Page No 7.48: Question 1: Land and Building (book value) ₹ 1,60,000 sold for  ₹ 3,00,000 through a broker who charged 2% commission on the deal. Journalise the transaction, at the time of dissolution of the firm. Answer:

In the books of the firm Journal
Date	Particulars		L.F.	Debit Amount( ₹)	Credit Amount( ₹)
On the	Cash/ Bank A/c (3,00,000 – 6,000)	Dr.		2,94,000
Date of	To Realisation A/c (3,00,000 – 6,000)				2,94,000
Dissolution	(Being amount realized from land and building after providing for 2% commission to the broker)

Page No 7.48:

Question 2:

Pass Journal entries in the following cases? (a) Expenses of realisation  ₹ 1,500. (b) Expenses of realisation  ₹ 600 but paid by Mohan, a partner. (c) Mohan, one of the partners of the firm, was asked to look into the dissolution of the firm for which he was allowed a commission of  ₹ 2,000. (d) Motor car of book value  ₹ 50,000 taken over by Creditors  of the book value of  ₹ 40,000 in full settlement.

Answer:

Journal
S.N.	Particulars		L.F.	Debits Amount  ₹	Credit Amount  ₹
(a)	Realisation A/c	Dr.		1,500
	To Cash A/c				1,500
	(Being Realisation expenses paid)
(b)	Realisation A/c	Dr.		600
	To Mohan’s Capital A/c				600
	(Being Realisation expenses paid by Mohan)
(c)	Realisation A/c	Dr.		2,000
	To Mohan’s capital A/c				2,000
	(Being Commission allowed to Mohan on dissolution of the firm)
(d)	No entry No journal entry is passed because both motor car and Creditors  accounts have already been transferred to Realisation Account and nothing is recovered or paid in terms of Cash and Bank

Page No 7.48:

Question 3:

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.

Answer:

Journal
S.N.	Particulars		L.F.	Debits Amount  ₹	Credit Amount  ₹
(a)	Rahul’s Capital A/c	Dr.		15,000
	To Cash A/c
	(Realisation Expenses paid by Rahul )				15,000
(b)	Realisation A/c	Dr.		25,000
	To Ramesh’s Capital A/c				25,000
	(Remuneration allowed to Ramesh on account of taking responsibility of dissolution)
(c)	Realisation A/c	Dr.		20,000
	To Anuj’s Capital A/c				20,000
	( Remuneration  allowed to Anuj)
	Anuj’s Capital A/c                               Dr.			5,000
	To Bank A/c				5,000
	(Realisation expenses paid by the firm on behalf of Anuj)

Page No 7.48:

Question 4:

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.

Answer:

	Journal
S.N.	Particulars		L.F.	Debits Amount  ₹	Credit Amount  ₹
(a)	Realisation A/c	Dr.		7,500
	To Alok’s Capital A/c				7,500
	(Remuneration allowed to Alok)
	Alok’s capital A/c	Dr.		10,000
	To Bank A/c				10,000
	(Expenses paid by the firm on behalf of Alok)
	Alternatively, only one single entry can also be passed instead of above two entries.
	Realisation A/c	Dr.		7,500
	Alok’s Capital A/c	Dr.		2,500
	To Bank A/c				10,000
	(Realisation expenses paid)
(b)	Realisation A/c	Dr.		5,000
	To Ravinder’s Capital A/c				3,000
	To Bank A/c				2,000
	(Realisation expenses paid)
(c)	Realisation A/c	Dr.		10,000
	To Amit’s Capital A/c				10,000
	(Realisation expenses paid by Amit on behalf of the firm)

Page No 7.48:

Question 5:

Record necessary Journal entries in the following cases: (a) Creditors  worth  ₹ 85,000 accepted  ₹ 40,000 as cash and Investment worth  ₹ 43,000, in full settlement of their claim. (b) Creditors  were  ₹ 16,000. They accepted Machinery valued at  ₹ 18,000 in settlement of their claim. (c) Creditors  were  ₹ 90,000. They accepted Building valued at  ₹ 1,20,000 and paid cash to the firm  ₹ 30,000.

