Advertisements
Advertisements
Question
Aman and Harsh were partners in a firm. They decided to dissolve their firm. Pass necessary Journal entries for the following after various assets (other than Cash and Bank) and third party liabilities have been transferred to Realisation Account:
(a) There was furniture worth ₹ 50,000. Aman took over 50% of the furniture at 10% discount and the remaining furniture was sold at 30% profit on book value.
(b) Profit and Loss Account was showing a credit balance of ₹ 15,000 on the date of dissolution.
(c) Harsh's loan of ₹ 6,000 was discharged at ₹ 6,200.
(d) The firm paid realisation expenses amounting to ₹ 5,000 on behalf of Harsh who had to bear these expenses.
(e) There was a bill for 1,200 under discount. The bill was received from Soham who proved insolvent and a first and final dividend of 25% was received from his estate.
(f) Creditors, to whom the firm owed ₹ 6,000, accepted stock of ₹ 5,000 at a discount of 5% and the balance in cash.
Solution
Journal
|
Date |
Particulars |
L.F. |
Debit Amount (Rs) |
Credit Amount (Rs) |
|
|
a. |
Aman’s Capital A/c |
Dr. |
|
22,500 |
|
|
|
Bank A/c |
Dr. |
|
32,500 |
|
|
|
To Realisation A/c |
|
|
|
55,000 |
|
|
(Assets realized) |
|
|
|
|
|
b. |
Profit & Loss A/c |
Dr. |
|
15,000 |
|
|
|
To Aman’s Capital A/c |
|
|
|
7,500 |
|
|
To Harsh’s Capital A/c |
|
|
|
7,500 |
|
|
(Profit distributed) |
|
|
|
|
|
c. |
Harsh’s Loan A/c |
Dr. |
|
6,000 |
|
|
|
Realisation A/c |
Dr. |
|
200 |
|
|
|
To Bank A/c |
|
|
|
6,200 |
|
|
(Loan Discharged) |
|
|
|
|
|
|
|
Dr. |
|
5,000 |
|
|
d. |
Harsh’s Capital A/c |
|
|
|
5,000 |
|
|
To Bank A/c |
|
|
|
|
|
|
(Expenses paid on behalf of partner) |
|
|
|
|
|
e. |
Bank A/c |
Dr. |
|
300 |
|
|
|
To Realisation A/c |
|
|
|
300 |
|
|
(Amount received) |
|
|
|
|
|
|
Realisation A/c |
Dr. |
|
1,200 |
|
|
|
To Bank A/c |
|
|
|
1,200 |
|
|
(Amount paid) |
|
|
|
|
|
f. |
Realisation A/c |
Dr. |
|
1,250 |
|
|
|
To Bank A/c |
|
|
|
1,250 |
|
|
(Creditors paid) |
|
|
|
|
|
g. |
Aman’s Capital A/c |
Dr. |
|
4,000 |
|
|
|
Harsh’s Capital A/c |
Dr. |
|
4,000 |
|
|
|
To Realisation A/c |
|
|
|
8,000 |
|
|
(Loss on dissolution transferred to Partners’ Capital A/c) |
|
|
|
|
APPEARS IN
RELATED QUESTIONS
On 1st August, 2010 Swapnali sold goods to Swapnil on credit for Rs 20,000. And drew two bills of 60% and 40% of the amount due from Swapnil for 3 and 4 months period respectively. Swapnil accepted and return it to Swapnali immediately. On 1st September 2010 Swapnali send 3 months acceptance to her bank for collection and discounted 4 months acceptance with her bank @ 18% p.a.
On the due date of the respective bills Swapnil honoured 3 months acceptance for which bank debited Rs 50 as bank charges. On due date of 4 months acceptance Swapnil dishonoured for which Swapnali’s bank paid nothing charges Rs 100.
Pass the journal entries in the books of Swapnali and prepare Swapnil’s account in her ledger.
On 1st August, 2012 Omprakash drew a bill of Rs 10,000 for 60 days after date on Sharadchandra. On 15th August, 2012 Omprakash purchased goods from Hariprasad for Rs 12,000. On the same date Omprakash endorsed Sharadchandra’s bill in favour of Hariprasad and paid the balance by cheque at 1% cash discount. On the same date Hariprasad discounted the bill with his bank for Rs 9,500.
