CHAPER 07 Question 7.1 DISSOLUION OF A PARNERSHIP FIRM Following is the Balance Sheet ofa, B and C as on 31 st DEC 2013 and their profit and loss ratios are 3:3:4 respectively. LIABILIIES Rs. ASSES Rs. A Capital 3,00,000 Land & Buildings 4,60,000 B Capital 2,00,000 Machinery 60,000 C Capital 4,00,000 Debtors 50,000 40,000 Less:RBD() Bills Payable 50,000 Creditors Furniture 3,00,000 Workmen compensation fund 70,000 P and L a/c Investment fluctuation fund 5,000 Advertisement Suspense a/c B s Loan 45,000 Investments 50,000 Mrs. A s Loan 1,50,000 B/R Bank over draft 25,000 Goodwill General Reserve 25,000 Loan given to C s wife 1,00,000 E.P.F 50,000 Vehicles 1,60,000 otal 13,00,000 otal 13,00,000 he firm is dissolved on 1 st JANUARY 2014 and the following agreements have taken place among the partners (a) Land and Buildings are sold at 4,80,000 (b) Machinery are sold for a loss of Rs. (c) B/P is paid by A and also he settled his wife s Loan and taken Vehicles. (d) Debtors and stock realized 70%. (e) Creditors taken over B/R. (f) B s loan is paid with a discount of Rs.5,000. (g) Investments are sold at a loss of Rs.. (h) Realization expenses Rs. paid by B (i) Goodwill realized Rs.25,000 and furniture sold for Rs.2,50,000. (j) EPF is paid full and there was a claim paid on Workmen compensation fund of Rs.. (k) C s wife paid back loan given to her with a discount of Rs..
Prepare Realization account, Partners capital account and balance sheet. (ANS: Realisation loss- 1,15,000; Partners capital account- A 2,79,000; B 1,99,000; C 3,72,000; Cash 9,85,000 ) Question 7.2: (SP 2017) LIABILIIES ASSES Sundry creditors 60,000 Cash 25,000 Riya s loan 15,000 Debtors 42,000 36,000 Less: Provision (6,000) 15,000 12,000 Investment fluctuation fund 2,000 Investments 18,000 Riya s capital Plant and machinery 39,000 Diya s capital Diya s loan 2,000 otal 1,32,000 otal Additional information: (i) he creditors were paid off by giving them the plant and machinery at a discount of 10% and the balance in cash. (ii) Riya s loan was paid off with interest of Rs.500. (iii) Debtors realized 10% less of the amount due from them. (iv) was taken over by Riya at Rs.7,000. (v) Investments realized 80% of their book value. (vi) Realisation expenses Rs.600 were paid by Diya. You are required to prepare: (a) (b) (c) Realisation Account. Riya s Loan Account. Diya s Loan Account. Question 7.3 Balance Sheet as on 31 st March 2010 Liabilities Amount Assets Amount Creditors Goodwill Bills payable Building 25,000 Bank overdraft 8,000 Plant 25,000 Outstanding expenses 2,000 Investments 15,300 James brother s loan 8,700
Henry s loan Debtors 17,000 Investment fluctuation 2,800 Less provision for bad 15,000 Fund Debts 2,000 Employees provident fund 1,200 Bills receivable 2,000 Cash and bank 17,000 James capital Henry s capital 1,26,000 1,26,000 he firm was dissolved on the above balance sheet date and the following arrangements were decided upon: (a) James agreed to pay off his brother s loan. (b) Debtors realized 12,000. (c) Henry took over all the investment at 12,000. (d) (e) Other assets realized are as follows: (i) Plant. (ii) Building 50,000. (iii) Goodwill 6,000. Creditors and bills payable were settled at 5% discount. (f) Henry accepted stock at 8,000 and James took over bills receivable at 20% discount. (g) Realization expenses amounted to 2,000. You are required to prepare the necessary ledger accounts in order to close the books of the firm. Question 7.4 Following is the Balance Sheet ofx, Y and Z as on 31 st OC 2012 and their profit and loss ratios are 4:3:3 respectively. LIABILIIES Rs. ASSES Rs. X Capital 2,45,500 Land &Buildings 5,60,000 5,25,000 less :dep 35,000 Y Capital 1,54,500 Machinery 80,000 Z Capital 3,81,900 Debtors Bills Payable 18,100 50,000 Creditors 41,870 Vehicles 2,60,000
