CBSE Class 12 Accountancy Dissolution of Partnership Firm Assignment

OBJECTIVE QUESTIONS 1 Mark Each

Stand Alone MCQs

Question. On the basis of the following data, how much final payment will be made to a partner on firm’s dissolution?
Credit balance of capital account of the partner was Rs 50,000. Share of loss on realisation
amounted to Rs 10,000. Firm’s liability taken over by him was for Rs 8,000.
(A) Rs 32,000
(B) Rs 48,000
(C) Rs 40,000
(D) Rs 52,000

Answer: B

Question. The account which is prepared on dissolution of a partnership firm :
(A) Revaluation Account
(B) Realisation Account
(C) P & L Appropriation Account
(D) None of the above

Answer: B

Question. On dissolution of a firm, a liability taken over by a partner is credited to :
(A) Realisation Account
(B) Profit and Loss Account
(C) Partner’s Capital Account
(D) None of the above 
Answer: C

Question. Unrecorded liability when paid on dissolution of a firm is transferred to :
(A) Realisation Account
(B) Partners’ Capital Accounts
(C) Liability Account
(D) None of the above 

Answer: A

Question. General Reserve appearing in the Balance Sheet is transferred to :
(A) Realisation Account
(B) Partners’ Capital Accounts in their profit sharing ratio
(C) Partners’ Capital Accounts in capital ratio
(D) None of the above 

Answer: B

Question. Pick the odd one out :
(A) Fixed assets
(B) Partner’s loan
(C) Partner’s brother’s loan
(D) Creditors 

Answer: B

Question. Pick the odd one out :
(A) Debtors
(B) Payment of liabilities
(C) Provision for doubtful debts
(D) Fixed assets 

Answer: C

Question. What Journal Entry will be passed on dissolution of partnership firm, when creditors of Rs 40,000 accepted investments of Rs 50,000 (Book value)?
(A) Creditors A/c Dr. 40,000
To Realisation A/c 40,000
(B) Realisation A/c Dr. 40,000
To Creditors A/c 40,000
(C) Creditors A/c Dr. 50,000
To Investments A/c 50,000
(D) No Entry A

Answer: D

Assertion and Reason Based MCQs

Question. Assertion (A): Dissolution of partnership is different from the dissolution of the partnership firm.
Reason (R): Dissolution of partnership does not mean the dissolution of the firm compulsorily but in case of dissolution, the business of the firm is compulsorily comes to an end. 

Answer: A

Question. Assertion (A): Realisation Account is prepared at the time of dissolution of the partnership firm.
Reason (R): Dissolution of partnership firm involves the partners selling the assets and settling the liabilities. Thus, various amounts are recovered or paid to partners. 

Answer: A

Question. Assertion (A): Rajiv and Vinod, who share the profits and losses in the ratio 2:3, are dissolving the firm. There is general reserve in the balance of Rs60,000 in the balance sheet. The accountant transferred Rs24,000 in Rajiv’s Capital and Rs 36,000 in Vinod’s Capital Accounts.
Reason (R): The undistributed profits and losses and reserves are always transferred to partners’ capital accounts in their profit sharing ratio and not to the realisation account. 

Answer: A

Case-based MCQs

I. Read the following information and answer the given questions:

Vibhuti, Tiwari and Happu were partners in a partnership firm sharing profits and losses in their capital ratio, i.e., 1 : 2 : 3. On 31st March, 2020, they decided to dissolve the partnership firm. The following information is given to you on the dissolution of the firm:
The firm had total assets of Rs 12,00,000 that realized Rs 10,80,000. The creditors were settled at 90% by paying them Rs 54,000. There was an unrecorded asset in the books of the firm which was taken by Vibhuti for Rs 12,000. Realisation expenses amounted to Rs 2,000 and were paid by Tiwari on behalf of the firm. There was general reserve in the books of the company of Rs 21,000. The capitals of the partners were in the proportion of their profit sharing ratio. Their balance sheet also showed a cash balance of Rs 81,000.

