Class 12 Accountancy Study Guide: CBSE Class 12 Accountancy Dissolution Of Partnership Firm Important Questions Set 01
Review targeted academic resources with the CBSE Class 12 Accountancy Dissolution Of Partnership Firm Important Questions Set 01. Built according to official CBSE standards for the 2026-27 term, these downloadable Class 12 Accountancy study materials support effective daily practice and deeper conceptual understanding for Part 1 Chapter 04 Dissolution of Partnership Firm.
Download Part 1 Chapter 04 Dissolution of Partnership Firm Study Material PDF
Access the complete useful resource PDF for Class 12 Accountancy below. Regular practice with these targeted academic notes builds familiarity with complex topics and helps secure higher marks in final school evaluations.
Very Short Answer Questions (1 Mark)
Question 1. State True or False: Realisation account is a Nominal Account.
Answer:
True
Teacher's Note:
1. Realisation Account shows profit or loss on dissolution, which makes it a nominal account.
Question 2. State True or False: All assets including of cash are transferred to the Realisation Account.
Answer:
False
Teacher's Note:
1. Cash and bank balances are not transferred; they are used to make payments through the Cash/Bank Account.
Question 3. State True or False: An unrecorded computer system was sold for ₹20,000. Realisation Account will be credited by ₹20,000.
Answer:
True
Teacher's Note:
1. Entry: Cash/Bank A/c Dr. ₹20,000, To Realisation A/c ₹20,000.
Question 4. State True or False: Any amount paid for the unrecorded liabilities is credited to Realisation Account.
Answer:
False
Teacher's Note:
1. Payment of an unrecorded liability is debited to Realisation Account.
Question 5. State True or False: Dissolution of the firm means the dissolution of the partnership.
Answer:
True
Teacher's Note:
1. Dissolution of a firm ends the partnership among all the partners, so it always includes dissolution of partnership; the reverse is not always true.
Question 6. Fill in the blank: When the firm is dissolved, General Reserve is transferred to ________ in the profit-sharing ratio.
Answer:
Partners’ Capital Accounts
Teacher's Note:
1. General Reserve is an accumulated profit that belongs to the partners, so it never goes to Realisation Account.
Question 7. Fill in the blank: Goodwill Account appearing in books on the dissolution date is closed by transferring it to ________ side of the ________ account.
Answer:
debit, realisation
Teacher's Note:
1. Goodwill is an asset on dissolution, so it goes to the debit side like all other assets.
Question 8. Fill in the blank: At the time of dissolution, there were Debtors ₹1,32,000, Provision for Doubtful Debts ₹12,000, ₹24,000 of book debts proved bad. The ₹________ realised from the debtors will be ________ in the Realisation Account.
Answer:
1,08,000, credited
Teacher's Note:
1. Realised amount = 1,32,000 − 24,000 = 1,08,000; the provision itself is credited separately to Realisation A/c.
Question 9. Fill in the blank: Expenses of realisation are ________ to Realisation Account.
Answer:
debited
Teacher's Note:
1. Only when the firm bears the expenses; if a partner bears them, his capital account is involved.
Question 10. Fill in the blank: At the time of dissolution, Suhana, a partner agreed to pay creditors ₹8,000 and ________ Account will be credited by ₹8,000.
Answer:
Suhana’s Capital
Teacher's Note:
1. Entry: Realisation A/c Dr., To Suhana’s Capital A/c, because the firm now owes her the amount she paid.
Question 11. Give one distinction between reconstitution of a firm and dissolution of a firm. [CBSE (F) 2011, 2012]
Answer:
In case of reconstitution of a firm, i.e., dissolution of a partnership, the firm continues, while in case of dissolution of a firm, the firm’s business is discontinued.
Teacher's Note:
1. Reconstitution changes the relationship among partners; dissolution of the firm ends the business itself.
Question 12. 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 ₹45,000, whereas Arun’s loan was ₹65,000. Which loan will be paid first and why? [CBSE 2019 (67/3/1)]
Answer:
Varun’s wife’s loan will be paid first as it is an outside liability (third party liability).
Teacher's Note:
1. A loan from a partner’s relative is an outside liability; the partner’s own loan ranks after all outside liabilities.
Answer:
| Basis | Reconstitution of Partnership | Dissolution of Partnership Firm |
|---|---|---|
| Closure of Books | Closure of books is not required since the business is not terminated. | All books of accounts are closed since the business is terminated. |
Teacher's Note:
1. In a ‘distinguish’ answer, always write the basis first and give both sides on that same basis.
Answer:
| Basis | Dissolution of Partnership | Dissolution of Partnership Firm |
|---|---|---|
| Settlement of assets and liabilities | Assets are revalued, liabilities are reassessed and a new balance sheet is drawn. | All books of accounts are closed. All the assets (except cash) are realised and all the liabilities are paid off. |
Teacher's Note:
1. Revaluation Account belongs to dissolution of partnership; Realisation Account belongs to dissolution of the firm.
Question 15. Name the liability which is not shown in the Balance Sheet, but paid at the time of dissolution of the firm. [CBSE Delhi 2014(C)]
Answer:
Unrecorded liability.
Teacher's Note:
1. Payment of an unrecorded liability is debited to Realisation Account.
Question 16. State any two grounds on the basis of which court may order for the dissolution of the firm. [CBSE 2019 (67/4/1)]
Answer:
(i) A partner becomes a person of unsound mind.
