Advertisements
Advertisements
Question
Rohit, Kunal and Sarthak are 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 the third party liability have been transferred to Realisation Account:
(a) Kunal agreed to pay off his wife's loan of ₹ 6,000.
(b) Total Creditors of the firm were ₹ 40,000. Creditors worth ₹ 10,000 were given a piece of furniture costing ₹ 8,000 in full and final settlement. Remaining Creditors allowed a discount of 10%.
(c) Rohit had given a loan of ₹ 70,000 to the firm which was duly paid.
(d) A machine which was not recorded in the books was taken over by Kunal at ₹ 3,000, whereas its expected value was ₹ 5,000.
(e) The firm had a debit balance of ₹ 15,000 in the Profit and Loss Account on the date of dissolution.
(f) Sarthak paid the realisation expenses of ₹ 16,000 out of his private funds, who was to get a remuneration of ₹ 15,000 for completing dissolution process and was responsible to bear all the realisation expenses.
Solution
Journal
|
Date |
Particulars |
L.F. |
Debit Amount Rs |
Credit Amount Rs |
|
| (a) |
Realisation A/c |
Dr. |
6,000 |
||
|
To Kunal’s Capital A/c |
6,000 |
||||
|
(Being Kunal agrees to pay off his wife’s loan) |
|||||
| (b) |
Realisation A/c |
Dr. |
27,000 |
||
|
To Cash A/c |
27,000 |
||||
|
(Being Creditors worth Rs 30,000 paid |
|||||
| (c) |
Rohit’s Loan A/c |
Dr. |
70,000 |
||
|
To Cash A/c |
70,000 |
||||
|
(Being Loan paid by the firm) |
|||||
| (d) |
Kunal’s Capital A/c |
Dr. |
3,000 |
||
|
To Realisation A/c |
3,000 |
||||
|
(Being asset taken over by Kunal) |
|||||
| (e) |
Rohit’s Capital A/c |
Dr. |
5,000 |
||
|
Kunal’s Capital A/c |
Dr. |
5,000 |
|||
|
Sarthak’s Capital A/c |
Dr. |
5,000 |
|||
|
To Profit and Loss A/c |
15,000 |
||||
|
(Being Loss distributed equally) |
|||||
| (f) |
Realisation A/c |
Dr. |
15,000 |
||
|
To Sarthak’s Capital A/c |
15,000 |
||||
|
(Being remuneration of Rs 15,000 paid for completion of dissolution process) |
|||||
APPEARS IN
RELATED QUESTIONS
Devendra of Ahmednagar and Mahendra of Pune entered into joint venture to consign goods to Virendra of Jalgaon to be sold on their joint risk, which is proportion of 4/5 and 1/5 respectively.
Mahendra sent goods worth Rs 6,00,000 paying carriage and freight Rs 9,500 and other expenses Rs 3,400.
The amount of discount, Rs 6,000 was to be treated as joint venture expense.
Virendra remitted Rs 11,00,000 to Devendra and the balance to Mahendra both by bank draft.
You are required to prepare Joint Venture A/c, Mahendra's A/c and Virendra's A/c in the books of Devendra.
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.
Sushant owes Surekha Rs 1,25,000 Surekha draws a bill for Rs 1,00,000 on Sushant for 4 months period and received the cheque for the balance. The bill is duly accepted and returned by Sushant. On the same date Surekha endorsed Sushant’s acceptance to Suresh.
On the due date Suresh informed Surekha that Sushant dishonoured his acceptance and Rs 3,175 paid as noting charges Surekha then drew a new bill for 3 month on Sushant including noting charges and interest Rs 4,000. On the due date bill was duly honoured by Sushant.
Write Journal entries in the books of Surekha and prepare Surekha’s account in the books of Sushant.
On 7th May, 2011 Kulkarni of Karvenagar draws a bill on Patwardhan of Latur for Rs 18,000 at 3 months. Patwardhan accepts and returns it to Kulkarni. Kulkarni then sent the bill into his bank for collections.
On due date Patwardhan finds himself unable to make payment of the bill and request Kulkarni to renew it. Kulkarni agreed on the condition that Patwardhan should pay Rs 5,000 in cash, and should accept new bill for the balance at 2 months with interest @ 18% p.a. These arrangements were carried through. Before due date Patwardhan declared as insolvent and 20% of the amount due could be recovered from his private estate as first and final dividend.
Give journal entries in the books of Kulkarnis. Also prepare Kulkarni’s Accounts in the books of Patwardhan.
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.
Record necessary journal entries in the following cases:
[a] Creditors worth Rs 85,000 accepted Rs 40,000 as cash and Investment worth Rs 43,000, in full settlement of their claim.