Question. What was the capital of Tiwari before the dissolution of the firm?
(A) Rs2,00,000
(B) Rs 4,00,000
(C) Rs 6,00,000
(D) Rs 8,00,000

Answer: B

Question. What was the loss on realization?
(A) Rs 2,00,000
(B) Rs 1,47,000
(C) Rs 1,37,000
(D) Rs 1,16,000

Answer: D

Question. __________ account will be debited for the treatment of unrecorded asset given in case study.
(A) Vibhuti’s Capital
(B) Tiwari’s Capital
(C) Happu’s Capital
(D) None of the above

Answer: A

Question. What will be the final amount to be paid to Happu?
(A) Rs6,05,000
(B) Rs52,000
(C) Rs5,52,500
(D) Rs6,08,500

Answer: C

II. Read the following information and answer the questions that follow:

Raina and Meena were partners in a firm sharing profits and losses equally. They dissolved their firm on 31st March, 2018.
On this date, the Balance Sheet of the firm,apart from realizable assets and outside liabilities showed the following:
                                                         Rs
Raina's Capital                                40,000 (Cr.)
Meena's Capital                              20,000 (Dr.)
Profit & Loss Account                      10,000 (Dr.)
Raina’s loan to the firm                   15,000
Contingency Reserve                      7,000
On the date of dissolution of the firm:
(i) Raina’s loan was repaid by the firm along with interest of Rs 500.
(ii) The dissolution expenses of Rs 1,000 were paid by the firm on behalf of Raina who had to bear these expenses.
(iii) An unrecorded asset of Rs 2,000 was taken over by Meena while Raina discharged an unrecorded liability of Rs 3,000.
(iv) The dissolution resulted in a loss of Rs 60,000 from the realization of assets and settlement of liabilities.

Question. The amount of Profit and Loss Account to be transferred to the Partner’s Capital Account is:
(A) Rs5,000 each
(B) Rs6,000 Raina and Rs4,000 Meena
(C) Rs4,000 Raina and Rs6,000 Meena
(D) Insufficient data

Answer: A

Question. The contingency fund will be debited or credited to which account?
(A) Partners’ Capital Account
(B) Realisation Account
(C) Profit and Loss Account
(D) None of the above

Answer: A

Question. The unrecorded asset taken by Meena will be:
(A) Debited to Meena’s Capital Account
(B) Credited to Realisation Account
(C) Both (A) and (B)
(D) In the balance sheet

Answer: C

Question. How much loan amount will be paid to the Raina?
(A) Rs15,000
(B) Rs15,500
(C) Rs500
(D) None of the above

Answer. B

III. Read the following information and answer the questions that follows:

Mehta and Menon were partners in a firm sharing profits and losses in the ratio of 7 : 3. They decided to dissolve the firm on 31st March, 2016. On that date, their books showed the following ledger account balances :
                                         Rs
Sundry Creditors               27,000
Profit & Loss A/c (Dr.)         8,000
Cash in hand                     6,000
Bank Loan                         20,000
Bills Payable                      5,000
Sundry Assets                  1,98,000
Capital A/cs :
Mehta 1,12,000
Menon 48,000
Additional information :
(i) Bills payable falling due on 31st May, 2016 retired on the date of dissolution of the firm at a rebate of 6% per annum.
(ii) The bankers accepted the furniture (included in sundry assets) having a book value of Rs18,000 in full settlement of the loan given by them.
(iii) Remaining assets were sold for Rs 1,50,000.
(iv) Liability on account of outstanding salary not recorded in the books, amounting to Rs 15,000 was met.
(v) Menon agreed to take over the responsibility of completing the dissolution work to bear all expenses of realization at an agreed remuneration of Rs 2,000. The actual realization expenses were Rs 1,500 which were paid by the firm on behalf of Menon.