(ii) A partner is found to be guilty of misconduct.
Teacher's Note:
1. Other grounds under Section 44 include permanent incapacity of a partner, persistent breach of agreement, transfer of interest and the firm working only at a loss.
Question 17. Under which section, settlement of accounts under dissolution is made?
Answer:
Section 48 of the Indian Partnership Act, 1932.
Teacher's Note:
1. Section 48 gives the order of settlement: losses, then outside debts, partners’ loans, capitals and finally surplus.
Short Answer Questions (2 Marks)
Pass necessary journal entries for the above transactions in the firm’s books. [CBSE 2019 (67/4/1)]
Answer:
Books of Manjeet, Sujeet and Jagjeet
Journal
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2018 Mar. 31 (i) | Bank A/c Dr. To Realisation A/c (Being assets realised) | 10,00,750 | 10,00,750 | |
| (ii) | Realisation A/c Dr. To Sujeet’s Capital A/c (Being remuneration credited to Sujeet’s Capital Account) | 1,00,075 | 1,00,075 | |
| (iii) | Sujeet’s Capital A/c Dr. To Cash A/c (Being realisation expenses paid by firm on behalf of Sujeet) | 90,000 | 90,000 | |
| (iv) | Realisation A/c Dr. To Bank A/c (Being creditors paid in full settlement) | 4,50,000 | 4,50,000 |
Teacher's Note:
1. Commission = 10% of ₹10,00,750 = ₹1,00,075; the expenses paid from firm’s cash are debited to Sujeet because he agreed to bear them.
Short Answer Questions (3 Marks)
(i) Expenses of dissolution were ₹9,000.
(ii) Expenses of dissolution ₹3,400 were paid by a partner, Vishal.
(iii) Shiv, a partner, agreed to do the work of dissolution for a commission of ₹4,500. He also agreed to bear the dissolution expenses. Actual dissolution expenses ₹3,900 were paid from the firm’s bank account.
(iv) Naveen, a partner, agreed to look after the dissolution work for which he was allowed a remuneration of ₹3,000. Naveen also agreed to bear the dissolution expenses. Actual expenses on dissolution ₹2,700 were paid by Naveen.
(v) Vivek, a partner, was appointed to look after the dissolution work for a remuneration of ₹7,000. He agreed to bear the dissolution expenses. Actual dissolution expenses ₹6,500 were paid by Rishi, another partner, on behalf of Vivek.
(vi) Gaurav, a partner, was appointed to look after the work of dissolution for a commission of ₹12,500. He agreed to bear the dissolution expenses. Gaurav took over furniture of ₹12,500 as his commission. The furniture had already been transferred to realisation account. [CBSE (AI) 2017]
Answer:
Books of the firm
Journal
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| (i) | Realisation A/c Dr. To Cash/Bank A/c (Being dissolution expenses paid) | 9,000 | 9,000 | |
| (ii) | Realisation A/c Dr. To Vishal’s Capital A/c (Being dissolution expenses paid by Vishal) | 3,400 | 3,400 | |
| (iii) (a) | Realisation A/c Dr. To Shiv’s Capital A/c (Being remuneration given to Shiv for dissolution work) | 4,500 | 4,500 | |
| (iii) (b) | Shiv’s Capital A/c Dr. To Bank A/c (Being dissolution expenses paid by firm on behalf of the partner) | 3,900 | 3,900 | |
| (iv) | Realisation A/c Dr. To Naveen’s Capital A/c (Being dissolution expenses paid by Naveen and compensated by firm) | 3,000 | 3,000 | |
| (v) (a) | Realisation A/c Dr. To Vivek’s Capital A/c (Being partner Vivek remunerated for dissolution expenses) | 7,000 | 7,000 | |
| (v) (b) | Vivek’s Capital A/c Dr. To Rishi’s Capital A/c (Being dissolution expenses paid by Rishi on behalf of Vivek) | 6,500 | 6,500 | |
| (vi) (a) | Realisation A/c Dr. To Gaurav’s Capital A/c (Being remuneration given to Gaurav) | 12,500 | 12,500 | |
| (vi) (b) | Gaurav’s Capital A/c Dr. To Realisation A/c (Being furniture taken over by Gaurav as remuneration) | 12,500 | 12,500 | |
| (vi) (a) + (b) | Or No Entry |
Teacher's Note:
1. When a partner gets a fixed remuneration and bears the expenses, only the remuneration goes to Realisation A/c; the actual expenses are his own.
(i) Furniture of ₹70,000 was sold for ₹68,000 by auction and auctioneer’s commission amounted to ₹2,000.
(ii) Adiraj’s loan amounting to ₹35,000 was paid.
(iii) Out of the stock of ₹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 bill receivable of ₹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 ₹56,000.
(vi) Realization expenses amounted to ₹2,000 which were paid by Adiraj.
