ 5,500 were paid by Mohan, another partner, on behalf of Janki.
 (v) A partner, Kavita, agreed to look after the dissolution process for a commission of ₹ 9,000. She also agreed to
bear the dissolution expenses. Kavita took over furniture of ₹ 9,000 for her commission. Furniture had already been
transferred to realisation account.
(vi) A debtor, Ravinder, for ₹ 19,000 agreed to pay the dissolution expenses which were ₹ 18,000 in full settlement of
his debt.
17. Pass necessary journal entries on the dissolution of a partnership firm in the following cases
(i) L, a partner, was appointed to look after the dissolution process for which he was given a remuneration of ₹
10,000.
(ii) Dissolution expenses ₹ 8,000 were paid by the partner M.
(iii) Dissolution expenses were ₹ 5,000.
(iv) P, a partner, was appointed to look after the process of dissolution for which he was allowed a remuneration of ₹
7,000. P agreed to bear the dissolution expenses. Actual dissolution expenses ₹ 4,000 were paid by P.
(v) N, a partner, was appointed to look after the process of dissolution for which he was allowed a remuneration of ₹
9,000. N agreed to bear the dissolution expenses. Actual dissolution expenses ₹ 4,000 were paid by the firm.
(vi) Q, a partner, was appointed to look after the process of dissolution for which he was allowed a remuneration of
₹ 18,000. Q agreed to take over stock worth ₹ 18,000 as his remuneration. The stock had already been transferred to
realisation account.
18. Lal and Pal were partners in a firm sharing profits in the ratio of 3 : 7. On 1st April, 2015, their firm was dissolved.
After transferring assets (other than cash) and outsider’s liabilities to realisation account, you are given the following
information.
(i) A creditor of ₹ 3,60,000 accepted machinery valued at ₹ 5,00,000 and paid to the firm ₹ 1,40,000.
(ii) A second creditor for ₹ 50,000 accepted stock at ₹ 45,000 in full settlement of his claim.
(iii) A third creditor amounting to ₹ 90,000 accepted ₹ 45,000 in cash and investments worth ₹ 43,000 in full
settlement of his claim.
(iv) Loss on dissolution was ₹ 15,000.
Pass necessary journal entries for the above transactions in the books of firm assuming that all payments were made
by cheque.
19. L and M were partners in a firm sharing profits in the ratio of 2 : 3. On 28th February, 2016, the firm was dissolved.
After transferring assets (other than cash) and outsiders’ liabilities to realisation account you are given the following
information.
(i) A creditor for ₹ 1,40,000 accepted building valued at ₹ 1,80,000 and paid to the firm ₹ 40,000.
(ii) A second creditor for ₹ 30,000 accepted machinery valued at ₹ 28,000 in full settlement of his claim.
(iii) A third creditor amounting to ₹ 70,000 accepted ₹ 30,000 in cash and investments of the book value of ₹ 45,000
in full settlement of his claim.
(iv) Loss on dissolution was ₹ 4,000.
Pass necessary journal entries for the above transactions in the books of the firm assuming that all payments were
made by cheque.
20. Bhuvan, Suraj and Ibrahim were partners in a firm sharing profits in the ratio of 3 : 2 : 1. On 30th June, 2014, they
decided to dissolve the firm. Following was the balance sheet of the firm on that date.

Balance Sheet
Liabilities Amount Assets Amount
Creditors 50,400 Cash 13,700
Investment fluctuation fund 10,000 Stock 20,100
Reserve fund 12,000 Debtors 62,600
Capitals Investments 16,000
Bhuvan 30,000 Furniture 20,000
Suraj 20,000
Ibrahim 10,000 60,000
1,32,400 1,32,400

The assets were realised and the liabilities were paid-off as follows
(i) Investments were taken over by Bhuvan for ₹ 18,000.
(ii) Stock was taken over by Suraj for ₹ 17,500 and furniture was taken over by Ibrahim at book value.
(iii) ₹ 60,500 were realised from the debtors.
 (iv) Creditors were settled in full and realisation expenses were ₹ 4,500.
Prepare realisation account, cash account and partners’ capital accounts.
21. Parth and Shivika were partners in a firm sharing profits in the ratio of 3 : 2. The balance sheet of the firm on 31st
March, 2014, was as follows

Balance Sheet
Liabilities Amount Assets Amount
Sundry Creditors 50,400 Bank 1,72,000
Shivika's sister's loan 10,000 Debtors 27,000
Capitals Stock 50,000
Parth 1,75,000 Furniture 2,20,000
Shivika 1,94,000 3,69,000
4,69,000 4,69,000
On the above date, the firm was dissolved. The assets were realised and the liabilities were paid-off as follows

(i) 50% of the furniture was taken over by Parth at 20% less than book value. The remaining furniture was sold for
₹ 1,05,000.

(ii) Debtors realised ₹ 26,000.

(iii) Stock was taken over by Shivika for ₹ 29,000.

(iv) Shivika’s sister’s loan was paid-off alongwith an interest of ₹ 2,000.

(v) Expenses on realisation amounted to ₹ 5,000.

Prepare realisation account, partners’ capital accounts and bank account.

22. Shanti and Satya were partners in a firm sharing profits in the ratio of 4 : 1. On 31st March, 2013, their balance sheet
was as follows

Balance Sheet
Liabilities Amount Assets Amount
Creditors 45,000 Bank 55,000
Workmen's Compensation fund 40,000 Debtors 60,000
Satya's Current A/c 65,000 Stock 85,000
Capitals Furniture 1,00,000
Shanti 2,00,000 Machinery 1,30,000
Satya 1,00,000 3,00,000 Shanti's Current A/c 20,000
4,50,000 4,50,000

On the above date, the firm was dissolved

(i) Shanti took over 40% of the stock at 10% less than its book value and the remaining stock was sold for ₹ 40,000.
Furniture realised ₹ 80,000.
(ii) All unrecorded investment was sold for ₹ 20,000. Machinery was sold at a loss of ₹ 60,000.
(iii) Debtors realised ₹ 55,000.
(iv) There was an outstanding bill for repairs for which ₹ 19,000 were paid.
Prepare realisation account.