Question. The amount of bills payable paid is:
(A) Rs5,000
(B) Rs4,950
(C) Rs4,500
(D) Rs5,150

Answer: B

Question. The loss on the realisation transferred to Menon’s Capital Account is:
(A) Rs31,465
(B) Rs13,485
(C) Rs44,950
(D) Rs15,000

Answer: B

Question. What will be the amount of profit and loss balance transferred to Mehta’s Account?
(A) Rs5,600
(B) Rs 2,400
(C) Rs 2,500
(D) Rs5,000

Answer: A

Question. Consider the following Accounts:
(i) Mehta’s Capital Account
(ii) Menon’s Capital Account
(iii) Realisation Account
(iv) Profit and Loss Account
Which account will be affected by the realisation expenses paid by Menon?
(A) (i) only
(B) (ii) and (iii)
(C) (i) and (iii)
(D) (i), (ii) and (iii)

Answer: B

Very Short Answer Type Questions

Question. In case of dissolution of a firm, which item on the liabilities side is to be paid first ?
Answer: Outsider’s liability or debts from third parties.

Question. In case of dissolution of a firm, which item on the liabilities side is to be paid last ?
Answer: Partners’ capital

Question. Name the liability which is not shown in Balance Sheet, but paid at the time of dissolution of the firm ?
Answer: Unrecorded liability

Question. If Goodwill already appears in the books of account on dissolution of a partnership firm, in what ratio it will be debited to Partners’ Capital Accounts ? 
Answer: It will not be debited to the capital accounts of the partners while it will be transferred to the realisation account.

Question. On dissolution of a partnership firm, partners decided to pay for their capital account before any payment made to third parties. Were they correct in doing so ?
Answer: No, as debt of the firm from the third party is to be paid first.

Question. When an asset is taken over by a partner, why is his capital account debited?
Answer: A partner's capital account is debited because taking over an asset is treated as a partial payment of the partner's claim against the firm, effectively reducing the amount of capital the firm owes to that partner.

Question. Differentiate between dissolution of partnership and partnership firm on the basis of court’s intervention
Answer: Dissolution of partnership is a voluntary change in the relationship between partners and does not involve the court's intervention. However, dissolution of a partnership firm may be ordered by the court in specific cases such as a partner becoming of unsound mind or being guilty of misconduct.

Question. What shall be the journal entry for unrecorded assets in Realisation A/c.
Answer: The journal entry for the amount realized from an unrecorded asset is:
Bank/Cash A/c Dr.
To Realisation A/c
(Being the cash received from the sale of an unrecorded asset)

Question. On Dissolution of a firm, a partner paid Rs 700 for firm’s realization expenses. Which account will be debited?
(a) Cash Account
(b) Realisation Account
(c) Capital Account of Partner
(d) Profit & Loss A/C
Answer: (b)

Question. On dissolution of a firm, out of the proceeds received from the sale of assets …………… Will be paid first of all:
(a) Partner’s Capital
(b) Partner’s Loan to firm
(c) Partner’s additional Capital
(d) Outside Creditors
Answer: (d)

Question. In which condition a partnership firm is deemed to be dissolved ?
(a) On a partners admission
(b) On retirement of a partner
(c) On expiry of the period of partnership
(d) On loss in partnership
Answer: (c)

Question. At the time of the dissolution of the firm, how undistributed profits such as General Reserve, Credit Balance of P&L A/C are dealing with?
Answer: Undistributed profits are transferred directly to the Partners’ Capital Accounts in their old profit-sharing ratio. They are not transferred to the Realisation Account.

Question. Write any three differences between realisation account and revaluation account.
Answer: (1) Revaluation Account is prepared at the time of admission, retirement, or death of a partner, whereas Realisation Account is prepared only at the time of dissolution. (2) Revaluation Account records the changes in the value of assets and liabilities, whereas Realisation Account records the realization of assets and settlement of liabilities. (3) The objective of Revaluation A/c is to adjust values to current market rates, while Realisation A/c's objective is to close the books of the firm.

Question. i. Partners’ Capital Accounts ii. Partners’ loan accounts iii. Loan by the spouse of a partner; Which account(s) will not be transferred to Realisation Account?
Answer: (i) Partners’ Capital Accounts and (ii) Partners’ loan accounts will not be transferred to the Realisation Account.