Pass the necessary journal entries for the above transactions on the dissolution of the firm. [CBSE 2019 (67/3/1)]
Answer:
Journal
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2018 Mar. 31 (i) | Bank A/c Dr. To Realisation A/c (Being furniture realised) | 66,000 | 66,000 | |
| (ii) | Adiraj’s Loan A/c Dr. To Bank A/c (Being partner’s loan settled) | 35,000 | 35,000 | |
| (iii) | Karan’s Capital A/c Dr. To Realisation A/c (Being half the stock taken over by Karan) | 32,000 | 32,000 | |
| Bank A/c Dr. To Realisation A/c (Being remaining stock sold at 30% profit) | 52,000 | 52,000 | ||
| (iv) | Realisation A/c Dr. To Bank A/c (Being dishonoured bill met) | 3,000 | 3,000 | |
| (v) | Adiraj’s Capital A/c Dr. Karan’s Capital A/c Dr. To Profit and Loss A/c (Being debit balance of profit and loss account transferred) | 33,600 22,400 | 56,000 | |
| (vi) | Realisation A/c Dr. To Adiraj’s Capital A/c (Being realisation expenses paid by Adiraj) | 2,000 | 2,000 |
Teacher's Note:
1. Partner’s loan is paid directly through Bank A/c, never through Realisation A/c; stock taken: 40,000 − 20% = 32,000 and stock sold: 40,000 + 30% = 52,000.
(i) Sudha agreed to pay off her husband’s loan ₹19,000.
(ii) A debtor whose debt of ₹9,000 was written off in books paid ₹7,500 in full settlement.
(iii) Shiva took over all investments at ₹13,300.
(iv) Sundry creditors ₹10,000 were paid at 9% discount.
(v) Realisation expenses ₹3,400 were paid by Sudha for which she was allowed ₹3,000.
(vi) Loss on realisation ₹9,400 was divided between Sudha and Shiva in 3 : 2 ratio. [CBSE (AI) 2011]
Answer:
Journal
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| (i) | Realisation A/c Dr. To Sudha’s Capital A/c (Being Sudha’s husband’s loan taken over by Sudha) | 19,000 | 19,000 | |
| (ii) | Bank A/c Dr. To Realisation A/c (Being debtors realised) | 7,500 | 7,500 | |
| (iii) | Shiva’s Capital A/c Dr. To Realisation A/c (Being investments taken over by Shiva) | 13,300 | 13,300 | |
| (iv) | Realisation A/c Dr. To Bank A/c (Being creditors settled at 9% discount) | 9,100 | 9,100 | |
| (v) | Realisation A/c Dr. To Sudha’s Capital A/c (Being realisation expenses borne by Sudha) | 3,000 | 3,000 | |
| (vi) | Sudha’s Capital A/c Dr. Shiva’s Capital A/c Dr. To Realisation A/c (Being loss on realisation transferred to partners’ capital accounts) | 5,640 3,760 | 9,400 |
Teacher's Note:
1. The husband’s loan is an outside liability, so Sudha paying it is credited to her capital through Realisation A/c; a bad debt recovered is credited to Realisation A/c.
Long Answer Questions (5 Marks)
Balance Sheet of Shanti and Satya as at 31st March, 2013
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 45,000 | Bank | 55,000 |
| Workmen Compensation Fund | 40,000 | Debtors | 60,000 |
| Satya’s Current Account | 65,000 | Stock | 85,000 |
| Capitals: | Furniture | 1,00,000 | |
| Shanti | 2,00,000 | Machinery | 1,30,000 |
| Satya | 1,00,000 | Shanti’s Current Account | 20,000 |
| 4,50,000 | 4,50,000 |
(1) 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.
(2) An unrecorded investment was sold for ₹20,000. Machinery was sold at a loss of ₹60,000.
(3) Debtors realised ₹55,000.
(4) There was an outstanding bill for repairs for which ₹19,000 were paid.
Prepare Realisation Account. [CBSE 2014]
Answer:
Realisation Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Debtors A/c | 60,000 | By Creditors A/c | 45,000 |
| To Stock A/c | 85,000 | By Shanti’s Current/Capital A/c (34,000 − 3,400) | 30,600 |
| To Furniture A/c | 1,00,000 | By Bank A/c – Assets Realised: Stock 40,000 Furniture 80,000 Investment 20,000 Machinery 70,000 Debtors 55,000 | 2,65,000 |
| To Machinery A/c | 1,30,000 | By Loss transferred to: Shanti’s Current/Capital A/c 78,720 Satya’s Current/Capital A/c 19,680 | 98,400 |
| To Bank A/c: Outstanding Bill 19,000 Creditors 45,000 | 64,000 | ||
| 4,39,000 | 4,39,000 |
Teacher's Note:
1. Workmen Compensation Fund with no claim is not taken to Realisation A/c; it is credited to partners in their profit-sharing ratio.
2. Stock taken by Shanti: 40% of 85,000 = 34,000 less 10% = 30,600; machinery realised 1,30,000 − 60,000 = 70,000.
Balance Sheet of Srijan, Raman and Manan at 31st March, 2017
| Liabilities | ₹ | Assets | ₹ | |
|---|---|---|---|---|
| Capitals: | Capital: Manan | 10,000 | ||
| Srijan | 2,00,000 | Plant | 2,20,000 | |
| Raman | 1,50,000 | 3,50,000 | Investments | 70,000 |
| Creditors | 75,000 | Stock | 50,000 | |
| Bills Payable | 40,000 | Debtors | 60,000 | |
| Outstanding Salary | 35,000 | Bank | 10,000 | |
| Profit and Loss Account | 80,000 | |||
| 5,00,000 | 5,00,000 |
(i) Srijan was appointed to realise the assets and discharge the liabilities. Srijan was to receive 5% commission on sale of assets (except cash) and was to bear all expenses of realisation.
(ii) Assets were realised as follows: Plant ₹85,000; Stock ₹33,000; Debtors ₹47,000.