[b] Creditors were Rs 16,000. They accepted Machinery valued at Rs 18,000 in settlement of their claim.
[c] Creditors were Rs 90,000. They accepted Buildings valued Rs 1,20,000 and paid cash to the firm Rs 30,000.
What journal entries would be recorded for the following transactions on the dissolution of a firm after various assets (other than cash) on the third party liabilities have been transferred to Reliasation Account.
1. Arti took over the Stock worth Rs 80,000 at Rs 68,000.
2. There was unrecorded Bike of Rs 40,000 which was taken over By Mr. Karim.
3. The firm paid Rs 40,000 as compensation to employees.
4. Sundry creditors amounting to Rs 36,000 were settled at a discount of 15%.
5. Loss on Realisation Rs 42,000 was to be distributed between Arti and Karim in the ratio of 3:4.
Anup and Sumit are equal partners in a firm. They decided to dissolve the partnership on December 31, 2017. When the balance sheet is as under:
Balance Sheet of Anup and Sumit as on December 31, 2017
| Liabilities | Amt (Rs.) | Amt (Rs.) |
Assets | Amt (Rs.) |
| Sundry Creditors | 27,000 | Cash at bank | 11,000 | |
| Reserve fund | 10,000 | Sundry Debtors | 12,000 | |
| Loan | 40,000 | Plants | 47,000 | |
| Capital : | 120,000 | Stock | 42,000 | |
| Anup | 60,000 | Leasehold land | 60,000 | |
| Sumit | 60,000 |
Furniture |
25,000 | |
| 197,000 | 197,000 |
The Assets were realised as follows:
| Rs. | |
| Lease hold land | 72,000 |
| Furniture | 22,500 |
| Stock | 40,500 |
| Plant | 48,000 |
| Sundry Debtors | 10,500 |
The Creditors were paid Rs 25,500 in full settlement. Expenses of Realisation amount to Rs 2,500.
Prepare Realisation Account, Bank Account, Partners Capital Accounts to close the books of the firm.
Pass Journal entries for the following:
(a) Realisation expenses of ₹ 15,000 were to be met by Rahul, a partner, but were paid by the firm.
(b) Ramesh, a partner, was paid remuneration of ₹ 25,000 and he was to meet all expenses.
(c) Anuj, a partner, was paid remuneration of ₹ 20,000 and he was to meet all expenses. Firm paid an expense of ₹ 5,000.
Pass Journal entries for the following:
(a) Realisation expenses amounted to ₹ 10,000 were paid by the firm on behalf of Alok, a partner, with whom it was agreed at ₹ 7,500.
(b) Realisation expenses amounted to ₹ 5,000. It was agreed that the firm will pay ₹ 2,000 and balance by Ravinder, a partner.
(c) Dissolution expenses amounted to ₹ 10,000 were paid by Amit, a partner, on behalf of the firm.
Ramesh and Umesh were partners in a firm sharing profits in the ratio of their capitals. On 31st March, 2013, their Balance Sheet was as follows:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Creditors | 1,70,000 | Bank | 1,10,000 | |||||
| Workmen Compensation Reserve | 2,10,000 | Debtors | 2,40,000 | |||||
| General Reserve | 2,00,000 | Stock | 1,30,000 | |||||
| Ramesh's Current Account | 80,000 | Furniture | 2,00,000 | |||||
| Capital A/cs: | Machinery | 9,30,000 | ||||||
| Ramesh | 7,00,000 | Umesh's Current Account | 50,000 | |||||
| Umesh | 3,00,000 | 10,00,000 | ||||||
| 16,60,000 | 16,60,000 | |||||||
On the above date the firm was dissolved.
(a) Ramesh took over 50% of stock at ₹ 10,000 less than book value. The remaining stock was sold at a loss of ₹ 15,000. Debtors were realised at a discount of 5%.
(b) Furniture was taken over by Umesh for ₹ 50,000 and machinery was sold for ₹ 4,50,000.
(c) Creditors were paid in full.
(d) There was an unrecorded bill for repairs for ₹ 1,60,000 which was settled at ₹ 1,40,000.
Prepare Realisation Account.
Achal and Vichal were partners in a firm sharing profits in the ratio of 3 : 5. On 31st March, 2019, their Balance Sheet was as follows:
| Liabilities | Amount (₹) | Assets | Amount (₹) | |||||
| Capital A/cs: | Land and Building | 4,00,000 | ||||||
| Achal | 3,00,000 | Machinery | 3,00,000 | |||||
| Vichal | 5,00,000 | 8,00,000 | Debtors | 2,22,000 | ||||
| Creditors | 1,79,000 | Cash at Bank | 78,000 | |||||
| Employees' Provident Fund | 21,000 | |||||||
| 10,00,000 | 10,00,000 | |||||||
The firm was dissolved on 1st April, 2019 and the Assets and Liabilities were settled as follows:
(a) Land and Building realised ₹ 4,30,000.