Question. The amount of sundry assets transferred to Realisation Account was Rs 80,000. 60% of them have been sold at a profit of Rs. 2,000. 20% of the remaining were sold at a discount of 30% and remaining were taken over by Ramlal (a partner) at book value. Journalise.
Answer: (1) Bank A/c Dr. 50,000 To Realisation A/c (Being 60% assets sold for 48,000 + 2,000 profit).
(2) Bank A/c Dr. 4,480 To Realisation A/c (Being 20% of remaining 32,000, i.e., 6,400 sold at 30% discount).
(3) Ramlal’s Capital A/c Dr. 25,600 To Realisation A/c (Being remaining 80% of 32,000 taken over at book value).

Question. State the provisions of Section 48 of the Partnership Act 1932 regarding settlement of Accounts during the Dissolution of Partnership firm.
Answer: As per Section 48: (a) Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, and lastly, by the partners individually in their profit-sharing ratio. (b) Assets shall be applied in the following order: (1) Paying the firm's debts to third parties; (2) Paying each partner rateably for advances/loans; (3) Paying each partner rateably what is due on account of capital; (4) Distributing any surplus among partners in their profit-sharing ratio.

Question. State any six situations in which the court may order to dissolve a partnership firm.
Answer: (1) When a partner has become of unsound mind. (2) When a partner becomes permanently incapable of performing duties. (3) When a partner is guilty of misconduct. (4) Persistent breach of the partnership agreement. (5) When a partner has transferred the whole of his interest to a third party. (6) When the business cannot be carried on except at a loss.

Question. Verma and Sharma are partner sharing profit in the ratio \( 3:1 \). there balance sheet as on 31/3/2011.
Liabilities: Capital (Verma 120000, Sharma 80000) 200000; Creditor 70000. Total (Rs.): 270000.
Assets: Land and building 70000; Machinery 60000; Debtors 80000; bank 60000. Total (Rs.): 270000.
The firm was dissolved on 1/4/2011 and the assets and liabilities were settled as follows
(i) Creditors of rs, 50000 took over land and building in full settlement of their claim.
(ii) Remaining creditors were paid in cash.
(iii) Machinery was sold at depreciation of 30%.
(iv) Debtors were collected at a cost of rs. 500
(v) Expenses of realisation were Rs. 1700
Pass necessary journal entries for the dissolution of the firm.
Answer: (1) Transfer assets and liabilities to Realisation A/c. (2) No entry for Land & Building taken by creditors. (3) Bank A/c Dr. 1,21,500 To Realisation A/c (Machinery 42,000 + Debtors 79,500). (4) Realisation A/c Dr. 21,700 To Bank A/c (Remaining creditors 20,000 + Exp 1,700). (5) Calculate and distribute realization loss.

Question. Pass the necessary Journal entries for the following transactions on the dissolution of the firm of King and Singh after the various assets (other than cash) and outside liabilities have been transferred to Realisation Account:
(i) Bank Loan Rs.45,000 was paid
(ii) Stock worth Rs.60,000 was taken over by a partner Singh
(iii) King paid Rs.27,000 to a creditor
(IV) A liability not appearing in the books of accounts settled Rs.11,100
(v) Expenses of realisation Rs.2,700 were paid by partner Singh
(vi) Profit on realisation Rs.21,300 was distributed between KIng and Poppy in \( 7:3 \) Ratio
Answer: (i) Realisation A/c Dr. 45,000 To Bank A/c.
(ii) Singh’s Capital A/c Dr. 60,000 To Realisation A/c.
(iii) Realisation A/c Dr. 27,000 To King’s Capital A/c.
(iv) Realisation A/c Dr. 11,100 To Bank A/c.
(v) Realisation A/c Dr. 2,700 To Singh’s Capital A/c.
(vi) Realisation A/c Dr. 21,300 To King’s Cap A/c 14,910 To Poppy’s Cap A/c 6,390.

