Official CBSE Study Materials for Class 12 Accountancy
Review targeted academic resources with the CBSE Class 12 Accountancy Dissolution Of Partnership Firm Important Questions Set 02. 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.
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Very Short Answer Questions (1 Mark)
Answer:
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Realisation A/c Dr. To Partner’s Capital A/c (Being liability discharged by the partner) |
Teacher's Note:
1. The partner becomes a creditor of the firm for the amount he pays, so his capital account is credited.
Answer:
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Cash/Bank A/c Dr. To Realisation A/c (Being 60% of debtors realised) | 42,000 | 42,000 |
Teacher's Note:
1. 60% of ₹70,000 = ₹42,000; only the amount actually realised is credited to Realisation A/c.
Question 3. Name some specific liabilities which are transferable to realisation account but payment of these is not made on dissolution of firm.
Answer:
(i) Provision for Depreciation A/c
(ii) Investment Fluctuation Reserve A/c
Teacher's Note:
1. These are provisions against assets, not amounts owed to anyone, so they are only transferred to the credit of Realisation A/c.
Answer:
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Realisation A/c Dr. To Cash/Bank A/c (Being unrecorded liability paid) |
Teacher's Note:
1. An unrecorded liability is not transferred to Realisation A/c first; only its payment is debited.
Answer:
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| M’s Capital A/c Dr. Bank A/c Dr. To Realisation A/c (Being the assets whose book values were ₹2,00,000 were taken over by M for ₹1,60,000 and the assets whose book values were ₹80,000 were sold for ₹1,04,000) | 1,60,000 1,04,000 | 2,64,000 |
Teacher's Note:
1. No entry is needed for the obsolete assets or for assets taken over by a creditor in full settlement of his claim.
Question 6. Sundry Debtors are appearing at ₹2,16,000 and Provision for Doubtful Debts at ₹12,000 in the Balance Sheet before dissolution. The Sundry Debtors will be transferred at which figure in Realisation Account?
Answer:
Sundry debtors will be transferred to Realisation Account at ₹2,16,000.
Teacher's Note:
1. Debtors are always transferred at gross value; the provision of ₹12,000 is credited separately.
Answer:
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Anuj’s Capital A/c Dr. Bulbul’s Capital A/c Dr. To Profit & Loss A/c (Being loss transferred to partners) | 7,500 7,500 | 15,000 |
Teacher's Note:
1. When the profit-sharing ratio is not given, partners share equally as per the Partnership Act.
Question 8. The amount of Sundry Assets transferred to Realisation Account is ₹80,000. Assets realised 96% of their book value. What amount should be credited to Realisation Account?
Answer:
₹76,800.
Teacher's Note:
1. 96% of ₹80,000 = ₹76,800; the ₹3,200 shortfall becomes part of the loss on realisation.
Question 9. At which value the various assets are transferred to Realisation Account?
Answer:
Book value.
Teacher's Note:
1. Assets are transferred at book value, not at the amount expected to be realised.
Question 10. Which account is to be credited if realisation expenses are paid by a partner?
Answer:
Partner’s Capital Account.
Teacher's Note:
1. Debit Realisation A/c only if the firm bears the expenses; if the partner also bears them, no entry is passed.
Answer:
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Realisation A/c Dr. To Siyaram’s Capital A/c (Being remuneration for dissolution due to Siyaram) | 58,200 | 58,200 |
Working Note:
| (i) Total cash in hand | 4,20,000 | |
| Less: Payment made to creditors | 1,00,000 | |
| Siyaram’s Commission on Assets realised \( \left[\frac{3}{100} \times (4,20,000 - 20,000)\right] \) | 12,000 | 1,12,000 |
| Cash available for payment to partners | 3,08,000 |
Siyaram’s share on final payment to partners = \( 3,08,000 \times \frac{15}{100} \) = 46,200
Total amount to be paid to Siyaram = 12,000 + 46,200 = 58,200
(ii) No entry will be for realisation expenses assuming Siyaram has paid the same from his private funds.
Teacher's Note:
1. Cash at bank is not an asset ‘realised’, so exclude it before calculating the commission on assets realised.
Question 12. If creditors of the firm ₹50,000, X’s Capital ₹20,000, Y’s Capital ₹30,000, Loan from bank ₹50,000. Find out total assets of the firm.
