Micheal Vaz solutions for Book Keeping and Accountancy [English] 12 Standard HSC Maharashtra State Board chapter 6 - Dissolution of Partnership Firm [Latest edition]

Answer in one sentence only.

What is dissolution of partnership firm?

Answer in one sentence only.

When is Realisation Account opened?

Answer in one sentence only.

Which accounts are not transferred to Realisation account?

Answer in one sentence only.

Who is called Insolvent person?

Answer in one sentence only.

What is a capital deficiency?

Answer in one sentence only.

In what proportion is the balance on Realisation Account transferred to Partners’ Capital / Current Accounts?

Answer in one sentence only.

Who should bear the capital deficiency of an insolvent partner?

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Which account is debited on repayment of Partner’s Loan?

Answer in one Sentence only.
Why is Realisation Account opened?

Answer in one sentence only.

Which account is debited on payment of dissolution expenses?

Write the word / term / phrase, which can substitute the following statements.
Debit balance in realisation account.

Give the word/term/phrase which can substitute the following statement.

Winding up of partnership business.

Write the word / term / phrase, which can substitute the following statements.
An account opened to find out the Profit or Loss on Sale of Assets and Settlement of Liabilities.

Write the word / term / phrase, which can substitute the following statement.
Debit balance of an insolvent Partner’s Capital Account.

Write the word / term / phrase, which can substitute the following statements.
Credit balance in Realisation Account.

Write the word / term / phrase, which can substitute the following statement.
Conversion of assets into cash on dissolution of firm.

Write the word / term / phrase, which can substitute the following statement.
Liability likely to arise in future on happening of certain events.

Give the word/term/phrase which can substitute the following statement.

Assets which are not recorded in the books of account.

Give the word/term/phrase which can substitute the following statement.

The account which shows realisation of assets and discharge of liabilities.

Write the word / term / phrase, which can substitute the following statement.
Expenses incurred on dissolution of a partnership firm.

State whether the following statements is True or False.

The firm is dissolved automatically on the retirement of a partner.

State whether the following statement is True or False.

On dissolution Cash or Bank Account is closed automatically.

State whether the following statement is True or False.

On dissolution Bank Overdraft is transferred to Realisation Account.

State whether the following statements is True or False.

A Solvent partner having debit balance to his Capital Account does not share the deficiency of Insolvent Partner’s Capital Account.

State whether the following statements is True or False.

At the time of dissolution of Partnership Firm all assets should be transferred to Realisation A/c.

State whether the following statement is True or False with reason.

The debit balance of insolvent partner’s Capital Account is known as a capital deficiency.

State whether the following statement is True or False.
At the time of dissolution loan from partner will be transferred to Realisation Account.

State whether the following statement is True or False with reason.

Dissolution takes place when the relation among the partners comes to an end.

State whether the following statement is True or False with reason.

The insolvency loss at the time of dissolution of the firm is shared by the solvent partners in their profit sharing ratio.

State whether the following statement is True or False with reason.

Realisation Loss is not transferred to the insolvent partner’s capital account.

In case of dissolution assets and liabilities are transferred to ______ A/c.

Dissolution expenses are credited to ______.

Deficiency of Insolvent partner will be suffered by solvent partners in their ___________ ratio.

If an asset is taken over by partner from firm his capital account will be ___________.

If any unrecorded liability is paid on dissolution of the firm ___________ is debited.

Select the most appropriate alternative from those given below :

Partnership is compulsorily dissolved when the partners of the firm become ____________

If the number of partners in a firm falls below two, the firm stands_________.

Select the most appropriate alternative from those given below :

Realisation Account is __________on realisation of assets.

Select the most appropriate alternative from those given below :

All activities of the partnership firm cease (stop) on ____________ of firm.