Answer:

Journal
	Particulars			L.F.	Amount ( ₹)	Amount ( ₹)
(a)	Realisation A/c		Dr.		40,000
	To Cash A/c					40,000
	(Creditors  worth  ₹ 85,000 accepted 40,000 as cash and investment worth  ₹ 43,000 in full settlement)
(b)	No Entry
	(Creditors  worth  ₹ 16,000 accepted Machinery worth  ₹ 18,000 in fullsettlement. No entry as both asset and liability arealready transferred to the Realisation Account)
(c)	Cash A/c	Dr.			30,000
	To Realisation A/c					30,000
	(Creditors  worth  ₹ 90,000 accepted Building worth  ₹ 1,20,000 and paid back ₹ 30,000 as cash after settlement of claim to the firm)

Page No 7.48:

Question 6:

Pass Journal entries for the following at the time of dissolution of a firm: (a) Sale of Assets −  ₹ 50,000. (b) Payment of Liabilities −  ₹ 10,000. (c) A commission of 5% allowed to Mr. X, a partner, on sale of assets. (d) Realisation expenses amounted to  ₹ 15,000. The firm had agreed with Amrit, a partner, to reimbu ₹e him up to  ₹ 10,000. (e) Z, an old customer, whose account for  ₹ 6,000 was written off as bad in the previous year, paid 60% of the amount written off. (f) Investment (Book Value  ₹ 10,000) realised at 150%. (g)?

Answer:

Journal
S.N.	Particulars		L.F.	Debits Amount  ₹	Credit Amount  ₹
(a)	Cash A/c	Dr.		50,000
	To Realisation A/c				50,000
	(Assets realized for cash)
(b)	Realisation A/c	Dr.		10,000
	To Cash A/c				10,000
	(Payment of liabilities made)
(c)	Realisation A/c	Dr.		2,500
	To X’s Capital A/c				2,500
	(5% commission allowed to Mr. X’s on sale of assets of  ₹ 50,000)
(d)	Realisation A/c	Dr.		10,000
	To Amrit’s Capital A/c				10,000
	(Amrit was allowed remuneration on account of realisation)
	Amrit’s Capital A/c	Dr.		15,000
	To Cash A/c				15,000
	(Realisation expenses paid on behalf of amrit)
	Alternatively, only one single entry can also be passed instead of above two entries.
	Realisation A/c	Dr.		10,000
	Amrit’s Capital A/c	Dr.		5,000
	To Cash A/c				15,000
	(Realisation expenses paid)
(e)	Cash A/c	Dr.		3,600
	To Realisation A/c				3,600
	(60% of  the Bad debts against Z an old customer now recovered)
(f)	Cash A/c	Dr.		15,000
	To Realisation A/c				15,000
	(Investments are realised at 150%)

Page No 7.49:

Question 7:

Pass Journal entries for the following transactions at the time of dissolution of the firm: (a) Loan of  ₹ 10,000 advanced by a partner to the firm was refunded. (b) X, a partner, takes over an unrecorded asset (Typewriter) at  ₹ 300. (c) Undistributed balance (Debit) of Profit and Loss Account  ₹ 30,000. The firm has three partners X,Y and Z. (d) Assets of the firm realised  ₹ 1,25,000. (e) Y who undertakes to carry out the dissolution proceedings is paid  ₹ 2,000 for the same. (f) Creditors  are paid  ₹ 28,000 in full settlement of their account of  ₹ 30,000.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount ( ₹)	Credit Amount ( ₹)
a.	Partner’s Loan A/c	Dr.		10,000
	To Bank A/c				10,000
	(Loan refunded)
b.	X’s Capital A/c	Dr.		300
	To Realisation  A/c				300
	(Unrecorded assets took over )
c.	X’s Capital A/c	Dr.		10,000
	Y’s Capital A/c	Dr.		10,000
	Z’s Capital A/c	Dr.		10,000
	To Profit & Loss A/c				30,000
	(Loss distributed)
d.	Bank A/c	Dr.		1,25,000
	To Realisation  A/c				1,25,000
	(Assets realized)
e.	Realisation  A/c	Dr.		2,000
	To Y’s Capital A/c				2,000
	(Amount given for dissolution proceedings)
f.	Realisation  A/c	Dr.		28,000
	To Bank A/c				28,000
	(Creditors  paid)