Answer:
Assets = ₹1,50,000 [Hint: Assets = Liabilities + Capital]
Teacher's Note:
1. Total assets = 50,000 + 20,000 + 30,000 + 50,000; capitals are part of the balance sheet total.
Answer:
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Realisation A/c Dr. To Debtors’ A/c (full value) (Being debtors transferred to Realisation Account) | ||||
| Provision for Doubtful Debts A/c Dr. To Realisation A/c (Being provision for doubtful debts transferred to Realisation Account) |
Teacher's Note:
1. Two separate entries: debtors at gross value to the debit, provision to the credit of Realisation A/c.
Question 14. Give any two objectives for preparing the Realisation Account at the time of dissolution of the firm.
Answer:
(i) To settle/close the assets and liabilities accounts.
(ii) To find out net profit or net loss on realisation of sundry assets and after settlement of sundry liabilities.
Teacher's Note:
1. Cash/bank and partners’ accounts are excluded from Realisation A/c; it only deals with other assets and outside liabilities.
Question 15. When an asset is taken over by a partner, why is his capital account debited?
Answer:
When an asset is taken over by a partner, his capital account is debited as the amount of that asset reduces the claim of capital account of the partner against the firm.
Teacher's Note:
1. Entry: Partner’s Capital A/c Dr., To Realisation A/c, at the agreed value, not book value.
Question 16. B, C and D were partners in a firm sharing profits and losses in the ratio of 1 : 4 : 5. On 31st March, 2018 the firm was dissolved and on that date the Balance Sheet of the firm showed a loan of ₹10,000 given by C's brother F. C agreed to pay his brother's loan. Pass necessary journal entry for the above on the firm's dissolution. [CBSE 2019]
Answer:
Dr. Realisation A/c and Cr. C's Capital A/c by ₹10,000
Teacher's Note:
1. When a partner agrees to pay an outside liability, Realisation A/c is debited and that partner's Capital A/c is credited – no cash moves.
Question 17. At the time of dissolution of a partnership firm, book value of sundry assets transferred to Realisation Account was ₹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. [CBSE 2019]
Answer:
Dr. Bank A/c ₹52,000, Dr. A's Capital A/c ₹80,000 and Cr. Realisation A/c ₹1,32,000
Teacher's Note:
1. Work in steps: A takes ₹1,00,000 at 80% = ₹80,000; 40% of the remaining ₹1,00,000 = ₹40,000 sold at cost + 30% = ₹52,000.
2. Obsolete assets and assets taken over by a creditor in full settlement need no entry.
Short Answer Questions (2 Marks)
Pass necessary journal entries for the above transactions in the firm’s books on its dissolution. [CBSE 2019 (67/4/3)]
Answer:
Books of J, K and L
Journal
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2018 Mar. 31 (i) | Bank A/c Dr. To Realisation A/c (Being amount realised from debtors) | 1,30,000 | 1,30,000 | |
| (ii) | Realisation A/c Dr. To K’s Capital A/c (Being remuneration paid for dissolution work) | 16,000 | 16,000 | |
| (iii) | Realisation A/c Dr. To K’s Capital A/c (Being amount credited for dissolution expenses) | 4,000 | 4,000 | |
| K’s Capital A/c Dr. To Bank A/c (Being realisation expenses paid by firm on behalf of partner, K) | 6,500 | 6,500 | ||
| (iv) | J’s Capital A/c Dr. K’s Capital A/c Dr. L’s Capital A/c Dr. To Realisation A/c (Being realisation loss transferred to Partners’ Capital A/cs) | 14,800 18,500 3,700 | 37,000 |
Teacher's Note:
1. No entry is passed for transferring debtors and provision because the question says it is already done; amount realised = 1,34,000 − 4,000 = 1,30,000.
Short Answer Questions (3 Marks)
(a) Raman, a creditor of ₹4,00,000 accepted land valued at ₹7,00,000 and paid ₹3,00,000 to the firm.
(b) Gopal, a second creditor for ₹1,05,000 accepted ₹90,000 in cash and investments of ₹14,000 in full settlement of his account.
(c) Hari, a third creditor amounting to ₹75,000 accepted stock of book value of ₹60,000 for ₹45,000 and the balance was paid to him by cheque.
(d) Loss on dissolution was ₹45,000.
Pass necessary journal entries for the above transactions in the firm’s books. [CBSE (AI) 2016]
Answer:
Books of Prem and Suresh
Journal
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2015 Apr. 1 (a) | Cash/Bank A/c Dr. To Realisation A/c (Being payment received from creditor) | 3,00,000 | 3,00,000 | |
| (b) | Realisation A/c Dr. To Cash/Bank A/c (Being partial payment made to creditor) | 90,000 | 90,000 | |
| (c) | Realisation A/c Dr. To Bank A/c (Being partial payment made to creditor) | 30,000 | 30,000 | |
| (d) | Prem’s Capital A/c Dr. Suresh’s Capital A/c Dr. To Realisation A/c (Being loss on realisation transferred to partners’ capital A/cs) | 21,000 24,000 | 45,000 |
Teacher's Note:
1. When a creditor takes an asset, record only the cash that changes hands; the asset and the liability are already in Realisation A/c.