Question. Pass necessary journal entries for the following transactions at the time of dissolution of the firm.
(a).loan of Rs 10,000 advanced by a partner to the firm on dissolution of the firm.
(b). X, a partner takes over an unrecorded assets (typewriter) at Rs.300.
(c). undistributed balance (debit) of P/L account Rs.30,000. The firm has three partners X, Y and Z.
(d). the assets of the firm realized Rs 1,25,000.
(e). Y who undertakes to carry out the dissolution proceedings is paid Rs.2,000 for the same.
(f). creditors paid Rs. 28,000 in full settlement of their account of Rs.30,000
Answer: (a) Partner's Loan A/c Dr. 10,000 To Bank A/c.
(b) X’s Capital A/c Dr. 300 To Realisation A/c.
(c) X’s Cap A/c Dr. 10,000, Y’s Cap A/c Dr. 10,000, Z’s Cap A/c Dr. 10,000 To P&L A/c 30,000.
(d) Bank A/c Dr. 1,25,000 To Realisation A/c.
(e) Realisation A/c Dr. 2,000 To Y’s Capital A/c.
(f) Realisation A/c Dr. 28,000 To Bank A/c.

Question. Journalise the following transactions regarding Realisation expense
a) Realisation expenses amounted to Rs 2,500.
b) Realisation expenses amounting to Rs 3,000 were paid by Ashok,one of the partners.
c) Realisation expenses Rs 2,300 borne by Tarun,personally.
d) Amit,a partner was appointed to realize the assets,at a cost of Rs 4,000. The actual amount of Realisation amounted to Rs 3,000
Answer: (a) Realisation A/c Dr. 2,500 To Bank A/c.
(b) Realisation A/c Dr. 3,000 To Ashok’s Capital A/c.
(c) No Entry (borne personally).
(d) Realisation A/c Dr. 4,000 To Amit’s Capital A/c.

Question. X and Y are partners in the firm who decided to dissolve the firm. Assets and Liabilities are transferred to Realisation account. Pass necessary journal entries—
a. Creditors were Rs 1,00,000. They accepted Building valued Rs 1,40,000 and paid cash to the firm Rs 40,000
b. Aman,an old customer whose account of Rs 1,000 was written off as bad in the previous year paid 40% of the amount.
c. There were 300 shares of Rs 10 each in ABCLtd which were acquired for Rs 2,000 were now valued at Rs 6 each. These were taken over by the partners in the profit sharing ratio.
d. Profit on Realisation Rs 42,000 was divided among the partners.
e. Land and Building (Book value Rs 1,60,000) was sold for Rs 3,00,000 through a broker who charged 2% commission on the deal
Answer: (a) Bank A/c Dr. 40,000 To Realisation A/c.
(b) Bank A/c Dr. 400 To Realisation A/c.
(c) X’s Capital A/c Dr. 900, Y’s Capital A/c Dr. 900 To Realisation A/c.
(d) Realisation A/c Dr. 42,000 To X’s Cap A/c 21,000 To Y’s Cap A/c 21,000.
(e) Bank A/c Dr. 2,94,000 To Realisation A/c.

Question. E and F are partner in a firm sharing profits in the ratio of \( 3:2 \) .there balance sheet on 31.3.2015.
Liabilities: Creditors 25,000; outstanding expense 5,000; Capital account (E: 90,000, F: 1,20,000) 2,10,000. Total (Rs.): 2,40,000.
Assets: Building 1,00,000; Plant 40,000; Stock 30,000; debtors 45,000; cash 25,000. Total (Rs.): 2,40,000.
On the above date the firm was dissolved. Stock was taken over by E at a discount of 10% .F took over debtors for Rs. 40,000.plant was sold for Rs. 30,000 and buildings realised Rs. 80,000.F arrange to ply the creditors . E paid outstanding expense. Expense of realisation amounted to Rs. 7,500. Prepare Realisation A/c.
Answer: [Realisation Account: Debit side: Building 1,00,000, Plant 40,000, Stock 30,000, Debtors 45,000, F's Cap (Creditors) 25,000, E's Cap (O/S Exp) 5,000, Bank (Realisation Exp) 7,500. Credit side: Creditors 25,000, O/S Exp 5,000, E's Cap (Stock) 27,000, F's Cap (Debtors) 40,000, Bank (Plant + Bldg) 1,10,000. Result: Realisation Loss Rs. 45,500 distributed to E and F in \( 3:2 \).]