On the due date Sharadchandra honoured his acceptance presented by Hariprasad.You are required to pass journal entries in the books of Omprakash, Sharadchandra and Hariprasad.
On 5th September, 2010 Prakash Patil accepted a bill of Rs 16,000 drawn by Chandu Chaudhari for 3 months. This bill was drawn for amount which Prakash Patil owed to Chandu Chaudhari. On same date Chandu Chaudhari purchased goods from Magan Mahajan for Rs 20,000 for this Chandu Chaudhari endorsed Prakash Patil’s acceptance in favour of Magan Mahajan and accepted 2 months bill for the balance due. On 5th October, 2010 Magan Mahajan discounted both the bill with his bank @ 12% p.a.
On the due date Prakash Patil’s honoured his acceptance while Chandu Chaudhari unable to meet the payment for his acceptance. Magan Mahajan’s bank paid noting charges Rs 100.
Pass Journal entries in the books of Magan Mahajan and also prepare Prakash Patil’s and Magan Mahajan ledger account in the books of Chandu Chaudhari.
On 1st June, 2010 Narayan draws a bill for Rs 50,000 on Chunilal for 4 months period.
The bill is duly accepted and returned to Narayan. One month after the date. Narayan discounted the bill with bank @ 18% p.a.
Before due date Chunilal dishonoured his acceptance. Bank paid noting charges Rs 1,125. Narayan requested to renew the bill for further period of 2 months. Narayan agreed he took the bill back from bank and received new acceptance for 40% amount of the bill with full amount of noting charges and cheque for 60% balance plus interest @ 12% p.a.
Before the due date Chunilal declared insolvent and 30% of the amount due could be recovered from his private estate.
Write Journal of Narayan and Chunilal for the above bill transactions.
On 1st Sept., 2010 Badrinath drew a bill of Rs 20,000 on Dinanath at 4 months. The bill was duly accepted by Dinanath. On 5th Sept., 2010 Badrinath endorsed the bill in favour of Somnath. However on 1st January, 2012 Dinanath approached to Badrinath and requested bill be renewed for a further period of 3 months at 15% p.a. Badrinath agreed and paid necessary money to Somnath. Before one month of the due date of the new bill Dinanath retired his acceptance @ 10% p.a.
Pass journal entries in the books Badrinath and Dinanath.
Journalise the following bill transactions as on 21st May, 2010 in the books of Prabodhan.
A. Renewed Veerendra’s acceptance of Rs 17,500 due on 21st May 2010 with interest Rs 500 for 2 months.
B. Bank informed that Radhabai’s acceptance of Rs 1,400 which was discounted dishonoured, bank paid noting charges Rs 185.
C. Sent acceptance of Rs 12,000 at 120 days after sight, drawn by Mudhukar for the amount due to him.
D. Pandharinath honoured his acceptance of Rs 8,500 which was deposited into bank for collection.
Journalise the following transactions on following dates in the books of Gajanan
A. On 3rd October, 2012 Bankatlal informs Gajanan that Navnath’s acceptance of Rs 16,000 endorsed to him dishonoured and noting charges paid Rs 200.
B. On 9th October, 2012 Vishwanath’s acceptance for 120 days of Rs 15,500 dated 24th September, 2008 deposited into bank for collections.
C. On 11th October 2012 Gajanan sold goods to Kartik for Rs 4,500 and received own acceptance from him, which was given to milind of Rs 4,500 and due for payment on this date.
D. 20th October, 2012 recovered 40% of the amount due the private estate of Jyoti who declared as insolvent, against bill accepted by her for Rs 6,000 which was dishonoured on 29th September, 2008.
E. On 21st October, 2012 Gajanan renews his acceptance of Rs 7,500 to Pandurang by paying cheque Rs 3,500 and accepting new bill for 2 months for the balance plus interest @ 18% p.a.
How will you deal with the Realisation expenses of the firm of Rashim and Bindiya in the following cases
1. Realisation expenses amounts to Rs 1,00,000,
2. Realisation expenses amounting to Rs 30,000 are paid by Rashim, a partner.
3. Realisation expenses are to be borne by Rashim for which he will be paid Rs 70,000 as remuneration for completing the dissolution process. The actual expenses incurred by Rashim were Rs 1,20,000.