(i) Expenses of dissolution were ₹4,500.
(ii) Expenses of dissolution ₹5,000 were paid by a partner, Sudhir.
(iii) Sudha, a partner, agreed to do the dissolution work for a commission of ₹7,300. She also agreed to bear the dissolution expenses. Actual dissolution expenses paid by Sudha were ₹7,500.
(iv) Somesh, a partner, agreed to do the dissolution work for a commission of ₹5,000. He also agreed to bear the dissolution expenses. Actual dissolution expenses ₹4,750 were paid from the firm’s bank account.
(v) Sheetal, a partner, was appointed to look after the dissolution work for a remuneration of ₹8,000. She also agreed to bear the dissolution expenses. Actual dissolution expenses ₹7,500 were paid by Smita, another partner, on behalf of Sheetal.
(vi) Somaya, a partner, was appointed to look after the dissolution process for a remuneration of ₹11,000. Somaya agreed to bear the dissolution expenses. Somaya took over stock of the same value as her remuneration. The stock had already been transferred to realisation account. [CBSE (F) 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) | 4,500 | 4,500 | |
| (ii) | Realisation A/c Dr. To Sudhir’s Capital A/c (Being dissolution expenses paid by partner) | 5,000 | 5,000 | |
| (iii) | Realisation A/c Dr. To Sudha’s Capital A/c (Being commission paid to Sudha for dissolution work) | 7,300 | 7,300 | |
| (iv) (a) | Realisation A/c Dr. To Somesh’s Capital A/c (Being the commission paid to Somesh for dissolution) | 5,000 | 5,000 | |
| (iv) (b) | Somesh’s Capital A/c Dr. To Cash/Bank A/c (Being dissolution expenses paid by firm) | 4,750 | 4,750 | |
| (v) (a) | Realisation A/c Dr. To Sheetal’s Capital A/c (Being a partner, Sheetal remunerated for dissolution expenses) | 8,000 | 8,000 | |
| (v) (b) | Sheetal’s Capital A/c Dr. To Smita’s Capital A/c (Being dissolution expenses paid by Smita on behalf of Sheetal) | 7,500 | 7,500 | |
| (vi) (a) | Realisation A/c Dr. To Somaya’s Capital A/c (Being remuneration given to Somaya) | 11,000 | 11,000 | |
| (vi) (b) | Somaya’s Capital A/c Dr. To Realisation A/c (Being stock taken over by Somaya as remuneration which had been transferred to Realisation A/c) | 11,000 | 11,000 | |
| (vi) (a) + (b) | Or No Entry will be passed |
Teacher's Note:
1. In (iii) no entry is passed for the ₹7,500 actually spent, because Sudha both bears and pays it herself.
(i) A, a creditor (already transferred to Realisation Account) for ₹25,000 accepted furniture (already transferred to Realisation Account) at ₹36,000, in full settlement of his claim.
(ii) B, a creditor (already transferred to Realisation Account) for ₹25,000 accepted furniture (already transferred to Realisation Account) at ₹20,000 in settlement of his claim.
(iii) C, a creditor (already transferred to Realisation Account) for ₹30,000 agreed to take Machinery (already transferred to Realisation Account) at ₹48,000 (book value ₹50,000) in settlement of his claim.
(iv) D, a creditor of ₹20,000 (unrecorded in books) agreed to accept computer (unrecorded in books) at ₹15,000 plus ₹2,000 in full settlement of his claim.
Answer:
Books of X and Y
Journal
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Case (i) | (No entry) | |||
| Case (ii) | Realisation A/c Dr. To Cash A/c (Being creditor of ₹25,000 accepted furniture at ₹20,000 in settlement of his claim and balance paid in cash) | 5,000 | 5,000 | |
| Case (iii) | Cash A/c Dr. To Realisation A/c (Being creditor of ₹30,000 accepted machinery at ₹48,000 and balance amount received from him) | 18,000 | 18,000 | |
| Case (iv) | Realisation A/c Dr. To Cash A/c (Being unrecorded creditor accepted unrecorded computer at ₹15,000 and balance of ₹2,000 paid in cash in full settlement of his claim) | 2,000 | 2,000 |
Teacher's Note:
1. Compare the asset value with the claim: if the claim is bigger the firm pays the difference, if the asset is bigger the creditor pays it.