Workmen compensation fund 58,130 P and L a/c 15,000 Investment fluctuation fund 12,350 Advertisement Suspense a/c X s Loan 30,440 Investments 85,000 Mrs.Y s Loan 57,210 B/R Bank over draft 15,000 Goodwill General Reserve 85,000 Loan given to Z s wife 5,000 otal 11,00,000 otal 11,00,000 he firm is dissolved on 1 st April 2013 and the following agreements have taken place among the partners (a) Land and Buildings are sold at 2,80,000 (b) Machinery and vehicles are sold for a loss of Rs. each. (c) B/R is taken by Y to settle his wife s Loan (d) realized 65,000 and there is no trace of half of debtors. (e) Creditors and B/P accepted with a discount of 20%. (f) X s loan is paid at Rs.28,000 in full settlement. (g) Investments sold at market value Rs.70,000. (h) Realization expenses Rs.12,000. (i) Goodwill realized nill. (j) Z s wife paid back to the firm Rs.4,000 for loan given to her in full settlement. (k) Workmen claimed a compensation of Rs.,so paid. Prepare Realisation, Capital and Cash accounts Question 7.5 Following is the Balance Sheet ofa, B and C as on 31 st DEC 2013 and their profit and loss ratios are 3:3:4 respectively. LIABILIIES Rs. ASSES Rs. A Capital 2,00,000 Land & Buildings 2,00,000 B Capital 1,50,000 Machinery 1,00,000 C Capital 3,00,000 Debtors 1, 1,00,000 Less:RBD() Bills Payable 25,000 50,000 Creditors 75,000 Cash 1,00,000 Workmen compensation fund 50,000 Bank 1,00,000 Investment fluctuation fund 5,000 Advertisement Suspense a/c B s Loan 45,000 Investments 70,000 Mrs.A s Loan 1,50,000 B/R 1,70,000 P and L a/c 50,000 Goodwill 80,000
General Reserve 50,000 Loan given to C s wife 1,00,000 otal 11,00,000 otal 11,00,000 he firm is dissolved on 1 st JANUARY 2014 and the following agreements have taken place among the partners (a) Land and Buildings are sold at 1,80,000 (b) Machinery are sold for a PROFI of Rs. (c) B/R is taken by A to settle his wife s Loan (d) Debtors and stock realized FULL. (e) Creditors and B/P accepted 80%. (f) B s loan is paid off full (g) Investments are sold at a profit of Rs.. (h) Realization expenses Rs. paid by B (i) Goodwill realized Rs.. (j) C s wife paid back loan given to her. Prepare necessary accounts to close the books. Question 7.6 Following is the Balance Sheet of A, B and as on 31 st March 2016 and their profits and losses ratios are 5:2:3 respectively. LIABILIIES ASSES A s Capital account B s Capital account 2,00,000 3,00,000 Land and building Other fixed assets 2,50,000 3,50,000 C s capital account 2,50,000 Debtors 35,000 Profit and loss a/c 24,000 Less: Provision (5,000) Creditors Mrs. A s loan 31,000 15,000 Cash Investments 50,000 1,90,000 Bank loan 50,000 OAL 9,00,000 OAL 9,00,000 On 1-4-2016 and the firm is dissolved and the assets sold and liabilities are paid as follows. (a) Land and Buildings are sold at Rs.2,90,000. (b) Other Fixed assets are sold at Rs.3,40,000. (c) Debtors realised Rs.32,000 and stock realised 90%. (d) Creditors is paid full. (e) Expenses for the process of realisation Rs.3,000. (f) A decided to pay Mrs.A s loan and has taken over investments. (g) C decided to pay Bank Loan. Prepare RealisationAccount,Capital Accounts of all partners and Cash account. Question 7.7
Following is the Balance Sheet of Raman and Ramesh on March 31 st, 2016 LIABILIIES ASSES Sundry creditors Bills payable Bank overdraft Mrs Raman s loan Ramesh s Loan Goodwill Building Plant and fitting Investments 25,000 25,000 15,300 8,700 Investment fluctuation reserve 2,800 Debtors 17,000 Employees provident fund 1,200 Less: RBD (2000) 15,000 Raman s capital 2,000 Bills receivable Cash at bank 13,000 Ramesh s Capital Profit and loss account 4,000 OAL 1,26,000 OAL 1,26,000 he firm was dissolved on June 30, 2002 and following was the position : 1. Raman agreed to pay off his wife s loan. 2. Debtors realized Rs. 12,000. 3. Ramesh took away all the investments at Rs. 12,000. 4. Other assets realized as follows : Plant and Fittings Building 50,000 Goodwill 6,000 5. Sundry creditors and Bills payable were settled at 5% discount. 6. Raman accepted stock at Rs 8,000 and Ramesh took over bills receivable at 20% discount. 7. Realization expenses amounted to Rs. 2,000. Record journal entries and also prepare various ledger accounts. Question 7.8 (ISC 2013 ) Following is the balance sheet of Ravi and Prakash as on 31 st March, 2012 LIABILIIES ASSES Sundry creditors 60,000 Cash 25,000 Ravi s loan 15,000 Debtors 42,000 Investment fluctuation fund 15,000 2,000 Less: Provision for doubtful debts (6,000) 36,000 Ravi s capital Prakash s Capital Investments Plant and Machinery 12,000 18,000 41,000 OAL 1,32,000 OAL 1,32,000