Page No 7.49:

Question 8:

Pass necessary Journal entries for the following transactions on the dissolution of the firm P and Q after the various assets (other than cash)  and outside liabilities have been transferred to Realisation Account: (a) Bank Loan  ₹ 12,000 was paid. (b) Stock worth  ₹ 16,000 was taken over by partner Q. (c) Partner P paid a creditor  ₹ 4,000. (d) An asset not appearing in the books of accounts realised  ₹ 1,200. (e) Expenses of realisation  ₹ 2,000 were paid by partner Q. (f) Profit on realisation  ₹ 36,000 was distributed between P and Q in 5 : 4 ratio.

Answer:

	Journal
S.N.	Particulars		L.F.	Debits Amount  ₹	Credit Amount  ₹
(a)	Realisation A/c	Dr.		12,000
	To Bank A/c				12,000
	(Bank loan paid at the time of dissolution)
(b)	Q’s Capital A/c	Dr.		16,000
	To Realisation A/c				16,000
	(Stock taken over by Q)
(c)	Realisation A/c	Dr.		4,000
	To P’s Capital A/c				4,000
	(Creditors  paid by P)
(d)	Bank A/c	Dr.		1,200
	To Realisation A/c				1,200
	(Unrecorded assets realised)
(e)	Realisation A/c	Dr.		2,000
	To Q’s Capital A/c				2,000
	(Realisation expenses paid by Q)
(f)	Realisation A/c	Dr.		36,000
	To P’s Capital A/c				20,000
	To Q’s Capital A/c				16,000
	(Realisation Profit distributed )

Page No 7.49:

Question 9:

Answer:

	Journal
S.N.	Particulars		L.F.	Debits Amount  ₹	Credit Amount  ₹
(a)	Bank A/c	Dr.		10,00,750
	To Realisation A/c				10,00,750
	(Being assets realized on dissolution)
(b)	Realisation A/c	Dr.		1,00,075
	To Sujeet’s Capital A/c				1,00,075
	(Being 10% of assets realized on dissolution)
(c)	Sujeet’s Capital A/c	Dr.		90,000
	To Bank A/c				90,000
	(Being realization expenses paid)
(d)	Realisation A/c	Dr.		4,50,000
	To Bank A/c				4,50,000
	(Being creditors paid in full settlement on dissolution)

Page No 7.49:

Question 10:

Pass necessary Journal entries to record the following unrecorded assets and liabilities in the books of Paras and Priya: (a) There was an old furniture in the firm which had been written off completely in the books. This was sold for  ₹ 3,000. (b) Ashish, an old customer whose account for  ₹ 1,000 was written off as bad in the previous year, paid 60%, of the amount. (c) Paras agreed to takeover the firm’s goodwill (not recorded in the books of the firm), at a valuation of  ₹ 30,000. (d) There was an old typewriter which had been written off completely from the books. It was estimated to realise  ₹ 400. It was taken by Priya at an estimated price less 25%. (e) There were 100 shares of  ₹ 10 each in Star Limited acquired at a cost of  ₹ 2,000 which had been written-off completely from the books. These shares are valued @  ₹ 6 each and divided among the partners in their profit-sharing ratio.