(i) Expenses of realisation amounted ₹7,400.
(ii) Expenses of realisation ₹7,400 were paid by Ravi, a partner.
(iii) Realisation expenses were to be borne by Deepak, a partner, for which he was allowed a commission of 2% of net cash realised from dissolution. The net cash realised from dissolution was ₹1,00,000 and actual realisation expenses were ₹7,400.
(iv) Expenses of realisation ₹7,400 were to be borne by Khan, a partner. Khan used firm’s cash for paying these expenses.
Answer:
Journal Entries
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| (i) | Realisation A/c Dr. To Cash A/c (Being payment of realisation expenses) | 7,400 | 7,400 | |
| (ii) | Realisation A/c Dr. To Ravi’s Capital A/c (Being realisation expenses paid by Ravi) | 7,400 | 7,400 | |
| (iii) | Cash A/c Dr. To Realisation A/c (Being the net amount realised from assets) | 1,00,000 | 1,00,000 | |
| Realisation A/c Dr. To Deepak’s Capital A/c (Being commission allowed @ 2% on ₹1,00,000) | 2,000 | 2,000 | ||
| Deepak’s Capital A/c Dr. To Cash A/c (Being actual realisation expenses paid by the firm on behalf of the partner) | 7,400 | 7,400 | ||
| (iv) | Khan’s Capital A/c Dr. To Cash A/c (Being the payment of realisation expenses by the firm on behalf of the partner) | 7,400 | 7,400 |
Teacher's Note:
1. Case (iv) never touches Realisation A/c: the firm simply pays Khan’s own expense and debits his capital.
Long Answer Questions (5 Marks)
You are required to complete these below given accounts by posting correct amounts. [CBSE (AI) 2015]Realisation Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Sundry Assets: | By Provision for bad debts | 1,000 | |
| Machinery 10,000 | By Sundry Creditors | 15,000 | |
| Stock 21,000 | By Sheela's Loan | 13,000 | |
| Debtors 20,000 | By Repairs and Renewals Reserve | 1,200 | |
| Prepaid Insurance 400 | By Cash – Assets sold: | ||
| Investments 3,000 | 54,400 | Machinery 8,000 | |
| To Mala's Capital A/c – Sheela's Loan | 13,000 | Stock 14,000 | |
| To Cash – Creditors paid | 15,000 | Debtors 16,000 | 38,000 |
| To Cash – Dishonoured bill paid | 5,000 | By Mala's Capital — Investments | 2,000 |
| To Cash – Expenses | 800 | By .......... .......... | |
| .......... .......... | |||
| .......... .......... | |||
| .......... .......... | .......... | ||
| 88,200 | 88,200 | ||
| Dr. | Cr. | ||||||
|---|---|---|---|---|---|---|---|
| Particulars | Mala ₹ | Neela ₹ | Kala ₹ | Particulars | Mala ₹ | Neela ₹ | Kala ₹ |
| To .......... | .......... | .......... | .......... | By .......... | .......... | .......... | .......... |
| To .......... | .......... | – | – | By .......... | .......... | – | – |
| To Cash A/c | 12,000 | 9,000 | – | By Cash A/c | – | – | 1,000 |
| 23,000 | 15,000 | 3,000 | 23,000 | 15,000 | 3,000 | ||
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Balance b/d | 2,800 | By Realisation A/c – Creditors paid | 15,000 |
| To Realisation A/c – Sale of assets | 38,000 | By Dishonoured bill | 5,000 |
| To Kala's Capital A/c | 1,000 | By .......... | .......... |
| By Mala's Capital A/c | 12,000 | ||
| By Neela's Capital A/c | 9,000 | ||
| 41,800 | 41,800 | ||
Answer:
Realisation Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Sundry Assets: | By Provision for bad debts | 1,000 | |
| Machinery 10,000 | By Sundry Creditors | 15,000 | |
| Stock 21,000 | By Sheela's Loan | 13,000 | |
| Debtors 20,000 | By Repairs and Renewals Reserve | 1,200 | |
| Prepaid Insurance 400 | By Cash – Assets sold: | ||
| Investments 3,000 | 54,400 | Machinery 8,000 | |
| To Mala's Capital A/c – Sheela's Loan | 13,000 | Stock 14,000 | |