(iii) Investments were realised at 95% of the book value.
(iv) The firm had to pay ₹7,500 for an outstanding repair bill not provided for earlier.
(v) A contingent liability in respect of bills receivable, discounted with the bank had also materialised and had to be discharged for ₹15,000.
(vi) Expenses of realisation amounting to ₹3,000 were paid by Srijan.
Prepare Realisation Account, Partners’ Capital Accounts and Bank Account. [CBSE 2018]
Answer:
Realisation Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Sundry Assets: Plant 2,20,000 Investments 70,000 Stock 50,000 Debtors 60,000 | 4,00,000 | By Sundry Liabilities: Creditors 75,000 Bills Payable 40,000 Outstanding salary 35,000 | 1,50,000 |
| To Bank A/c: Creditors 75,000 Bills Payable 40,000 Outstanding repair bill 7,500 Contingent liability for bill discounted 15,000 Outstanding salary 35,000 | 1,72,500 | By Bank A/c: Plant 85,000 Stock 33,000 Debtors 47,000 Investments 66,500 | 2,31,500 |
| To Srijan’s Capital A/c (Commission – 2,31,500 × 5%) | 11,575 | By Loss transferred to Partners’ Capital A/cs: Srijan 81,030 Raman 81,030 Manan 40,515 | 2,02,575 |
| 5,84,075 | 5,84,075 |
Partners’ Capital Accounts
| Dr. | Cr. | ||||||
|---|---|---|---|---|---|---|---|
| Particulars | Srijan ₹ | Raman ₹ | Manan ₹ | Particulars | Srijan ₹ | Raman ₹ | Manan ₹ |
| To Balance b/d | — | — | 10,000 | By Balance b/d | 2,00,000 | 1,50,000 | — |
| To Profit and Loss A/c | 32,000 | 32,000 | 16,000 | By Realisation A/c | 11,575 | — | — |
| To Realisation A/c | 81,030 | 81,030 | 40,515 | By Bank A/c | — | — | 66,515 |
| To Bank A/c | 98,545 | 36,970 | — | ||||
| 2,11,575 | 1,50,000 | 66,515 | 2,11,575 | 1,50,000 | 66,515 | ||
Bank Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Balance b/d | 10,000 | By Realisation A/c | 1,72,500 |
| To Realisation A/c | 2,31,500 | By Srijan’s Capital A/c | 98,545 |
| To Manan’s Capital A/c | 66,515 | By Raman’s Capital A/c | 36,970 |
| 3,08,015 | 3,08,015 |
Teacher's Note:
1. No entry is passed for the ₹3,000 expenses because Srijan both bears and pays them; only his 5% commission on assets realised (₹2,31,500) is credited to him.
2. The repair bill and the discounted bill are unrecorded liabilities, so only their payment is debited to Realisation A/c; Manan’s debit capital means he brings in cash.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capitals: | Land and Building | 70,000 | |
| Verma 1,20,000 | Machinery | 60,000 | |
| Sharma 80,000 | 2,00,000 | Debtors | 80,000 |
| Creditors | 70,000 | Bank | 60,000 |
| 2,70,000 | 2,70,000 |
(i) Creditors of ₹50,000 took over Land and Building in full settlement of their claim.
(ii) Remaining Creditors were paid in cash.
(iii) Machinery was sold at a depreciation of 30%.
(iv) Debtors were collected at a cost of ₹500.
(v) Expenses of realisation were ₹1,700.
Pass necessary Journal Entries for dissolution of the firm. [CBSE Delhi 2012]
Answer:
Journal
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2017 April 1 | Realisation A/c Dr. To Land and Building A/c To Machinery A/c To Debtors A/c (Being the above assets transferred to Realisation A/c) | 2,10,000 | 70,000 60,000 80,000 | |
| Sundry Creditors A/c Dr. To Realisation A/c (Being creditors transferred to Realisation A/c) | 70,000 | 70,000 | ||
| Bank A/c Dr. To Realisation A/c (Being amount realised from sale of machinery and collection of debtors) | 1,21,500 | 1,21,500 | ||
| Realisation A/c Dr. To Bank A/c (Being payment made for creditors and realisation expenses) | 21,700 | 21,700 | ||
| Verma's Capital A/c Dr. Sharma's Capital A/c Dr. To Realisation A/c (Being loss on realisation debited to Partners' Capital A/cs) | 30,150 10,050 | 40,200 | ||
| Verma's Capital A/c Dr. Sharma's Capital A/c Dr. To Bank A/c (Being final payment made to partners) | 89,850 69,950 | 1,59,800 |
Teacher's Note:
1. When creditors accept an asset in full settlement, no journal entry is passed for that part – only the remaining ₹20,000 of creditors is paid in cash.
2. Quick check: Bank ₹60,000 + ₹1,21,500 − ₹21,700 = ₹1,59,800, exactly the final payment to partners.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Sundry Creditors | 80,000 | Bank | 1,72,000 |
| Shivika's Sister's Loan | 20,000 | Debtors | 27,000 |
| Capital A/cs | Stock | 50,000 | |
| Parth 1,75,000 | Furniture | 2,20,000 | |
| Shivika 1,94,000 | 3,69,000 | ||
| 4,69,000 | 4,69,000 |
(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 along with interest of ₹2,000.