Record necessary journal entries to record the following unrecorded assets and liabilities in the books of Paras and Priya:
1. There was an old furniture in the firm which had been written-off completely in the books. This was sold for Rs 3,000,
2. Ashish, an old customer whose Account for Rs 1,000 was written-off as bad in the previous year, paid 60%, of the amount,
3. Paras agreed to take over the firm’s goodwill (not recorded in the books of the firm), at a valuation of Rs 30,000,
4. There was an old typewriter which had been written-off completely from the books. It was estimated to realize Rs 400. It was taken away by Priya at an estimated price less 25%,
5. There were 100 shares of Rs 10 each in Star Limited acquired at a cost of Rs 2,000 which had been written-off completely from the books. These shares are valued @ Rs 6 each and divided among the partners in their profit sharing ratio.
Ashok, Babu and Chetan are in partnership sharing profit in the proportion of 1/2, 1/3, 1/6 respectively. They dissolve the partnership of the December 31, 2017, when the balance sheet of the firm as under:
Balance Sheet of Ashok, Babu and Chetan as on December 31, 2017
|
Liabilities |
Amt (Rs.) |
Assets |
Amt (Rs.) |
||
|
Sundry Creditors |
20,000 |
Bank |
7,500 |
||
|
Bills payable |
25,500 |
Sundry Debtors |
58,000 |
||
|
Babu’s loan |
30,000 |
Stock |
39,500 |
||
|
Capital’s: |
1,52,000 |
Machinery |
48,000 |
||
|
Ashok |
70,000 |
Investment |
42,000 |
||
|
Babu |
55,000 |
Freehold Property |
50,500 |
||
|
Chetan |
27,000 |
|
|
||
|
Current Accounts : |
18,000 |
|
|||
|
Ashok |
10,000 |
|
|||
|
Babu |
5,000 |
|
|||
|
Chetan |
3,000 |
|
|||
|
|
|
2,45,500 |
|
2,45,500 |
|
The Machinery was taken over by Babu for Rs 45,000, Ashok took over the Investment for Rs 40,000 and Freehold property was taken over by Chetan at Rs 55,000. The remaining Assets realised as follows: Sundry Debtors Rs 56,500 and Stock Rs 36,500. Sundry Creditors were settled at discount of 7%. A Office computer, not shown in the books of Accounts realised Rs 9,000. Realisation expenses amounted to Rs 3,000.
Prepare Realisation Account, Partners Capital Account, Bank Account.
Lal and Pal were partners in a firm sharing profits in the ratio of 3 : 7. On 1st April, 2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to Realisation Account, you are given the following information:
(a) A creditor of ₹ 3,60,000 accepted machinery valued at ₹ 5,00,000 and paid to the firm ₹ 1,40,000.
(b) A second creditor for ₹ 50,000 accepted stock at ₹ 45,000 in full settlement of his claim.
(c) A third creditor amounting to ₹ 90,000 accepted ₹ 45,000 in cash and investments worth ₹ 43,000 in full settlement of his claim.
(d) Loss on dissolution was ₹ 15,000.
Pass necessary Journal entries for the above transactions in the books of firm assuming that all payments were made by cheque.
Bale and Yale are equal partners of a firm. They decide to dissolve their partnership on 31st March, 2019 at which date their Balance Sheet stood as:
| Liabilities | ₹ | Assets | ₹ | |
| Capital A/cs: | Building | 45,000 | ||
| Bale | 50,000 | Machinery | 15,000 | |
| Yale | 40,000 | 90,000 | Furniture | 12,000 |
| General Reserve | 8,000 | Debtors | 8,000 | |
| Bale's Loan A/c | 3,000 | Stock | 24,000 | |
| Creditors | 14,000 | Bank | 11,000 | |
| 1,15,000 | 1,15,000 | |||
(a) The assets realised were:
Stock ₹ 22,000; Debtors ₹ 7,500; Machinery ₹ 16,000; Building ₹ 35,000.
(b) Yale took over the Furniture at ₹ 9,000.