| To Cash – Creditors paid | 15,000 | Debtors 16,000 | 38,000 |
| To Cash – Dishonoured bill paid | 5,000 | By Mala's Capital — Investments | 2,000 |
| To Cash – Expenses | 800 | By Loss Transferred to Partners' Capital A/cs: | |
| Mala 9,000 | |||
| Neela 6,000 | |||
| Kala 3,000 | 18,000 | ||
| 88,200 | 88,200 | ||
Partners' Capital Accounts
| Dr. | Cr. | ||||||
|---|---|---|---|---|---|---|---|
| Particulars | Mala ₹ | Neela ₹ | Kala ₹ | Particulars | Mala ₹ | Neela ₹ | Kala ₹ |
| To Realisation A/c | 9,000 | 6,000 | 3,000 | By Balance b/d | 10,000 | 15,000 | 2,000 |
| To Realisation A/c (Investments) | 2,000 | – | – | By Realisation A/c (Sheela's Loan) | 13,000 | – | – |
| To Cash A/c | 12,000 | 9,000 | – | By Cash A/c | – | – | 1,000 |
| 23,000 | 15,000 | 3,000 | 23,000 | 15,000 | 3,000 | ||
Cash Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Balance b/d | 2,800 | By Realisation A/c – Creditors paid | 15,000 |
| To Realisation A/c – Sale of assets | 38,000 | By Dishonoured bill | 5,000 |
| To Kala's Capital A/c | 1,000 | By Realisation A/c (Expenses) | 800 |
| By Mala's Capital A/c | 12,000 | ||
| By Neela's Capital A/c | 9,000 | ||
| 41,800 | 41,800 | ||
Teacher's Note:
1. Start with the Cash Account: its only blank is the expenses (₹41,800 − ₹41,000 = ₹800), which also appear on the debit side of the Realisation Account.
2. Opening capitals are balancing figures: e.g. Mala ₹23,000 − ₹13,000 (loan taken over by her) = ₹10,000.
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Land and Building A/c | 7,00,000 | By Bank Loan A/c | 4,00,000 |
| To Sundry Debtors A/c | 3,00,000 | By Sundry Creditors A/c | 1,00,000 |
| To Stock A/c | 1,00,000 | By Q's Capital A/c (Computer) | 90,000 |
| To Bank A/c (Repair of Computer) | 20,000 | By P's Capital A/c (Land and Building) | .......... |
| To Bank A/c (Creditors) | 25,000 | By Shares in BPL Limited A/c (5,000 × ₹100) | 5,00,000 |
| To P's Capital A/c (Bank Loan) | .......... | ||
| To Shares in BPL Limited A/c (Loss) (₹5,00,000 − ₹4,80,000) | 20,000 | ||
| To .......... | |||
| P's Capital A/c (2/5) .......... | |||
| Q's Capital A/c (2/5) .......... | |||
| R's Capital A/c (1/5) .......... | .......... | ||
| 16,90,000 | 16,90,000 | ||
| Dr. | Cr. | ||||||
|---|---|---|---|---|---|---|---|
| Particulars | P ₹ | Q ₹ | R ₹ | Particulars | P ₹ | Q ₹ | R ₹ |
| To Balance b/d | – | – | 80,000 | By Balance b/d | 4,50,000 | 2,55,000 | – |
| To Realisation A/c | .......... | .......... | – | By General Reserve | 24,000 | 24,000 | 12,000 |
| To Shares in BPL Limited A/c | 2,40,000 | 2,40,000 | – | By Realisation A/c (Profit) | .......... | .......... | .......... |
| To Bank A/c (Final Payment) | 84,000 | – | – | By .......... | .......... | – | – |
| By Bank A/c | – | 1,000 | 43,000 | ||||
| 9,24,000 | 3,30,000 | 80,000 | 9,24,000 | 3,30,000 | 80,000 | ||
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Balance b/d | 85,000 | By Realisation A/c (Repair of Computer) | .......... |
| To .......... | .......... | By Realisation A/c (Creditors) | .......... |
| To Q's Capital A/c (Cash Brought in) | 1,000 | By P's Capital A/c (Final Payment) | .......... |
| 1,29,000 | 1,29,000 | ||
Answer:
Realisation Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Land and Building A/c | 7,00,000 | By Bank Loan A/c | 4,00,000 |
| To Sundry Debtors A/c | 3,00,000 | By Sundry Creditors A/c | 1,00,000 |
| To Stock A/c | 1,00,000 | By Q's Capital A/c (Computer) | 90,000 |
| To Bank A/c (Repair of Computer) | 20,000 | By P's Capital A/c (Land and Building) | 6,00,000 |