Question. Ramesh and Umesh were partners in a firm sharing profits in the ratio of their capitals. On 31st March, 2013, their Balance Sheet was as follows:
Liabilities: Creditors 1,70,000; Workmen Compensation Reserve 2,10,000; General Reserve 2,00,000; Ramesh's Current Account 80,000; Capital A/cs (Ramesh 7,00,000, Umesh 3,00,000) 10,00,000. Total (Rs.): 16,60,000.
Assets: Bank 1,10,000; Debtors 2,40,000; Stock 1,30,000; Furniture 2,00,000; Machinery 9,30,000; Umesh's Current Account 50,000. Total (Rs.): 16,60,000.
On the above date the firm was dissolved.
a. Ramesh took over 50% of stock at Rs.10,000 less than book value. The remaining stock was sold at a loss of Rs. 15,000. Debtors were realized at a discount of 5%.
b. Furniture was taken over by Umesh for Rs. 50,000 and machinery was sold for Rs. 4,50,000.
c. Creditors were paid in full.
d. There was an unrecorded bill for repairs for Rs. 1,60,000 which was settled at Rs 140,000.
Prepare Realisation Account
Answer: [Realisation Account Summary: Debit side: Debtors 2,40,000, Stock 1,30,000, Furniture 2,00,000, Machinery 9,30,000, Bank (Creditors 1,70,000 + Bill 1,40,000). Credit side: Creditors 1,70,000, Ramesh's Cap (Stock) 55,000, Bank (Stock 50,000 + Debtors 2,28,000 + Machinery 4,50,000), Umesh's Cap (Furniture) 50,000. The profit sharing ratio is \( 7:3 \).]

Question. A and B are in partnership sharing profits and losses in the ratio of \( 3:1 \). Their Balance Sheet on \( 31^{st} \) March, 2013 was as follows:
Liabilities: Creditors 38,500; A’s Loan A/c 2,750; Capitals (A 15,200, B 11,200) 26,400. Total: 67,650.
Assets: Debtors 30,000; Stock 19,000; Furniture 7,200; Bank balance 11,450. Total: 67,650.
The firm was dissolved on the above date. The assets realised: Stock ₹ 13,840, Furniture ₹ 5,150 and Debtors ₹ 29,200. The creditors were paid less discount amounting ₹ 250. The dissolution expenses were ₹ 520. Prepare necessary ledger accounts.
Answer: [Prepare Realisation A/c (Resulting in Loss), A's Loan A/c (Paid fully), Bank A/c, and Partners' Capital A/cs (A and B to pay in/withdraw final balances).]

Question. The Balance sheet of P, Q & R as on \( 31^{st} \) March 2003. Who are sharing profits in the ratio of \( 5:3:1 \) was as follows:
Liabilities: B/P 40,000; Loan from Bank 30,000; Reserve Fund 9,000; Capital (P 44,000, Q 36,000, R 20,000) 1,00,000. Total (Rs.): 1,79,000.
Assets: Buildings 40,000; Plant and Machinery 40,000; Stock 19,000; Debtors 42,000 Less Provisions 2,000 (40,000); 40,000; Cash 40000. Total (Rs.): 1,79,000.
The partners dissolved the firm, the assets realized stock – Rs. 23,400, Debtors – 50% fixed assets – 10% has than their book value B/P were settled for Rs. 32,000. There was our outstanding bill of Rs. 800. Which was paid off. Realisation expense Rs. 1,250 were also paid. Prepare realization A/c, Bank A/c and partners capital A/c.
Answer: [Calculation: Fixed assets realized = \( 0.90 \times (40,000 + 40,000) = 72,000 \). Debtors realization = \( 0.50 \times 42,000 = 21,000 \). Transfer B/P and Bank Loan to Realisation credit side. Record settlements.]