(v) Expenses on realisation amounted to ₹5,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account. [CBSE Delhi 2015 (C)]
Answer:
Realisation Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Debtors A/c | 27,000 | By Sundry Creditors A/c | 80,000 |
| To Stock A/c | 50,000 | By Shivika's Sister's Loan A/c | 20,000 |
| To Furniture A/c | 2,20,000 | By Parth's Capital A/c (Furniture) (₹1,10,000 − ₹22,000) | 88,000 |
| To Bank A/c (Sundry Creditors) | 80,000 | By Bank A/c (Assets Realised): | |
| To Bank A/c (₹20,000 + ₹2,000) (Shivika's Sister's Loan) | 22,000 | Furniture 1,05,000 | |
| To Bank A/c (Expenses) | 5,000 | Debtors 26,000 | 1,31,000 |
| By Shivika's Capital A/c (Stock) | 29,000 | ||
| By Loss transferred to: | |||
| Parth's Capital A/c 33,600 | |||
| Shivika's Capital A/c 22,400 | 56,000 | ||
| 4,04,000 | 4,04,000 | ||
Partners' Capital Accounts
| Dr. | Cr. | ||||
|---|---|---|---|---|---|
| Particulars | Parth ₹ | Shivika ₹ | Particulars | Parth ₹ | Shivika ₹ |
| To Realisation A/c | 88,000 | 29,000 | By Balance b/d | 1,75,000 | 1,94,000 |
| To Realisation A/c (Loss) | 33,600 | 22,400 | |||
| To Bank A/c (Final Payment) | 53,400 | 1,42,600 | |||
| 1,75,000 | 1,94,000 | 1,75,000 | 1,94,000 | ||
Bank Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Balance b/d | 1,72,000 | By Realisation A/c — Sundry Creditors | 80,000 |
| To Realisation A/c — Assets Realised | 1,31,000 | By Realisation A/c — Shivika's Sister's Loan | 22,000 |
| By Realisation A/c — Expenses | 5,000 | ||
| By Parth's Capital A/c — Final Payment | 53,400 | ||
| By Shivika's Capital A/c — Final Payment | 1,42,600 | ||
| 3,03,000 | 3,03,000 | ||
Teacher's Note:
1. A loan from a partner's relative (here Shivika's sister) is an outside liability: it goes to the Realisation Account and is paid before partners' capitals.
2. Asset taken over by a partner = agreed value debited to his capital: 50% of ₹2,20,000 = ₹1,10,000, less 20% = ₹88,000.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capitals: | Cash at Bank | 3,00,000 | |
| A 7,50,000 | Sundry Debtors 1,95,000 | ||
| B 3,00,000 | Less: Provision for Bad Debts 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 |
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. Expenses on Realisation amounted to ₹19,000.
Pass the necessary journal entries on the dissolution of the firm. [CBSE 2019]
Answer:
Journal
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| (i) | Realisation A/c Dr. To Fixed Assets A/c To Stock A/c To Debtors A/c (Being assets transferred to Realisation A/c) | 12,05,000 | 7,10,000 3,00,000 1,95,000 | |
| (ii) | Sundry Creditors A/c Dr. Provision for Doubtful Debts A/c Dr. To Realisation A/c (Being liabilities transferred to Realisation A/c) | 2,00,000 5,000 | 2,05,000 | |
| (iii) | Bank A/c Dr. To Realisation A/c (Being assets realised) | 11,49,000 | 11,49,000 | |
| (iv) | Realisation A/c Dr. To Bank A/c (Being creditors paid in full settlement) | 1,85,000 | 1,85,000 | |
| Realisation A/c Dr. To Bank A/c (Being realisation expenses paid) | 19,000 | 19,000 | ||
| (v) | A's Capital A/c Dr. B's Capital A/c Dr. C's Capital A/c Dr. To Realisation A/c (Being loss on realisation debited to Partners' Capital A/cs) | 22,000 22,000 11,000 | 55,000 | |
| (vi) | A's Capital A/c Dr. B's Capital A/c Dr. C's Capital A/c Dr. To Bank A/c (Being Partners' Capital A/c settled on dissolution) | 7,28,000 2,78,000 2,39,000 | 12,45,000 |
Teacher's Note:
1. Debtors are transferred to the Realisation Account at their gross value (₹1,95,000); the provision for doubtful debts is transferred separately to the credit side.
2. Check: Bank ₹3,00,000 + ₹11,49,000 − ₹1,85,000 − ₹19,000 = ₹12,45,000 = total paid to partners.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 3,60,000 | Bank | 80,000 |
| Mrs. Vinit's Loan | 60,000 | Stock | 70,000 |
| Yogesh's Loan | 1,00,000 | Investments | 1,00,000 |
| Investment Fluctuation Fund | 30,000 | Debtors 2,00,000 | |
| Capitals: | Less: Provision for Doubtful Debts 20,000 | 1,80,000 | |
| Vinit 2,00,000 | Fixed Assets | 3,80,000 | |
| Yogesh 1,00,000 | 3,00,000 | Profit and Loss A/c | 40,000 |
| 8,50,000 | 8,50,000 |
(a) Vinit promised to pay off Mrs. Vinit's Loan and took away stock at 20% discount.
(b) Yogesh took away 90% of the investments at 10% discount.
(c) 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.
(d) Creditors were paid ₹3,50,000 in full settlement of their claim.
(e) Fixed Assets realised ₹2,82,000 and remaining investment realised ₹7,500.