| To Bank A/c (Creditors) | 25,000 | By Shares in BPL Limited A/c (5,000 × ₹100) | 5,00,000 |
| To P's Capital A/c (Bank Loan) | 4,00,000 | ||
| To Shares in BPL Limited A/c (Loss) (₹5,00,000 − ₹4,80,000) | 20,000 | ||
| To Profit transferred to Partners' Cap. A/cs: | |||
| P's Capital A/c (2/5) 50,000 | |||
| Q's Capital A/c (2/5) 50,000 | |||
| R's Capital A/c (1/5) 25,000 | 1,25,000 | ||
| 16,90,000 | 16,90,000 | ||
Partners' Capital Accounts
| Dr. | Cr. | ||||||
|---|---|---|---|---|---|---|---|
| Particulars | P ₹ | Q ₹ | R ₹ | Particulars | P ₹ | Q ₹ | R ₹ |
| To Balance b/d | – | – | 80,000 | By Balance b/d | 4,50,000 | 2,55,000 | – |
| To Realisation A/c | 6,00,000 | 90,000 | – | By General Reserve | 24,000 | 24,000 | 12,000 |
| To Shares in BPL Limited A/c | 2,40,000 | 2,40,000 | – | By Realisation A/c (Profit) | 50,000 | 50,000 | 25,000 |
| To Bank A/c (Final Payment) | 84,000 | – | – | By Realisation A/c (Bank Loan) | 4,00,000 | – | – |
| By Bank A/c | – | 1,000 | 43,000 | ||||
| 9,24,000 | 3,30,000 | 80,000 | 9,24,000 | 3,30,000 | 80,000 | ||
Bank Account
| Dr. | Cr. | ||
|---|---|---|---|
| Particulars | ₹ | Particulars | ₹ |
| To Balance b/d | 85,000 | By Realisation A/c (Repair of Computer) | 20,000 |
| To R's Capital A/c (Cash Brought in) | 43,000 | By Realisation A/c (Creditors) | 25,000 |
| To Q's Capital A/c (Cash Brought in) | 1,000 | By P's Capital A/c (Final Payment) | 84,000 |
| 1,29,000 | 1,29,000 | ||
Teacher's Note:
1. Work out the profit first from R's column: R's total is ₹80,000, so his profit share = ₹80,000 − ₹12,000 − ₹43,000 = ₹25,000 (1/5), giving total profit ₹1,25,000.
2. Shares in BPL received at ₹5,00,000 but given to P and Q at ₹4,80,000, so the ₹20,000 difference is a loss debited to the Realisation Account.
Question 25. E and F were partners in a firm sharing profits in the ratio of 7 : 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:
(a) A creditor for ₹3,00,000 accepted building valued at ₹3,75,000 and paid the firm ₹75,000.
(b) A second creditor for ₹93,000 accepted stock valued at ₹90,000 in full settlement of his claim.
(c) A third creditor amounting to ₹60,000 accepted ₹37,000 in cash and investments of book value of ₹40,000 in full settlement of his claim.
(d) Loss on dissolution was ₹7,000.
Pass necessary journal entries for the above transactions in the firm’s books assuming that all payments were made by cheque. [CBSE Delhi 2016]
Answer:
(a) Dr. Bank A/c, Cr. Realisation A/c ₹75,000
(b) No entry
(c) Dr. Realisation A/c, Cr. Bank A/c ₹37,000
(d) Dr. E's Capital A/c ₹4,900 and F's Capital A/c ₹2,100, Cr. Realisation A/c ₹7,000
Teacher's Note:
1. Only the cash part of a settlement is recorded; an asset handed over to a creditor needs no entry because both are already in the Realisation Account.
2. Loss ₹7,000 in 7 : 3 = ₹4,900 and ₹2,100.
Question 26. G and H were partners in a firm sharing profits in the ratio of 9 : 7. On 1st April, 2015 their firm was dissolved. After transferring assets (other than cash) and outsiders' liabilities to realisation account, you are given the following information:
(a) Mohan, a creditor of ₹2,30,000 accepted debtors of ₹2,00,000 at a discount of 10% and the balance was paid to him by cheque.
(b) Sohan, a second creditor for ₹7,00,000 accepted land of book value of ₹10,00,000 at ₹15,00,000 and paid the balance to the firm by cheque.
(c) Ram, a third creditor for ₹80,000 took over stock of book value of ₹40,000 at ₹30,000 and investments of ₹48,000 in full settlement of his claim.
(d) Loss on dissolution was ₹48,000.