Sushil and Sumit were in partnership sharing profits and losses in the proportion of 3/5 and 2/5 respectively. On 31^st March, 2005 they decide to dissolve the firm when their Balance Sheet was as under:

Balance Sheet as on 31^st March, 2005

The Assets realised as follows: Stock Rs 14,000, Plant and Machinery Rs 12,000 and Debtors Rs 20,000. The Sundry Creditors were paid Rs 9,000 in full settlement.

Prepare: Realisation Account, Partners Capital Accounts and Bank Account.

Ganesh and Chandan were partners sharing profits and losses in the proportion of 3:2. They dissolve the partnership firm on 31^st March, 2011 when their position was as follows:

               Balance Sheet as on 31^st March, 2011

The Assets realised as follows: Debtors Rs 90,000, Stock Rs 2,00,000, and Goodwill Rs 25,000, Motor Car was taken over by Ganesh for Rs 70,000 and Furniture by Chandan for Rs 60,000.
The Creditors were paid Rs 22,500 in full settlement. The expenses of realisation amounted to Rs 10,000.

Pass necessary journal entries in the books of the firm.

Anil and Sunil were partners sharing profits and losses in the ratio of 3: 2. Their Balance Sheet as on 31st March, 2009.

The firm was dissolved on the above date and the assets realised as under:

1) Stock Rs 20,000, Debtors Rs 60,000, Plant Rs 40,000 and Building Rs 30,000.

2) Anil agreed to pay off the bills payable.

3) Creditors were paid in full.

4) Dissolution expenses were Rs 7,000. 

Prepare:
(i) Realisation Account
(ii) Bank Account
(iii) Current Account and Capital Account of the partners.

X, Y and Z were carrying on business. They share profits and losses in the ratio of 5:3:2 respectively. Their Balance Sheet as on 31^st March, 2010 was as under:

              Balance Sheet as on 31^st March, 2010

On the above date the firm was dissolved and the assets realised as under:

1) Investment Rs 5,000, Stock Rs 24,000 and Debtors Rs 15,000.

2) The Plant and Machinery was taken over by Mr. ‘X’ at book value.

3) Sundry Creditors and Mr. ‘Y’ loan were paid in full.

4) Realisation expenses incurred Rs 1,000.

Prepare Realisation Account, Partner’s Capital Account and Bank Account

A, B and C were partners sharing profits and losses in the ratio of 3:2:1. On 31^st March, 2010. Their Balance Sheet was as follows:

              Balance Sheet as on 31^st March, 2010

The firm was dissolved on 31^st March, 2010 and the assets realised as follows:

1) Join Life Policy was taken over by Mr. A at Rs 5,000.

2) Stock realised Rs 18,000, Debtors realised Rs 14,500, Plant and Machinery was sold for Rs 36,000.

3) Liabilities were paid in full. In addition one bill for Rs 700 under discount was dishonoured and had to be taken up by the firm.

4) There were no realisation expenses.

Give the Journal entries and necessary Ledger Accounts to close the books of the firm.

Pannalal, Babulal and Hiralal were partners sharing profits and losses in the proportion of 2:2:1, following is their Balance Sheet as on 31^st March, 2008.

             Balance Sheet as on 31^st March, 2008

On the above date the partners decided to dissolve the firm:

1) Assets were realised: Machinery Rs 22,500, Stock Rs 9,000, Investment Rs 10,500, Debtors Rs 22,500.

2) Dissolution expenses were Rs 1,500.

3) Goodwill of the firm realised Rs 12,000

Pass the necessary Journal entries in the books of the firm.

Mahesh, Suresh and Jayesh were partners of the firm. They decided to dissolve the firm on 31^st March, 2012. Their Balance Sheet as on that date was as under:

        Balance Sheet as on 31^st March, 2012

The firm was dissolved as follows:

1) Mahesh will accept furniture for Rs 2,000 and agreed accept the debtors of book value of Rs 60,000 at on agreed value of Rs 51,000.