Answer:

Journal
	Particulars		L.F.	Amount (₹)	Amount ( ₹)
(a)	Cash/Bank A/c	Dr.		3,000
	To Realisation A/c				3,000
	(Being Old and unrecorded furniture sold)
(b)	Cash/Bank A/c	Dr.		600
	To Realisation A/c				600
	(Being Bad debts previously written off now recovered)
(c)	Paras’s Capital A/c	Dr.		30,000
	To Realisation A/c				30,000
	(Being Unrecorded goodwill taken over by Paras)
(d)	Priya’s Capital A/c	Dr.		300
	To Realisation A/c				300
	(Being Unrecorded Typewriter taken over by Priya at25% less price)
(e)	Paras’s Capital A/c	Dr.		300
	Priya’s Capital A/c	Dr.		300
	To Realisation A/c				600
	(Being 100 unrecorded shares of  ₹ 10 each in the books taken @  ₹ 6 each by Paras and Priya and divided between them in profit sharing ratio)

Page No 7.53:

Question 11:

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.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount ( ₹)	Credit Amount ( ₹)
a.	Aman’s Capital A/c	Dr.		22,500
	Bank A/c	Dr.		32,500
	To Realisation  A/c				55,000
	(Being 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
	(Being Profit distributed)
c.	Harsh’s Loan A/c	Dr.		6,000
	Realisation  A/c	Dr.		200
	To Bank A/c				6,200
	(Being Loan Discharged)
		Dr.		5,000
d.	Harsh’s Capital A/c				5,000
	To Bank A/c
	(Being Expenses paid on behalf of partner)
e.	Bank A/c	Dr.		300
	To Realisation  A/c				300
	(Being Amount received)
	Realisation  A/c	Dr.		1,200
	To Bank A/c				1,200
	(Being Amount paid)
f.	Realisation  A/c	Dr.		1,250
	To Bank A/c				1,250
	(Being 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
	(Being Loss on dissolution transferred to Partners Capital A/c)

Page No 7.53:

Question 12:

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.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount  ₹	Credit Amount  ₹
(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  ₹ 30,000 paid off at a discount of 10%)
(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  ₹ 15,000 paid for completion of dissolution process)

Page No 7.53:

Question 13:

Book Value of assets (other than cash and bank) transferred to Realisation Account is  ₹ 1,00,000. 50% of the assets are taken over by a partner Atul, at a discount of 20%; 40% of the remaining assets are sold at a profit of 30% on cost; 5% of the balance being obsolete, realised nothing and remaining assets are handed over to a Creditor, in full settlement of his claim. You are required to record the Journal entries for realisation of assets.

Answer:

Journal
Date	Particulars		L.F.	Amount ( ₹)	Amount ( ₹)
	Realisation A/c	Dr.		1,00,000
	To Sundry Assets A/c				1,00,000
	(All assets other than cash and bank transferred to Realisation Account)
	Atul’s Capital A/c	Dr.		40,000
	To Realisation A/c				40,000
	(Atul took over 50% of assets worth  ₹ 1,00,000 at 20% discount)[1,00,000 @ 50% @ 80%]
	Bank A/c	Dr.		26,000
	To Realisation A/c				26,000
	(Assets worth  ₹ 20,000, i.e. 40% of assets of  ₹ 50,000 are soldat a profit of 30%) [50,000 × (40/100) × (130/100)]
	No entry for obsolete assets and for the assets givento the Creditors  in the full settlement as these are already transferred tothe Realisation Account)

Page No 7.54:

Question 14:

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.

Answer:

In the books of … Journal Entry
Date	Particulars		L.F.	Debit Amount  ₹	Credit Amount  ₹
(a)	Bank A/c	Dr.		1,40,000
	To Realisation A/c				1,40,000
	(A creditor of  ₹ 3,60,000 accepted machinery valued at  ₹ 5,00,000 and paid  ₹ 1,40,000 to the firm)
(b)	No entry
(c)	Realisation A/c	Dr.		45,000
	To Cash A/c				45,000
	(A third creditor of  ₹ 90,000 accepted  ₹ 45,000 in cash and investments worth  ₹ 43,000 in full settlement of his claim)
(d)	Lal’s Capital A/c	Dr.		4,500
	Pal’s Capital A/c	Dr.		10,500
	To Realisation A/c				15,000
	(Loss on dissolution transferred to Partners capital accounts)