Pass necessary journal entries for the above transactions in G and H’s books. [CBSE (AI) 2016]
Answer:
(a) Dr. Realisation A/c, Cr. Bank A/c ₹50,000
(b) Dr. Bank A/c, Cr. Realisation A/c ₹8,00,000
(c) No Entry
(d) Dr. G's Capital A/c ₹27,000 and H's Capital A/c ₹21,000, Cr. Realisation A/c ₹48,000
Teacher's Note:
1. (a) Debtors at 10% discount = ₹1,80,000, so the cheque paid is ₹2,30,000 − ₹1,80,000 = ₹50,000.
2. (b) The agreed value (₹15,00,000), not book value, decides the balance Sohan pays: ₹15,00,000 − ₹7,00,000 = ₹8,00,000.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capitals: | Building | 2,40,000 | |
| A 3,00,000 | Furniture | 1,75,000 | |
| B 2,00,000 | 5,00,000 | Debtors | 80,000 |
| Sundry Creditors | 1,17,000 | Stock | 75,000 |
| Cash | 47,000 | ||
| 6,17,000 | 6,17,000 |
(i) Building was taken over by the creditors as their full & final payment.
(ii) Furniture was taken over by B for cash payment at 5% less than book value.
(iii) Debtors were collected by a debt collection agency at a cost of ₹5,000.
(iv) Stock realised ₹70,500.
(v) 'B' agreed to bear all realisation expenses. For this service, B is paid ₹500. Actual expenses on realisation amounted to ₹1,000.
Pass necessary Journal Entries for dissolution of the firm. [CBSE Delhi 2012]
Answer:
Final Payment made to the partners: A ₹2,14,950, B ₹1,42,800
Teacher's Note:
1. Loss on realisation is ₹1,41,750 (A ₹85,050, B ₹56,700); B gets ₹500 for the service but bears the ₹1,000 expenses (paid by the firm on his behalf, so debited to his capital).
2. Furniture taken over "for cash payment" brings cash into the firm (₹1,66,250); it is not debited to B's capital.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 1,50,000 | Bank | 2,00,000 |
| Workmen's Compensation Reserve | 3,00,000 | Debtors | 3,40,000 |
| General Reserve | 75,000 | Stock | 1,50,000 |
| Hanif's Current Account | 25,000 | Furniture | 4,60,000 |
| Capitals: | Machinery | 8,20,000 | |
| Hanif 10,00,000 | Jubed's Current Account | 80,000 | |
| Jubed 5,00,000 | 15,00,000 | ||
| 20,50,000 | 20,50,000 |
(i) Debtors were realised at a discount of 5%. 50% of the stock was taken over by Hanif at 10% less than book value. Remaining stock was sold for ₹65,000.
(ii) Furniture was taken over by Jubed for ₹1,35,000. Machinery was sold as scrap for ₹74,000.
(iii) Creditors were paid in full.
(iv) Expenses on realisation ₹8,000 were paid by Hanif.
Prepare Realisation Account. [CBSE (AI) 2014]
Answer:
Loss on Realisation ₹11,13,500
Teacher's Note:
1. Workmen's Compensation Reserve with no claim against it is not taken to the Realisation Account; it is shared by the partners in their profit ratio.
2. Check: debit side ₹17,70,000 + ₹1,50,000 + ₹8,000 = ₹19,28,000; credit side before loss ₹8,14,500.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Trade Creditors | 42,000 | Bank | 35,000 |
| Employees' Provident Fund | 60,000 | Stock | 24,000 |
| Mrs. Ashish's Loan | 9,000 | 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 |
| Capital: | Profit and Loss Account | 10,000 | |
| Ashish 1,20,000 | |||
| Kanav 80,000 | 2,00,000 | ||
| 3,70,000 | 3,70,000 |
(i) Ashish agreed to take over furniture 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 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 realization expenses. Actual expenses of realization amounted to ₹8,000.
Prepare Realisation Account. [CBSE 2019]
Answer:
Profit on Realisation ₹20,020
Teacher's Note:
1. Stock: Kanav takes ₹9,600 at 80% = ₹7,680; the remaining ₹14,400 sold at 10% gain = ₹15,840. Plant realises ₹2,31,000.
2. Kanav bears the ₹8,000 expenses himself, so only his ₹12,000 remuneration is debited to the Realisation Account; Kanav's Loan is a partner's loan and stays out of it.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Capitals: | Sundry Assets | 17,000 | |
| A 27,500 | Stock | 7,800 | |
| B 10,000 | Debtors 24,200 | ||
| C 7,000 | 44,500 | Less: Provision for doubtful debts 1,200 | 23,000 |
| Loan | 1,500 | Bills Receivables | 1,000 |
| Creditors | 6,000 | Cash | 3,200 |
| 52,000 | 52,000 |
(a) A to take over Bills Receivables at ₹800, debtors amounting to ₹20,000 at ₹17,200 and the creditors of ₹6,000 were to be paid by him at this figure.