(c) Bale agreed to accept ₹ 2,500 in full settlement of his Loan Account.
(d) Dissolution Expenses amounted to ₹ 2,500.
Prepare the:
(i) Realisation Account; (ii) Capital Accounts of Partners;
(iii) Bale's Loan Account; (iv) Bank Account.
Shilpa, Meena and Nanda decided to dissolve their partnership on 31st March, 2019. Their profit-sharing ratio was 3 : 2 : 1 and their Balance Sheet was as under:
BALANCE SHEET OF SHILPA, MEENA AND NANDA as at 31st March, 2019
| Liabilities | ₹ | Assets | ₹ | |
| Capital A/cs: | Land | 81,000 | ||
| Shilpa | 80,000 | Stock | 56,760 | |
| Meena | 40,000 | 1,20,000 | Debtors | 18,600 |
| Bank Loan | 20,000 | Nanda's Capital | 23,000 | |
| Creditors | 37,000 | Cash | 10,840 | |
| Provision For Doubtful Debts | 1,200 | |||
| General Reserve | 12,000 | |||
| 1,90,200 | 1,90,200 | |||
It is agreed as follows:
The stock of value of ₹ 41,660 are taken over by Shilpa for ₹ 35,000 and she agreed to discharge bank loan. The remaining stock was sold at ₹ 14,000 and debtors amounting to ₹ 10,000 realised ₹ 8,000. Land is sold for ₹ 1,10,000. The remaining debtors realised 50% at their book value. Cost of realisation amounted to ₹ 1,200. There was a typewriter not recorded in the books worth of ₹ 6,000 which were taken over by one of the Creditors at this value. Prepare Realisation Account, Partners' Capital Accounts, and Cash Account to Close the books of the firm.
A, B and C were equal partners. On 31st March, 2019, their Balance Sheet stood as:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Creditors | 50,400 | Cash | 3,700 | |
| Reserve | 12,000 | Stock | 20,100 | |
| Capital A/cs: | Debtors | 62,600 | ||
| A | 40,000 | Loan to A | 10,000 | |
| B | 25,000 | Investments | 16,000 | |
| C | 15,000 | 80,000 | Furniture | 6,500 |
| Building | 23,500 | |||
| 1,42,400 | 1,42,400 | |||
The firm was dissolved on the above date on the following terms:
(a) For the purpose of dissolution, Investments were valued at ₹ 18,000 and A took over the Investments at this value.
(b) Fixed Assets realised ₹ 29,700 whereas Stock and Debtors realised ₹ 80,000.
(c) Expenses of realisation amounted to ₹ 1,300.
(d) Creditors allowed a discount of ₹ 800.
(e) One Bill receivable for ₹ 1,500 under discount was dishonoured as the acceptor had become insolvent and was unable to pay anything and hence the bill had to be met by the firm.
Prepare Realisation Account, Partner's Capital Accounts and Cash Account showing how the accounts would finally be settled among the partners.
A, B and C are in partnership sharing profits and losses in the proportions of 1/2, 1/3 and 1/6 respectively. On 31st March, 2019, they decided to dissolve the partnership and the position of the firm on this date is represented by the following Balance Sheet:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Creditors | 40,000 | Cash at Bank | 3,000 | |
| Loan A/c: | Stock | 50,000 | ||
| A | 10,000 | Sundry Debtors | 50,000 | |
| Workmen Compensation Reserve | 21,000 | Land and Building | 57,000 | |
| Capital A/cs: | Profit and Loss A/c | 15,000 | ||
| A | 60,000 | Advertisement Suspense A/c | 6,000 | |
| B | 40,000 | |||
|
C |
10,000 | 1,10,000 | ||
| 1,81,000 | 1,81,000 | |||
During the course of realisation, a liability under a suit for damages is settled at ₹ 20,000 as against ₹ 5,000 only provided for in the books of the firm.
Land and Building were sold for ₹ 40,000 and the Stock and Sundry Debtors realised ₹ 30,000 and ₹ 42,000 respectively. The expenses of realisation amounted to ₹ 1,200.
There was a car in the firm, which was completely written off from the books. It was taken by A for ₹ 20,000. He also agreed to pay Outstanding Salary of ₹ 20,000 not provided in books.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.