(f) There was an old furniture which has been written off completely. Yogesh took away the same for ₹4,000.
(g) Realisation expenses ₹2,000 were paid by Vinit.
Prepare Realisation A/c, Bank A/c and Partners' Capital A/cs. [CBSE Delhi 2016 (C)]
Answer:
Realisation Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Sundry Assets: | By Provision for Doubtful Debts A/c | 20,000 | |
| Stock 70,000 | By Investment Fluctuation Fund A/c | 30,000 | |
| Investments 1,00,000 | By Creditors | 3,60,000 | |
| Debtors 2,00,000 | By Mrs. Vinit's Loan A/c | 60,000 | |
| Fixed Assets 3,80,000 | 7,50,000 | By Vinit's Capital A/c (Stock) | 56,000 |
| To Vinit's Capital A/c (Mrs. Vinit's Loan) | 60,000 | By Yogesh's Capital A/c (Investment) (₹90,000 − ₹9,000) | 81,000 |
| To Bank A/c (Creditors) | 3,50,000 | By Bank A/c (Assets): | |
| To Vinit's Capital A/c (Realisation Expenses) | 2,000 | Debtors (₹47,500 + ₹1,50,000) 1,97,500 | |
| Fixed Assets 2,82,000 | |||
| Investment 7,500 | 4,87,000 | ||
| By Yogesh's Capital A/c (Old furniture) | 4,000 | ||
| By Loss transferred to: | |||
| Vinit's Capital A/c 32,000 | |||
| Yogesh's Capital A/c 32,000 | 64,000 | ||
| 11,62,000 | 11,62,000 | ||
Partners' Capital Accounts
| Dr. | Cr. | ||||
|---|---|---|---|---|---|
| Particulars | Vinit ₹ | Yogesh ₹ | Particulars | Vinit ₹ | Yogesh ₹ |
| To Realisation A/c (Loss) | 32,000 | 32,000 | By Balance b/d | 2,00,000 | 1,00,000 |
| To Profit and Loss A/c | 20,000 | 20,000 | By Realisation A/c (Expenses) | 2,000 | – |
| To Realisation A/c (Stock / Investment) | 56,000 | 81,000 | By Realisation A/c (Mrs. Vinit's Loan) | 60,000 | – |
| To Realisation A/c (Old furniture) | – | 4,000 | By Yogesh's Loan A/c | – | 37,000 |
| To Bank A/c (Final Payment) | 1,54,000 | – | |||
| 2,62,000 | 1,37,000 | 2,62,000 | 1,37,000 | ||
Bank Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Balance b/d | 80,000 | By Realisation A/c | 3,50,000 |
| To Realisation A/c | 4,87,000 | By Yogesh's Loan A/c | 63,000 |
| By Vinit's Capital A/c (Final payment) | 1,54,000 | ||
| 5,67,000 | 5,67,000 | ||
Note: Yogesh's Capital Account shows a debit balance of ₹37,000 after all adjustments. Therefore, an amount of ₹37,000, i.e., to the extent of debit balance of his capital account has been transferred from his Loan Account to his Capital Account.
The profit-sharing ratio is not given, so the loss on realisation and the accumulated loss (Profit and Loss A/c) are shared equally.
Teacher's Note:
1. A partner's loan (Yogesh's Loan) is not transferred to the Realisation Account; it is settled after outside liabilities, and a debit balance in his capital can be set off against it.
2. An asset already written off (old furniture) no longer has a ledger balance, so the amount Yogesh pays is credited directly to the Realisation Account.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 11,500 | Bank | 6,000 |
| Loan | 3,500 | Debtors 48,400 | |
| Capitals: | Less: Provision for Doubtful Debts 2,400 | 46,000 | |
| 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 |
(i) Michael was to take over Furniture at ₹2,600 and Debtors amounting to ₹40,000 at ₹34,400; the Creditors of ₹10,000 to be paid by him at this figure.
(ii) Jackson was to take over all the stock in trade at ₹14,000 and some of the Sundry Assets at ₹28,800 (being 10% less than book value).
(iii) John was to take over the remaining Sundry Assets at 90% of 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 book value. The expenses of dissolution ₹600 were paid by John.