(b) Debtors realised ₹ 2,25,000 (with interest) and ₹ 1,000 were recovered for Bad Debts written off last year.
(c) There was an Unrecorded Investment which was sold for ₹ 25,000.
(d) Vichal took over Machinery at ₹ 2,80,000 for cash.
(e) 50% of the Creditors were paid ₹ 4,000 less in full settlement and the remaining Creditors were paid full amount.
Pass necessary Journal entries for dissolution of the firm.
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.
Ashu and Harish are partners sharing profit and losses as 3 : 2 . They decided to dissolve the firm on 31st March, 2019. Their Balance Sheet on the above date was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Capital A/cs: | Building | 80,000 | ||||||
| Ashu | 1,08,000 | Machinery | 70,000 | |||||
| Harish | 54,000 | 1,62,000 | Furniture | 14,000 | ||||
| Creditors | 88,000 | Stock | 20,000 | |||||
| Bank Overdraft | 50,000 | Investments | 60,000 | |||||
| Debtors | 48,000 | |||||||
| Cash in Hand | 8,000 | |||||||
| 3,00,000 | 3,00,000 | |||||||
Ashu is to take over the building at ₹ 95,000 and Machinery and Furniture is taken over by Harish at value of ₹ 80,000. Ashu agreed to pay Creditor and Harish agreed to meet Bank overdraft. Stock and Investments are taken by both partner in profit-sharing ratio. Debtors realised for ₹ 46,000, expenses of realisation amounted to ₹ 3,000. Prepare necessary Ledger Accounts.
Krishna and Arjun are partners in a firm. They share profits in the ratio of 4 : 1. They decide to dissolve the firm on 31st March, 2019 at which date their Balance Sheet stood as:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
|
Bank Loan |
1,500 |
Trademarks |
1,200 |
||
|
Creditors for Goods |
8,000 |
Machinery |
12,000 |
||
|
Bills Payable |
500 |
Furniture |
400 |
||
|
Capital A/cs: |
Stock |
6,000 |
|||
|
Krishna |
16,000 |
Debtors |
9,000 |
||
|
Arjun |
6,000 |
22,000 |
Less: Provision for Bad Debts |
400 |
8,600 |
|
Cash at Bank |
2,800 |
||||
|
Advertisement Suspense |
1,000 |
||||
|
32,000 |
32,000 |
||||
The realisation shows the following results:
(a) Goodwill was sold for ₹ 1,000.
(b) Debtors were realised at book value less 10%.
(c) Trademarks realised ₹ 800.
(d) Machinery and Stock-in-Trade were taken by Krishna for ₹ 14,400 and ₹ 3,600 respectively.
(e) An unrecorded asset estimated at ₹ 500 was sold for ₹ 200.
(f) Creditors for goods were settled at a discount of ₹ 80. The expenses on realisation were ₹ 800.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.
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.
On 1st April, 2018, A, B and C commenced business in partnership sharing profits and losses in proportion of 1/2, 1/3 and 1/6 respectively. They paid into their Bank A/c as their capitals ₹ 22,000; ₹ 10,000 by A, ₹ 7,000 by B and ₹ 5,000 by C. During the year, they drew ₹ 5,000; being ₹ 1,900 by A, ₹ 1,700 by B and ₹ 1,400 by C.
On 31st March, 2019, they dissolved their partnership, A taking up Stock at an agreed valuation of ₹ 5,000, B taking up Furniture at ₹ 2,000 and C taking up Debtors at ₹ 3,000. After paying up their Creditors, there remained a balance of ₹ 1,000 at Bank. Prepare necessary accounts showing the distribution of the cash at the Bank and of the further cash brought in by any partner or partners as the case required.
The partnership between A and B was dissolved on 31st March, 2019. On that date the respective credits to the capitals were A − ₹ 1,70,000 and B − ₹ 30,000. ₹ 20,000 were owed by B to the firm; ₹ 1,00,000 were owed by the firm to A and ₹ 2,00,000 were due to the Trade Creditors. Profits and losses were shared in the proportions of 2/3 to A, 1/3 to B.
The assets represented by the above stated net liabilities realise ₹ 4,50,000 exclusive of ₹ 20,000 owed by B. The liabilities were settled at book figures. Prepare Realisation Account, Partners' Capital Accounts and Cash Account showing the distribution to the partners.