X, Y and Z carrying on business as merchants and sharing profits and losses in the ratio of 2 : 2 : 1, dissolved their firm as at 31st March, 2019 on which date their Balance Sheet was as follows:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Sundry Creditors | 41,500 | Cash at Bank | 22,500 | |||||
| Bills Payable | 20,000 | Stock | 80,000 | |||||
| Bank Loan | 40,000 | Debtors | 50,000 | |||||
| General Reserve | 50,000 | Less: Provision for Doubtful Debts | 2,500 | 47,500 | ||||
| Investments Fluctuation Reserve | 40,000 | Investments | 55,000 | |||||
| Capital A/cs: | Premises | 1,51,500 | ||||||
| X | 75,000 | |||||||
| Y | 75,000 | |||||||
| Z | 15,000 | 1,65,000 | ||||||
| 3,56,500 | 3,56,500 | |||||||
A bill for ₹ 5,000 received from Mohan discounted from bank is not met on maturity.
The assets except Cash at Bank and Investments were sold to a company which paid ₹ 3,25,000 in cash.The Investments were sold and ₹ 56,500 were received. Mohan proved insolvent and a dividend of 50% was received from his estate. Sundry Creditors (including Bills Payable) were paid ₹ 57,500 in full settlement. Realisation Expenses amounted to ₹ 15,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.
A, B and C were in partnership sharing profits in the ratio of 7 : 2 : 1 and the Balance Sheet of the firm as at 31st March, 2019 was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capital A/cs: | Building | 20,000 | ||
| A | 12,410 | Plant | 31,220 | |
| B | 8,650 | Goodwill | 10,000 | |
| C | 80,620 | 1,01,680 | 100 Shares in X Ltd. (At cost) | 2,400 |
| Creditors | 11,210 | 1,000 Shares in Y Ltd. (At cost) | 10,000 | |
| Reserve for Depreciation on Plant | 20,000 | Stock | 11,240 | |
| Debtors | 8,740 | |||
| Bank | 1,210 | |||
| Patents | 38,080 | |||
| 1,32,890 | 1,32,890 | |||
It was agreed to dissolve the partnership as on 31st March, 2019 and the terms of dissolution were−
(a) A to take over the Building at an agreed amount of ₹ 31,500.
(b) B, who was to carry on the business, to take over the Goodwill, Stock and Debtors at book value, the Patents at ₹ 30,000 and Plant at ₹ 5,000. He was also to pay the Creditors.
(c) C to take over shares in X Ltd. at ₹ 15 each.
(d) The shares in Y Ltd. to be divided in the profit-sharing ratio.
Show Ledger Accounts recording the dissolution in the books of the firm.
There are two partners X and Y in a firm and their capitals are ₹ 50,000 and ₹ 40,000. The creditors are ₹ 30,000. The assets of the firm realise ₹ 1,00,000. How much will X and Y receive?
Ashok and Kishore were in partnership sharing profits in the ratio of 3 : 1. They agreed to dissolve the firm. The assets (other than cash of ₹ 2,000) of the firm realised ₹ 1,10,000. The liabilities and other particulars on that date were:
| Creditors | ₹ 40,000 | |
| Ashok's Capital | ₹ 1,00,000 | |
| Kishore's Capital | ₹ 10,000 | (Dr. Balance) |
| Profit and Loss A/c | ₹ 8,000 | (Dr. Balance) |
| Realisation Expenses | ₹ 1,000 |
You are required to close the books of the firm.
A, B and C started business on 1st April, 2018 with capitals of ₹ 1,00,000; ₹ 80,000 and ₹ 60,000 respectively sharing profits (losses) in the ratio of 4 : 3 : 3. For the year ended 31st March, 2019, the firm suffered a loss of ₹ 50,000. Each of the partners withdrew ₹ 10,000 during the year.
On 31st March, 2019, the firm was dissolved, the creditors of the firm stood at ₹ 24,000 on that date and Cash in Hand was ₹ 4,000. The assets realised ₹ 3,00,000 and Creditors were paid ₹ 23,500 in full settlement of their claims.
Prepare Realisation Account and show your workings clearly.