Prepare Realisation Account, Bank Account and Partners' Capital Accounts. [CBSE 2019]
Answer:
Realisation Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Debtors | 48,400 | By Provision for Doubtful Debts A/c | 2,400 |
| To Stock-in-Trade | 16,000 | By Creditors | 11,500 |
| To Furniture | 2,000 | By Loan | 3,500 |
| To Sundry Assets | 34,000 | By Michael's Capital A/c: | |
| To Michael's Capital A/c (Creditors) | 10,000 | Furniture 2,600 | |
| To John's Capital A/c | Debtors 34,400 | 37,000 | |
| Loan 3,500 | By Jackson's Capital A/c: | ||
| Expenses (Realisation) 600 | 4,100 | Stock in trade 14,000 | |
| To Bank A/c (Creditors) | 1,500 | Sundry Assets 28,800 | 42,800 |
| By John's Capital A/c: Sundry assets | 1,800 | ||
| By Bank A/c (Debtors) | 4,200 | ||
| By Partners' Capital A/cs: | |||
| Michael 7,680 | |||
| Jackson 2,560 | |||
| John 2,560 | 12,800 | ||
| 1,16,000 | 1,16,000 | ||
Partners' Capital Accounts
| Dr. | Cr. | ||||||
|---|---|---|---|---|---|---|---|
| Particulars | Michael ₹ | Jackson ₹ | John ₹ | Particulars | Michael ₹ | Jackson ₹ | John ₹ |
| To Realisation A/c | 37,000 | 42,800 | 1,800 | By Balance b/d | 50,000 | 25,000 | 14,000 |
| To Realisation A/c (Loss) | 7,680 | 2,560 | 2,560 | By Realisation A/c | 10,000 | – | 4,100 |
| To Bank A/c | 15,320 | – | 13,740 | By Bank A/c | – | 20,360 | – |
| 60,000 | 45,360 | 18,100 | 60,000 | 45,360 | 18,100 | ||
Bank Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Balance b/d | 6,000 | By Realisation A/c | 1,500 |
| To Realisation A/c (Debtors) | 4,200 | By Michael's Capital A/c | 15,320 |
| To Jackson's Capital A/c | 20,360 | By John's Capital A/c | 13,740 |
| 30,560 | 30,560 | ||
Working Notes:
1. Calculation of book value of Sundry Assets taken over by Jackson:
₹28,800 × 100/90 = ₹32,000
Value of remaining Sundry Assets taken over by John:
₹34,000 − ₹32,000 = ₹2,000 and 90% of ₹2,000 = ₹1,800
2. Debtors of ₹40,000 are taken over by Michael and the remaining balance is ₹8,400 which have been sold for 50% or ₹4,200.
3. There is a deficit in the Capital Account of Jackson and it is assumed that he will bring necessary amount.
Teacher's Note:
1. "10% less than book value" means the price is 90% of book value, so book value = ₹28,800 × 100/90 = ₹32,000 (not ₹28,800 + 10%).
2. Only ₹1,500 of creditors (₹11,500 − ₹10,000 paid by Michael) is paid from the bank.
(i) Assets realised ₹1,70,000 (after a loss of ₹20,000).
(ii) Liabilities to be paid are ₹27,000 (including an unrecorded liability of ₹1,000).
(iii) Realisation expenses paid ₹700.
(iv) On the date of dissolution partners' capitals were in the ratio of 2 : 2 : 1.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account.
Answer:
Realisation Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Sundry Assets A/c | 1,90,000 | By Sundry Liabilities A/c | 26,000 |
| To Cash A/c (Expenses) | 700 | By Cash A/c | 1,70,000 |
| To Cash A/c: | By Capital A/cs (Loss) | ||
| Sundry Creditors 26,000 | X (5/10) 10,850 | ||
| Unrecorded Liability 1,000 | 27,000 | Y (3/10) 6,510 | |
| Z (2/10) 4,340 | 21,700 | ||
| 2,17,700 | 2,17,700 | ||
Partners' Capital Accounts
| Dr. | Cr. | ||||||
|---|---|---|---|---|---|---|---|
| Particulars | X ₹ | Y ₹ | Z ₹ | Particulars | X ₹ | Y ₹ | Z ₹ |
| To Realisation A/c (loss) | 10,850 | 6,510 | 4,340 | By Balance b/d | 65,600 | 65,600 | 32,800 |
| To Cash A/c | 54,750 | 59,090 | 28,460 | ||||
| 65,600 | 65,600 | 32,800 | 65,600 | 65,600 | 32,800 | ||
Cash Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Realisation A/c (Assets Realised) | 1,70,000 | By Realisation A/c (Creditors) | 27,000 |
| By Realisation A/c (Expenses) | 700 | ||
| By X's Capital A/c | 54,750 | ||
| By Y's Capital A/c | 59,090 | ||
| By Z's Capital A/c | 28,460 | ||
| 1,70,000 | 1,70,000 | ||
Working Note:
Memorandum Balance Sheet
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Sundry Liabilities | 26,000 | Sundry Assets (1,70,000 + 20,000) | 1,90,000 |
| Capitals: (Balancing figure) | |||
| X (2/5) 65,600 | |||
| Y (2/5) 65,600 | |||
| Z (1/5) 32,800 | 1,64,000 | ||
| 1,90,000 | 1,90,000 |
Teacher's Note:
1. Book value of assets = amount realised + loss = ₹1,90,000; book liabilities = ₹27,000 − ₹1,000 unrecorded = ₹26,000.
2. Total capital (₹1,90,000 − ₹26,000 = ₹1,64,000) is split in the capital ratio 2 : 2 : 1, but the realisation loss is shared in the profit ratio 5 : 3 : 2.