Note: No entry will be made when asset is taken over by the creditor

Page No 7.54:

Question 15:

Pass the Journal entries for the following transactions on the dissolution of the firm of P and Q after various assets (other than cash) and outside liabilities have been transferred to Realisation Account: (a) Stock  ₹ 2,00,000. ‘P‘ took over 50% of stock at a discount of 10%. Remaining stock was sold at a profit of 25% on cost. (b) Debto ₹  ₹ 2,25,000. Provision for Doubtful Debts  ₹ 25,000.  ₹ 20,000 of the book debts proved bad. (c) Land and Building (Book value  ₹ 12,50,000) sold for  ₹ 15,00,000 through a broker who charged 2% commission. (d) Machinery (Book value  ₹ 6,00,000) was handed over to a creditor at a discount of 10%. (e) Investment (Book value  ₹ 60,000) realised at 125%. (f) Goodwill of  ₹ 75,000 and prepaid fire insurance of  ₹ 10,000. (g) There was an old furniture in the firm which had been written off completely in the books. This was sold for  ₹ 10,000. (h) ‘Z‘ an old customer whose account for  ₹ 20,000 was written off as bad in the previous year, paid 60%. (i) ‘P‘ undertook to pay M ₹. P‘s loan of  ₹ 50,000. (j) Trade Creditors   ₹ 1,60,000. Half of the trade Creditors  accepted Plant and Machinery at an agreed valuation of  ₹ 54,000 and cash in full settlement of their claims after allowing a discount of  ₹ 16,000. Remaining trade Creditors  were paid 90% in final settlement.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount ( ₹)	Credit Amount ( ₹)
a.	P’s Capital A/c	Dr.		90,000
	Bank A/c	Dr.		1,25,000
	To Realisation  A/c				2,15,000
	(Stock realized)
b.	Bank A/c	Dr.		2,05,000
	To Realisation  A/c				2,05,000
	(Debto ₹ realized)
c.	Bank A/c	Dr.		14,70,000
	To Realisation  A/c				14,70,000
	(Land and Building realized)
d.	No Entry
e.	Bank A/c	Dr.		75,000
	To Realisation  A/c				75,000
	(Investment realized )
f.	No Entry
g.	Bank A/c	Dr.		10,000
	To Realisation  A/c				10,000
	(Unrecorded furniture realized )
h.	Bank A/c	Dr.		12,000
	To Realisation  A/c				12,000
	(Bad debts recovered )
i.	Realisation  A/c	Dr.		50,000
	To P’s Capital A/c				50,000
	(Wife’s loan paid by partner)
J.	Realisation  A/c	Dr.		82,000
	To Bank A/c (10,000 + 72,000)				82,000
	(Creditors  paid)

Page No 7.51:

Question 16:

What Journal entries would be passed for discharge of following unrecorded liabilities on the dissolution of a firm of partners A and B: (a) There was a contingent liability in respect of bills discounted but not matured of  ₹ 18,500. An acceptor of one bill of  ₹ 2,500 became insolvent and fifty paise in a rupee was recovered. The liability of the firm on account of this bill discounted and dishonoured has not so far been recorded. (b) There was a contingent liability in respect of a claim for damages for  ₹ 75,000, such liability was settled for  ₹ 50,000 and paid by the partner A. (c) Firm will have to pay  ₹ 10,000 as compensation to an injured employee, which was a contingent liability not accepted by the firm. (d)  ₹ 5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70% by a compromise between the customer and the firm.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount ( ₹)	Credit Amount ( ₹)
a.	Bank A/c	Dr.		1,250
	To Realisation  A/c				1,250
	(Amount received)
	Realisation  A/c
	To Bank A/c	Dr.		2,500
	(Liability discharged)				2,500
b.	Realisation  A/c	Dr.		50,000
	To A’s Capital A/c				50,000
	(Liability paid by a partner)
		Dr.		10,000
c.	Realisation  A/c				10,000
	To Bank A/c
	(Liability discharged)
d.	Realisation  A/c	Dr.		3,500
	To Bank A/c				3,500
	(Liability discharged)