he firm was dissolved on 31 st March, 2012, on the following terms: a) Ravi took over stock at 8,000. b) Creditors payable after two months were paid immediately at a discount of 6% per annum. c) Debtors realized 35,000. d) Plant and Machinery and Investments realized 60,000. e) An old computer completely written off was taken over by Prakash at 1,200. f) Realization expenses of 2,000 were paid by Ravi. You are required to prepare: i) Realization Account. ii) Partners' Capital Accounts. iii) Cash Account. Question 7.9 Yesterday, oday and omorrow were partners in a firm sharing profits and losses in the ratio of 3:2:1. hey decided to dissolve their firm with effect from 31 st Dec,2011. he Balance Sheet on which date was as follows: LIABILIIES ASSES Loan on Machinery 45,000 Mortgage Creditors 25,000 Bills payable 12,000 Debtors 28,500 Less:Provision(1,500) Capital a/cs: Copy rights 15,000 Yesterday 45,000 Patents oday Cash at Bank 18,500 omorrow 15,000 OAL 1,47,000 OAL 1,47,000 Additional information in connection with the dissolution was as follows: (a) Bills payable are due on an average period of 3 months and now settled at a discount of 10% p.a. (b) oday took some of the Patents at Rs.3,500 whose book value was Rs.5,000 (c) he remaining assets realized as follows: Machinery Rs.; Rs.15,500; Debtors Rs.25,500; Patents 50% of the book value.
(d)liabilities were paid and discount of Rs.1,250 was allowed by the Creditors (e)copyrights realized nothing. (f) Expenses dissolution amounted to Rs.1,500. Prepare the necessary Ledger Accounts to close the books of the firm. Question 7.10 he following is the balance sheet of A, B and C as on 31 st March 2016 and their profit sharing ratio is 5:3:2. Mr. C was appointed to complete the process of dissolution for which he was given a commission of Rs. 2,000. LIABILIIES A s Capital account B s Capital account C s Loan Profit and loss account Employees provident fund Creditors 3,75,000 5,85,000 2,50,000 35,000 40,000 50,000 15,000 ASSES Goodwill Land and building Debtors 35,000 Less: Provision (5,000) Cash C s Capital account 1,50,000 3,00,000 6,50,000 1,40,000 80,000 OAL 13,50,000 OAL 13,50,000 Additional information in connection with the dissolution was as follows: a) Land and building realized 60% of book value b) Creditors took over stock costing Rs. 75,000 for full settlement of their accounts and remaining stock is realized at 10% less than the book value. c) All debtors were good d) Realisation expense Rs. is borne by Mr.A Prepare Partners capital account and Cash book. Question 7.11 Following is the balance sheet of Arman, Barman and Charman as on 31 st March 2016 and their profit sharing ratios are 5:3:2 respectively: LIABILIIES ASSES Arman s Capital account Barman s Capital account Charman s capital account Barman s Loan Creditors 2,00,000 2,80,000 3,00,000 2,00,000 6,00,000 Land and building Furniture Debtors Profit and loss account Cash 4,50,000 1,00,000 6,50,000 1,80,000 1,90,000 OAL 16,00,000 OAL 16,00,000
he firm is dissolved as all partners have become insolvent. a) Land and building realized 20% of book value b) realized only 30% of its book value c) 50% of debtors were realized at 40% of its book value, Remaining debtors were sold to a debt collection agency and received after deducting a commission of Rs. 5,000. d) A portion of furniture sold for Rs. 16,000 at discount of 20 % on its original cost, remaining furniture taken over by Charman at a discount of Rs.. e) Realization expense Rs. was paid by Charman Prepare realization account, Partners capital account and cash accounts.