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Partnership Dissolution Accounting Guide

The document outlines a test on partnership dissolution, including a balance sheet of partners P, Q, and R, and the assets realized during the dissolution process. It contains questions on preparing accounts related to the dissolution, distinguishing between revaluation and realization accounts, and comparing the dissolution of partnership versus the dissolution of a firm. Additionally, it includes a scenario involving partners X and Y, requiring the preparation of their accounts upon dissolution.

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7 views1 page

Partnership Dissolution Accounting Guide

The document outlines a test on partnership dissolution, including a balance sheet of partners P, Q, and R, and the assets realized during the dissolution process. It contains questions on preparing accounts related to the dissolution, distinguishing between revaluation and realization accounts, and comparing the dissolution of partnership versus the dissolution of a firm. Additionally, it includes a scenario involving partners X and Y, requiring the preparation of their accounts upon dissolution.

Uploaded by

harikrishan708
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

TEST :- PARTNERSHIP- DISSOLUTION

TIME : 45 Minutes Maximum Marks : 20

Q1. The following is the Balance Sheet of P, Q and R, as on 31 st December, 2004:


Liabilities Amount Assets Amount
Bills Payable 20,000 Bank 8,000
Cerditors 18,000 Bills Receivable 12,000
Mrs. P’s Loan 20,000 Stock 25,000
Outstanding Salary 5,000 Sundry Debtors 40,000
Investment Fluctuation Fund 10,000 Less: Provision for D/D 4,000 36,000
Reserves 15,000 Land and Building 50,000
Capital Account: Furniture 10,000
P 40,000 Typewriters 5,000
Q 30,000 Investments 30,000
R 18,000 88,000
1,76,000 1,76,000
The profit and loss sharing ratios of the partners are 5:3:2. On the above date; partners decide to
dissolve the firm. The assets realised are as follows”
Bills Receivable were realised at discount of 5%. Debtors were all good.
Stock realised Rs. 22,000. Land and Building realised at 40% higher than the book value. Furniture
was sold for Rs. 8,000 by auction and auctioneer’s commission amounted to Rs. 500. Typewriters were
taken over by P for an agreed valuation of Rs. 3,000. Investments were sold in the open market at a price
of Rs. 35,000, for which a commission of Rs. 600 was paid to the broker. Bills payable were paid at full
amount. Creditors, however, agree to accept 10% less. The firm retrenched their employees three months
before the dissolution of the firm and the firm had to pay Rs. 20,000 as compensation. The liability was
not appearing in the above balance sheet.
Close books of the firm by preparing Realisation A/c, Partners’ Capital A/c and Bank A/c. (8)

Q2. Distinguished between Revaluation Account and Realisation Account. (3)

Q3. Distinguished between Dissolution of Partnership and Dissolution of firm. (3)

Q4. X and Y, who were sharing profits and losses in the ratio of 3:1 respectively, decided to dissolve the
firm on 31st December, 2004, on which date some of the balances were as follows:
X’s Capital – Rs. 1,00,000, Y’s Capital – Rs. 10,000 (Dr. Balance) , Profit & Loss A/c – Rs. 8,000
(DR. Balance), Trade Creditors – Rs. 30,000 , Loan from Mrs. X – Rs. 10,000, Cash at Bank – Rs. 2,000.
The assets (other than cash at bank) realised Rs. 1,10,000 and all creditors were paid off less 5%
discount. Realisation expenses amounted to Rs. 1,000.
Prepare Realisation Account, Bank Account and the Capital Accounts of the partners. (6)

Prepared by: -
MOHIT SIR

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