Page No 7.51:

Question 17:

Pass necessary Journal entries on the dissolution of a firm in the following cases: (a) Dharam, a partner, was appointed to look after the process of dissolution at a remuneration of  ₹ 12,000 and he had to bear the dissolution expenses. Dissolution expenses  ₹ 11,000 were paid by Dharam. (b) Jay, a partner, was appointed to look after the process of dissolution and was allowed a remuneration of  ₹ 15,000. Jay agreed to bear dissolution expenses. Actual dissolution expenses  ₹ 16,000 were paid by Vijay, another partner on behalf of Jay. (c) Deepa, a partner, was to look after the process of dissolution and for this work she was allowed a remuneration of  ₹ 7,000. Deepa agreed to bear dissolution expenses. Actual dissolution expenses  ₹ 6,000 were paid from the firm’s bank account. (d) Dev, a partner, agreed to do the work of dissolution for  ₹ 7,500. He took away stock of the same amount as his commission. The stock had already been transferred to Realisation Account. (e) Jeev, a partner, agreed to do the work of dissolution for which he was allowed a commission of  ₹ 10,000. He agreed to bear the dissolution expenses. Actual dissolution expenses paid by Jeev were  ₹ 12,000. These expenses were paid by Jeev by drawing cash from the firm. (f) A debtor of  ₹ 8,000 already transferred to Realisation Account agreed to pay the realisation expenses of  ₹ 7,800 in full settlement of his account.

Answer:

Journal
Date	Particulars		L.F.	Debit Amount ( ₹)	Credit Amount ( ₹)
(a)	Realisation A/c	Dr.		12,000
	To Dharam’s Capital A/c				12,000
	(Remuneration paid)
(b)	Realisation A/c	Dr.		15,000
	To Jay’s’s Capital A/c				15,000
	(Remuneration paid)
	Jay’s Capital A/c	Dr.		16,000
	To Vijay’s Capital A/c				16,000
	(Expenses borne by Jay, paid by Vijay)
(c)	Realisation A/c	Dr.		7,000
	To Deepa’s Capital A/c				7,000
	(Remuneration paid)
	Deepa’s Capital A/c	Dr.		6,000
	To Bank A/c				6,000
	(Expenses paid by firm)
(d)	No Entry
(e)	Realisation A/c	Dr.		10,000
	To Jeev’s Capital A/c				10,000
	(Remuneration paid)
	Jeev’s Capital A/c	Dr.		12,000
	To Bank A/c				12,000
	(Expenses paid by firm)
(f)	No Entry

Page No 7.51:

Question 18:

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	Debto ₹		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. Debto ₹ 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 repai ₹ for  ₹ 1,60,000 which was settled at  ₹ 1,40,000. Prepare Realisation Account.

Answer:

Realisation Account
Dr.						Cr.
Particulars			Amount  ₹	Particulars		Amount  ₹
Sundry Assets-				Creditors		1,70,000
Debto ₹		2,40,000		Ramesh’s Current A/c (Stock)		55,000
Stock		1,30,000		Cash A/c (Assets Realised)
Furniture		2,00,000		Stock	50,000
Machinery		9,30,000	15,00,000	Machinery	4,50,000
				Debto ₹	2,28,000	7,28,000
To Cash A/c (Liabilities)				Umesh’s Current A/c (Furniture)		50,000
Creditors		1,70,000
Outstanding Bill		1,40,000	3,10,000	Realisation Loss
				Ramesh’s Current A/c	5,64,900
				Umesh’s Current A/c	2,42,100	8,07,000
			18,10,000			18,10,000

Page No 7.52:

Question 19:

Pradeep and Rajesh were partners in a firm sharing profits and losses in the ratio of 3 : 2. They decided to dissolve their partnership firm on 31st March, 2018. Pradeep was deputed to realise the assets and to pay off the liabilities. He was paid  ₹ 1,000 as commission for his services. The financial position of the firm on 31st March, 2018 was as follows:

BALANCE SHEET as at 31st March, 2018
Liabilities		Amount ( ₹)	Assets		Amount ( ₹)
Creditors		80,000	Building		1,20,000
M ₹. Pradeep’s Loan		40,000	Investment		30,600
Rajesh’s Loan		24,000	Debto ₹	34,000
Investment Fluctuation Fund		8,000	Less: Provision for Doubtful Debts	4,000	30,000
Capital A/cs:			Bills Receivable		37,400
Pradeep	42,000		Bank		6,000
Rajesh	42,000	84,000	Profit and Loss A/c		8,000
			Goodwill		4,000
		2,36,000			2,36,000

Following terms and conditions were agreed upon: (a) Pradeep agreed to pay off his wife’s loan. (b) Half of the debto ₹ realised  ₹ 12,000 and remaining debto ₹ were used to pay off 25% of the Creditors . (c) Investment sold to Rajesh for  ₹ 27,000. (d) Building realised  ₹ 1,52,000. (e) Remaining Creditors  were to be paid after two months, they were paid immediately at 10% p.a. discount. (f) Bill receivables were settled at a loss of  ₹ 1,400. (g) Realisation expenses amounted to  ₹ 2,500. ​Prepare Realisation Account.

Answer:

Dr.	Realisation A/c						Cr.
Particulars			Amount ( ₹)	Particulars		Amount ( ₹)
To Building			1,20,000	By Provision for Doubtful Debts		4,000
To Investments			30,600	By Creditors		80,000
To Debto ₹			34,000	By M ₹. Pradeep’s Loan		40,000
To Bills Receivable			37,400	By Investment Fluctuation Fund		8,000
To Goodwill			4,000
To Pradeep’s Capital A/c (Wife loan paid)			40,000	By Bank A/c:
To Cash A/c (Creditors  Paid) (WN1)			59,000	Debto ₹	12,000
To Pradeep’s Capital A/c (Commission)			1,000	Building	1,52,000
To Cash A/c (Realisation Expenses)			2,500	Bills Receivable	36,000	2,00,000
To Profit transferred to:
Pradeep’s Capital A/c		18,300		By Cash A/c (Sale of Investments)		27,000
Rajesh’s Capital A/c		12,200	30,500
			3,59,000			3,59,000

Working Notes:

Remaining Creditors  to be paid	=	₹ (80,000 × 75/100) =  ₹ 60,000
Discount Received on Creditors	=	₹ (60,000 × 10/100 × 2/12) =  ₹ 1,000
Amount paid to the Creditors	=	₹ (60,000 – 1,000) =  ₹ 59,000

Page No 7.52:

Question 20:

Answer:

Realisation a/c
Dr.			Cr.
Particulars	₹	Particulars	₹
To Stock To Debtors To Furnisture To Plant To Investiment To Ashish’s capital a/c Mrs. Ashish loan taken To Kanav’s capital a/c Ageed to bear realization expenses To Bank a/c EPF paid To Captial – profit transferred to; Ashish 20,020×3/5=12,012 Kanav 20,020×2/5=8,008 (In the ratio 3:2)	24,000 19,000 40,000 2,10,000 32,000 9,000 12,000 60,000 20,020	By Creditors By employees provident fund By Mrs. Ashish’s loan By Investment fluctuation reserve By Ashish’s capital a/c (Furniture taken) By Kanav’s capital a/c Stock(24,000×40%×80%) By Bank a/c (Assets realised) Debtors    =       18,500 Plant    =    2,31,000 Stock    =       15,840 (24,000×24%×110%)	42,000 60,000 9,000 4,000 38,000 7,680 2,65,340
	4,26,020		4,26,020