2) Suresh will accept stock at an agreed value Rs 20,000, and Sundry Assets of Book value Rs 24,000 at Rs 23,500.

3) Jayesh will accept remaining Sundry Assets for Rs 25,000 He will further accept the liability of loan along with due interest at 12% p.a.

    Interest for three months on this loan was outstanding and was not recorded in the books.

4) Expenses of dissolution were Rs 1,000 and outstanding expenses of Rs 1,200 were to be paid from the firm.

5) The remaining debtors were realised Rs 7,000. 
Prepare:
1) Realisation A/c
2) Partner’s Capital A/c
3) Bank A/c

Gautam, Viral and Ashwin were Partners sharing profits and losses equally. Their Balance sheet as on 31^st December, 2011 was as follows:

          Balance Sheet as on 31^st December, 2011

The firm was dissolved due to insolvency of Ashwin and the following was the result.

(i) The realisation of Assets were as follows:

a) The stock was completely damaged and could realise worth Rs 16,500 only.

b) Building was sold for Rs 49,800.

c) Furniture was realised by the firm at Rs 23,100 less than the book value.

d) A Customer who owes Rs 14,400 became insolvent and nothing could be recovered from his private estate.

(ii) Creditors were paid for Rs 36,900 in full settlement and Bank Loan was discharged fully.

(iii) The expenses of realisation Rs 4,100

(iv) Ashwin became insolvent and the firm could recover only Rs 4,000 from his private estate.

Prepare Realisation A/c, Partner’s Capital A/c and cash A/c to close the books of the firm.

(When one partner becomes insolvent)
Rahul, Rohit and Ramesh were partners in a firm sharing profit and losses in the ratio of 2:2:1 respectively.The Balance Sheet as on 31^st March, 2012 was as follows:
          Balance Sheet as on 31^st December, 2011

The firm was dissolved on the above date:

1. The Assets realised as follows:
   Debtors Rs 9,000, Plant and Machinery Rs 26,000, Stock Rs 14,000 and Furniture Rs 3,000.
2. The Creditors were paid Rs 18,000 in full settlement and the bills payable were paid in full.
3. The realisation expenses amounted to Rs 3,000.
4. Ramesh become insolvent and was able to bring in only Rs 1,800 from his private estate. 

Prepare:

1. Realisation A/c
2. Bank A/c and
3. Partner’s Capital A/c

(When all partners become insolvent)

Shiv, Sadashiv and Sadanand are Partners in a firm sharing Profit and Losses equally whose Balance-sheet as on 31^st December, 2011 stood as follows:

      Balance Sheet as on 31^st December, 2011

Shiv, Sadashiv and Sadanand were declared bankrupt and hence the firm was dissolved as on that date:

(i) The sundry Assets realised as follows:

     Building Rs 10,900, Machinery Rs 8,200, Debtors Rs 6,800.

(ii) Realisation expenses amounted to Rs 1,300.

(iii) Sadanand was unable to contribute anything-

Whereas Rs 1,100 and Rs 900 were recovered from the realisation of private estate of Shiv and Sadashiv respectively.

You are required to close the books of the firm.

Ganga, Yamuna and Godavari are in Partnership sharing profits and losses equally. Their Balance sheet as on 31^st December, 2011 was as follows:

           Balance Sheet as on 31^st December, 2011

Godavari was declared insolvent and hence the firm was dissolved as on that date. Premises was sold at Rs 14,800, Machinery realised Rs 6,400. Bad debts and discount allowed to Debtors amounted to Rs 1,600. Sundry creditors agreed to receive 80 paise in a rupee (Rs) in full satisfaction of their claim. Bank Loan was settled at 60% of book value. During the course of dissolution a liability under an action for damages was settled for Rs 1,400 against Rs 2,100 provided in the books of the firm. The expenses of realisation amounted to Rs 900. Goodwill contributed Rs 1,900 from her private Property.

Prepare necessary ledger accounts in the books of the firm.