Question. Monu and Shiksha were partners sharing profits and losses in the ratio of \( 3:2 \). They decided to dissolve their firm on 31-03-2015, when their balance sheet was as follows:
Liabilities: Creditors 40000; Monu’s Brother’s loan 10000; Shiksha’s loan 15000; Gen Res 5000; Capital (Monu 10000, Shiksha 8000). Total: 88000.
Assets: Cash 14000; Stock 8000; Debtors 18000 Less PFBDD 1000 (17000); Furniture 4000; Plant 30000; Investment 10000; P/L A/c 5000. Total: 88000.
The Firm was dissolved on 1-4-2015 on the following terms:
a) Monu took over investments at Rs. 8000 and agreed to pay off her brother’s loan
b) The assets realized as follows: stock- Rs. 2000, Debtors-Rs. 20500, Furniture- Rs. 1000 more than the book value and Plant Rs. 20000 less than its book value
c) Realisation expenses Rs. 1200
d) Creditors were paid off at a discount of 3%
e) Firm had an unrecorded asset of Rs. 5000 which was accepted by an unrecorded liability of Rs. 7000 in full settlement
Prepare necessary accounts to close the books of the firm.
Answer: [Transfer Assets and Liabilities (except Cash, P/L, and Shiksha's loan) to Realisation. Note that Shiksha's loan is paid separately. Unrecorded settlement (e) requires no entry as the asset and liability offset each other.]

Question. A, B and C were equal partners. On \( 31^{st} \) March 2019 their balance sheet stood as:
Liabilities: Creditors 50,400; Reserve 12,000; Capital (A 40,000, B 25,000, C 15,000) 80,000. Total (Rs.): 1,42,400.
Assets: Cash 3,700; Stock 20,100; Debtors 62,600; LoantoA 10,000; Investments 16,000; Furniture 6,500; Building 23,500. Total (Rs.): 1,42,400.
The firm was dissolved on the above date on the following terms:
i. For the purpose of dissolution Investments were valued at Rs.18,000 and A took over the investments at this value,
ii. Fixed Assets realized Rs.29,700 whereas Stock and Debtors realized Rs.80,000.
iii. Expenses of Realisation amounted to Rs.1,300.
iv. Creditors allowed a discount of Rs.800..
Prepare Realisation Account, Cash Account and Partners' Capital Accounts showing how the accounts would finally be settled among the partners.
Answer: [Realisation Account Result: Profit Rs. 10,800 distributed equally. Loan to A is adjusted in A's Capital Account. Cash Account to show final payments to/from partners.]

Question. Vishal and Pavitra were partners in a firm sharing profits in the ratio of \( 3 : 2 \). The Balance Sheet of the firm on \( 31^{st} \) March, 2016 was as follows :
Liabilities: Sundry creditos 80,000; Pavitra’s Sister’s loan 20,000; Capital (Vishal 1,75,000, Pavitra 1,94,000) 3,69,000. Total: 4,69,000.
Assets: Bank 1,72,000; Debtors 27,000; Stock 50,000; Furniture 2,20,000. Total: 4,69,000.
On the above date the firm was dissolved. The assets were realized and the liabilities were paid off as follows :
a) 50% of the furniture was taken over by Vishal at 20% less than book value. Th remaining furniture was sold for Rs.1,05,000.
b) Debtors realized Rs.26,000
c) Stock was taken over by Pavitra for Rs. 29,000.
d) Pavitra’s sister’s loan was paid off along with an interest of Rs.2,000.
e) Expenses on realization amounted to Rs. 5,000.
Prepare Realisation Account, Partner’s Capital Accounts
Answer: [Realisation Account debits: Debtors 27,000, Stock 50,000, Furniture 2,20,000, Bank (Loan 20,000 + Int 2,000 + Creditors 80,000 + Exp 5,000). Credits: Creditors 80,000, Loan 20,000, Bank (Furniture 1,05,000 + Debtors 26,000), Vishal's Cap (Furniture 88,000), Pavitra's Cap (Stock 29,000).]