Q.1 Lalit and Pulkit 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
third party liabilities have been transferred to RealizationA/c :
(a) The firm had stock of₹80,000. Lalit took over 50% stock at a discount of 20% while
remaining stock was sold at a profit of 30% on cost.
(b) Pulkit's sister loan of ₹ 20,000 was paid off along with interest of ₹ 2,000.
(c) 1,000 shares of ₹ 100 each have been taken over by partners at market value of ₹ 20
per share in their profit sharing ratio, which is3: 2.
(d) A debtor whose debt of ₹ 80,000 had been written off as bad and paid ₹76,000 in
full settlement.
Q.2 M, N and O were partners in a firm sharing profits in the ratio of4: 5: 1. On 31st March
2024 their firm was dissolved. On this date the Balance Sheet showed a balance of ₹
1,34,000 in Debtors Account and a balance of ₹ 14,000 in Provision for Doubtful Debts
Account. Both the accounts were closed by transferring their balances to Realisation
Account. ₹ 4,000 of the debtors became bad and nothing could be realized from them
on dissolution. N agreed to look after the dissolution work for which he was allowed a
remuneration of₹16,000. N also agreed to bear dissolution expenses for which he was
allowed a lump sum ‘payment of ₹ 4,000. Actual dissolution expenses were ₹ 6,500 and
the same were paid from the firm's cash. Loss on dissolution amounted to ₹ 37,000.
Pass the necessary Journal entries for the above transactions on the dissolution of the
partnership firm.
Q.3 Karn and Monu were partners in a sport shoes manufacturing firm sharing profits and
losses in the ratio of3: 2. During current year Karn invested some cash from firm for his
personal benefit. Monu raises a strong objection on this transaction but Karn refuses to
return the profit derived from this transaction which causes a lack of faith between the
partners.
Finally, after two months they decided to dissolve the firm on the following terms:
(i) Karn was deputed to realise the assets and to pay the liabilities. He agreed to bear all
realisation expenses and he was paid commission of ₹ 12,500 for his service. Actual
expenses was ₹ 6,000 paid by Monu on behalf of Karn.
(ii) The firm had Stock of ₹ 2,40,000. 25% of the stock was taken over by an unrecorded
creditor of ₹ 70,000 in full settlement of his claim and the remaining stock was taken
over by Monu at 80% of cost.
(iii) The Balance Sheet shows Debtors at ₹ 60,000 and provision for doubtful debts at
₹8,000. Debtors of ₹12,000 proved bad and remaining realised 75% of its value.
(iv) Monu had given a loan of ₹ 75,000 to the firm for which he was paid ₹ 72,000 in full
settlement.
Q.4 Based on the above information you are required to pass Journal entries in the books of
the firm.
Rocy & Vista were partners in a firm sharing profit ratio of 3: 1. On 31st March, 2023,
their firm was dissolved with following terms:
(i) The Land and Building (Book Value ₹ 3,00,000 ) was sold through a broker at 120%
of book value. A commission of 2% on the selling price of Land and Building was paid to
the broker.
(ii) Creditors of ₹ 40,000 were to be paid on an average basis of 2 months after the date
of dissolution. On discharging the creditors on the date of dissolution, they allowed a
discount of 6% p.a.
(iii) An unrecorded liability of ₹40,000 was settled through an unrecorded asset which
was yalued at ₹36,000 and balance was settled by Cash.
(iv) Unrecorded 1,000 shares of Accounts Guru Ltd. were valued at ₹90 each and divided
among the partners in their profit sharing ratio at an agreed value of ₹ 60 per share.
Pass Journal entries only for realisation account in the book of the form.
Q.5 Gaurav and Amit were partners in a firm sharing profits in the ratio of 3: 2. On March
31,2024 , their Balance Sheet was as follows:
Liabilities Amount (₹) Assets Amount (₹)
Creditors 36,000 Bank 40,000
Amit's Wife's Loan 60,000 Debtors 76,000
Gaurav's Loan 40,000 Stock 2,00,000
Capitals: Furniture 20,000
Gaurav 2,00,000 Leasehold Premises 1,00,000
Amit 1,00,000
4,36,000 4,36,000
On the above date the firm was dissolved. The various assets were realized and
liabilities were settled as under:
(i) Amit agreed to pay his wife's loan.
(ii) Leasehold Premises realised ₹ 1,50,000 and Debtors ₹ 2,000 less.
(iii) Half of the creditors agreed to accept furniture of the firm as full settlement of their
claim and remaining half agreed to accept 5% less.
(iv) 50% Stock was taken over by Gaurav on cash payment of ₹90,000 and remaining
stock was sold for ₹ 94,000.
(v) Realisation expenses of ₹10,000 were paid by Amit on behalf of firm.
Q.6 X, Y and Z were equal partners in a firm. Due to heavy losses they decided to dissolve
their firm. Pass the Journal entries for the followings:
(i) Y paid the realisation expenses of ₹ 1,800 from firm's cash for which he was to get a
remuneration of ₹ 1,500 from firm.
(ii) A creditor of ₹ 10,000, accepted stock of ₹7,000 at a discount of 10% and balance in
cash.
(iii) There was a stock of ₹ 40,000. X took over 50% of stock at 20% discount and
balance stock was sold at a profit of 30% on book value.
(iv) A bill which had been discounted through bank for ₹ 10,000 was dishonored, and a
final dividend of 50% were received from drawee.
Q.7 Pass the necessary Journal entries on the dissolution of a partnership firm in the
following case.
(i) Mohan, a creditor of ₹ 60,000 accepted Plant at ₹78,000 and balance paid to the
firm.
(ii) Sohan, a second creditor of ₹ 80,000 accepted Furniture of the book value of ₹
60,000 for ₹47,000 and balance was paid to him by cheque.
(iii) Rohan, a third creditor of ₹ 1,20,000 accepted equipment of the book value of ₹
95,000 in full settlement of his claim.
(iv) An unrecorded asset of ₹ 20,000 was purchased by Sumit, a partner for cash at an
agreed value of ₹ 18,000.
Q.8 Virat, Daksh and Madhav commenced business on 1st April, 2023 with fixed capitals of ₹
50,000, ₹40,000 and ₹30,000 respectively. They agreed to share profits and losses in
the ratio of 4: 3: 3. During the year 2023-24, they made a profit of ₹ 28,000 before
allowing interest on capital @ 10% p.a. Each of the partners had drawn ₹ 10,000 during
the year. The partners with mutual consent agreed to wind up the business operations.
Creditors on that date were ₹ 54,000. Assets realised ₹2,10,000 and the expenses of
realisation were ₹ 2,500. Prepare the Balance Sheet as on 31st March, 2024 and find out
the profit or loss on realisation.
Q.9 Ankit, Bobby and Kartik were partners in a firm sharing profits in the ratio4: 3: 3. The
firm was dissolved on 31-3-2023. Pass the necessary Journal entries for the following
transactions after varion assets (other than cash and bank) and third party liabilities had
been transferred to Realistion Account:
(i) The firm had stock of ₹ 80,000 . Ankit took over 50% of the stock at a discount of
20% whiks the remaining stock was sold off at a profit of 30% on cost.
(ii) A liability under a suit for damages included in creditors was settled at ₹32,000 as
againit only ₹ 13,000 provided in the books. Total creditors of the firm were ₹ 50,000.
(iii) Bobby's sister's loan of ₹ 20,000 was paid off along with interest of ₹ 2,000.
(iv) Kartik's Loan of ₹ 12,000 was settled at ₹ 12,500.