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Stock A/c | 10,000 | By Provision for bad debts A/c | 5,000 |
| To Debtors A/c | 25,000 | By Sundry Creditors A/c | 16,600 |
| To Plant and Machinery A/c | 40,000 | By Bills Payable A/c | 3,400 |
| To Bank A/c: | By Mortgage Loan A/c | 15,000 | |
| Sundry Creditors 16,000 | By Bank A/c – assets realised: | ||
| Bills Payable 3,400 | Stock 6,700 | ||
| Mortgage Loan 15,000 | 34,400 | Debtors 12,500 | |
| To Bank A/c (Outstanding repairs) | 400 | Plant & Machinery 36,000 | 55,200 |
| To Bank A/c (Expenses) | 620 | By Bank A/c – unrecorded assets realized | 6,220 |
| By .......... | .......... | ||
| 1,10,420 | 1,10,420 | ||
| Dr. | Cr. | ||||||
|---|---|---|---|---|---|---|---|
| Particulars | Bora ₹ | Singh ₹ | Ibrahim ₹ | Particulars | Bora ₹ | Singh ₹ | Ibrahim ₹ |
| To .......... | .......... | .......... | .......... | By Balance b/d | 22,000 | 18,000 | 10,000 |
| To .......... | .......... | .......... | .......... | By General Reserve | 2,500 | 1,500 | 500 |
| 24,500 | 19,500 | 10,500 | 24,500 | 19,500 | 10,500 | ||
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Balance b/d | 19,500 | By Realisation A/c (liabilities) | 34,400 |
| To Realisation A/c (assets realized) | 55,200 | By Realisation A/c (unrecorded liabilities) | 400 |
| To .......... | .......... | By .......... | .......... |
| By .......... | .......... | ||
| By .......... | .......... | ||
| By .......... | .......... | ||
| 80,920 | 80,920 | ||
Answer:
Realisation Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Stock A/c | 10,000 | By Provision for bad debts A/c | 5,000 |
| To Debtors A/c | 25,000 | By Sundry Creditors A/c | 16,600 |
| To Plant and Machinery A/c | 40,000 | By Bills Payable A/c | 3,400 |
| To Bank A/c: | By Mortgage Loan A/c | 15,000 | |
| Sundry creditors 16,000 | By Bank A/c – Assets realised: | ||
| Bills Payable 3,400 | Stock 6,700 | ||
| Mortgage Loan 15,000 | 34,400 | Debtors 12,500 | |
| To Bank A/c (Outstanding repairs) | 400 | Plant and Machinery 36,000 | 55,200 |
| To Bank A/c (Expenses) | 620 | By Bank A/c – unrecorded assets realised | 6,220 |
| By Loss transferred to Partners' Capital A/cs: | |||
| Bora 5,000 | |||
| Singh 3,000 | |||
| Ibrahim 1,000 | 9,000 | ||
| 1,10,420 | 1,10,420 | ||
Partners' Capital Accounts
| Dr. | Cr. | ||||||
|---|---|---|---|---|---|---|---|
| Particulars | Bora ₹ | Singh ₹ | Ibrahim ₹ | Particulars | Bora ₹ | Singh ₹ | Ibrahim ₹ |
| To Realisation A/c | 5,000 | 3,000 | 1,000 | By Balance b/d | 22,000 | 18,000 | 10,000 |
| To Bank A/c | 19,500 | 16,500 | 9,500 | By General Reserve | 2,500 | 1,500 | 500 |
| 24,500 | 19,500 | 10,500 | 24,500 | 19,500 | 10,500 | ||
Bank Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Balance b/d | 19,500 | By Realisation A/c (liabilities) | 34,400 |
| To Realisation A/c (assets realised) | 55,200 | By Realisation A/c (unrecorded liabilities) | 400 |
| To Realisation A/c (unrecorded assets) | 6,220 | By Realisation A/c (expenses) | 620 |
| By Bora's Capital A/c | 19,500 | ||
| By Singh's Capital A/c | 16,500 | ||
| By Ibrahim's Capital A/c | 9,500 | ||
| 80,920 | 80,920 | ||
Teacher's Note:
1. Find the missing item by balancing: the Realisation Account credit side is short by ₹9,000, which is the loss shared 5 : 3 : 1.
2. The final payments to partners are the balancing figures of their capital accounts (₹19,500, ₹16,500, ₹9,500), and they make the Bank Account total ₹80,920.
Free study material for Accountancy
Accountancy Class 12 Exam Resources: Part 1 Chapter 04 Dissolution of Partnership Firm
Core Study Kit: Class 12 Accountancy Part 1 Chapter 04 Dissolution of Partnership Firm
Access comprehensive study material for Part 1 Chapter 04 Dissolution of Partnership Firm, including revision notes, concept maps, and high-probability questions. These resources are designed in alignment with the latest 2026 CBSE syllabus for Class 12 Accountancy to support effective exam preparation.
NCERT-Aligned Solutions for Part 1 Chapter 04 Dissolution of Partnership Firm
Each resource draws directly from authorized textbooks to maintain academic accuracy. Evaluating solved examples allows Class 12 students to master the formal presentation and answer-writing standards expected in upcoming school exams.
Next Steps in Your Exam Preparation
Wrap up your chapter revision by testing your knowledge against standard objective question formats. Explore our full library of free, up-to-date sample papers and online assessments to secure top grades in your CBSE examinations.
FAQs
The latest 2026-27 advanced study resources for Class 12 Accountancy are available for free on StudiesToday.com which includes NCERT Exemplars, high-order thinking skills (HOTS) questions, and deep-dive concept summaries.
Our exhaustive Class 12 Accountancy package includes chapter wise revision notes, solved practice sheets, important formulas and Concept Maps to help in better understanding of all topics.
Yes. For Class 12, our resources have been developed to help you get better marks in CBSE school exams and also build fundamental strength needed for entrance tests including Competency Based learning.
in Class 12, students should use Active Recall method, read the concept summary, then solve the Important Questions section without looking at the answers and then check your answers.
All CBSE Accountancy study materials are provided in mobile-friendly PDF. You can download and save them on your device.
Yes, our team has ensured that all Accountancy materials for Class 12 are strictly aligned with the National Education Policy (NEP) 2020 and the latest 2026-27 CBSE syllabus.