(b) B is to take over all stock for ₹7,000 and some sundry assets at ₹7,200 (being 10% less than book value).
(c) C to take over remaining sundry assets at 90% of book value and assume the responsibility of discharge of loan together with accrued interest of ₹300.
(d) The expenses of realisation were ₹270.
The remaining debtors were sold to a debt collecting agency at 50% of book value. Prepare Realisation A/c, Partners' Capital A/cs and Cash A/c. [CBSE Delhi 2010]
Answer:
Loss on Realisation ₹6,970, Final payment to A ₹11,318, Cash Brought in by B ₹5,594 and C ₹694, Total of Cash A/c ₹11,588.
Teacher's Note:
1. Sundry assets taken by B: ₹7,200 × 100/90 = ₹8,000 book value, so C takes the remaining ₹9,000 at 90% = ₹8,100.
2. C's debit balance means he must bring cash; check that Cash A/c ₹3,200 + ₹2,100 + ₹5,594 + ₹694 = ₹11,588 = ₹270 + ₹11,318.
| Liabilities | ₹ | Assets | ₹ |
|---|---|---|---|
| Creditors | 60,000 | Bank | 50,000 |
| Arnab's Brother's Loan | 95,000 | Debtors 1,70,000 | |
| Dhrupad's Loan | 1,00,000 | Less: Provision for Bad Debts 20,000 | 1,50,000 |
| Investment Fluctuation Reserve | 50,000 | Stock | 1,50,000 |
| Capitals: | Investments | 2,50,000 | |
| Arnab 2,75,000 | Building | 3,00,000 | |
| Ragini 2,00,000 | Profit and Loss Account | 50,000 | |
| Dhrupad 1,70,000 | 6,45,000 | ||
| 9,50,000 | 9,50,000 |
(i) Arnab agreed to pay his brother's loan.
(ii) Investments realised 20% less.
(iii) Creditors were paid at 10% less.
(iv) Building was auctioned for ₹3,55,000. Commission on auction was ₹5,000.
(v) 50% of the stock was taken over by Ragini at market price which was 20% less than book value and the remaining was sold at market price.
(vi) Dissolution expenses were ₹8,000, ₹3,000 were to be borne by the firm and the balance by Dhrupad. The expenses were paid by him.
Prepare Realisation Account, Bank Account and Partners' Capital Accounts. [CBSE (AI) 2016 (C)]
Answer:
Loss on Realisation: ₹1,27,000. Final Payment: Arnab – ₹2,63,800; Ragini – ₹1,04,600; and Dhrupad – ₹1,37,600. Total of Bank Account – ₹6,65,000
Teacher's Note:
1. No amount is given for debtors, so they are taken as realising nothing; the Investment Fluctuation Reserve (₹50,000) and Provision for Bad Debts go to the credit of the Realisation Account.
2. Only the firm's share (₹3,000) of the expenses paid by Dhrupad is debited to Realisation A/c and credited to his capital; Dhrupad's Loan is repaid before partners' capitals.
Question 32. P, Q and R commenced business on 1st January, 2017 with capitals of: P – ₹2,00,000; Q – ₹2,00,000 and R – ₹1,00,000.
Profits are shared in the ratio of 4 : 3 : 3. Capital carried interest @ 5% p.a. During the year 2017, the firm suffered a loss of ₹1,50,000 before allowing interest on capital. Drawings of each partner during the year were ₹20,000.
On 31st December, 2017, the partners agreed to dissolve the firm as it was no longer profitable. The creditors on that date were ₹40,000. The assets realised a net value of ₹3,20,000 and the expenses of realisation were ₹7,000.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account along with necessary working to close the firm’s books. [CBSE (F) 2005]
Answer:
Partners' Capital A/cs (Before dissolution) P ₹1,20,000, Q ₹1,35,000, R ₹35,000. Loss on Realisation ₹17,000, Sundry Assets ₹3,30,000, Total of Cash Account ₹3,20,000.
Teacher's Note:
1. Interest on capital is an appropriation of profit, so it is not allowed in a year of loss; the ₹1,50,000 loss is shared 4 : 3 : 3 (₹60,000, ₹45,000, ₹45,000).
2. Sundry assets = capitals ₹2,90,000 + creditors ₹40,000 = ₹3,30,000; loss on realisation = ₹3,30,000 + ₹7,000 − ₹3,20,000 = ₹17,000.
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