Dissolution of Partnership Firm Accountancy - Dissolution of Partnership Firm

Unrecorded liabilities when paid are debited to:

Where it is agreed that a partner will be paid a lump sum amount for dissolution, if the payment is made by the firm, the payment is debited to:

At the time of dissolution of the firm, if goodwill appears in the Balance Sheet, it is transferred to:

At the time of dissolution of the firm, loan from partner's relative is:

At the time of dissolution of the firm, the assets and liabilities appearing in the Balance Sheet are transferred to:

Explain the provisions of Section 48 of Partnership Act, 1932 dealing with the settlement of accounts at the time of dissolution of firm.

Distinguish between firm's debts and private debts.

Distinguish between dissolution of partnership and dissolution of partnership firm.

Pass Journal entries for the following:

1. Realisation expenses of ₹ 15,000 were to be met by Rahul, a partner, but were paid by the firm.
2. Ramesh, a partner, was paid remuneration of ₹ 25,000 and he was to meet all expenses.
3. 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:

1. 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.
2. Realisation expenses amounted to ₹ 5,000. It was agreed that the firm will pay ₹ 2,000 and balance by Ravinder, a partner.
3. Dissolution expenses amounted to ₹ 10,000 were paid by Amit, a partner, on behalf of the firm.

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:

1. A creditor of ₹ 3,60,000 accepted machinery valued at ₹ 5,00,000 and paid to the firm ₹ 1,40,000.
2. A second creditor for ₹ 50,000 accepted stock ₹ 45,000 in full settlement of his claim.
3. A third creditor amounting to ₹ 90,000 accepted ₹ 45,000 in cash and investments worth ₹ 43,000 in full settlement of his claim.
4. 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.

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:

1. Kunal agreed to pay off his wife's loan of ₹ 6,000.
2. 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%.
3. Rohit had given a loan of ₹ 70,000 to the firm which was duly paid.
4. A machine which was not recorded in the books was taken over by Kunal at ₹ 3,000, whereas its expected value was ₹ 5,000.
5. The firm had a debit balance of ₹ 15,000 in the Profit and Loss Account on the date of dissolution.
6. 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.

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:

1. Bank Loan ₹ 12,000 was paid.
2. Stock worth ₹ 16,000 was taken over by partner Q.
3. Partner P paid a creditor ₹ 4,000.
4. An asset not appearing in the books of accounts realised ₹ 1,200.
5. Expenses of realisation ₹ 2,000 were paid by partner Q.
6. Profit on realisation ₹ 36,000 was distributed between P and Q in 5 : 4 ratio.

X and Y were partners sharing profits and losses in the ratio of 3 : 2. They decided to dissolve the firm on 31st March 2018. On that date their Capitals were X ₹ 40,000 and Y ₹ 30,000. Creditors amounted to ₹ 24,000.
Assets were realised for ₹ 88,500. Creditors of ₹ 16,000 were taken over by X at ₹ 14,000. Remaining Creditors were paid at ₹ 76,500. The cost of realisation came to ₹ 500.
Prepare necessary accounts.

There are two partners X and Y in a firm and their capitals are ₹ 50,000 and ₹ 40,000. The creditors are ₹ 30,000. The assets of the firm realise ₹ 1,00,000. How much will X and Y receive?

A, B and C were in partnership sharing profits and losses in the ratio of 2 : 1 : 1. They decided to dissolve the partnership. On that date of dissolution,Sundry Assets (including cash ₹ 5,000) amounted to ₹ 88,000, assets realised ₹ 80,000 (including an unrecorded asset which realised ₹ 4,000). A contingent liability on account of bills discounted ₹ 8,000 was paid by the firm. The Capital Accounts of A, B and C showed a balance of ₹ 20,000 each.
Prepare Realisation Account Partners' Capital Accounts and Cash Account.

A, B and C started business on 1st April, 2016 with capitals of ₹ 1,00,000 ₹ 80,000 and ₹ 60,000 respectively sharing profits (losses) in the ratio of 4 : 3 : 3. For the year ended 31st March, 2017, the firm suffered a loss of ₹ 50,000. Each of the partners withdrew ₹ 10,000 during the year.
On 31st March, 2017, the firm was dissolved, the creditors of the firm stood at ₹ 24,000 on that date and Cash in Hand was ₹ 4,000. The assets realised ₹ 3,00,000 and Creditors were paid ₹ 23,500 in full settlement of their claims.
Prepare Realisation Account and show your workings clearly.

(Dissolution of Firm) A, B and C are partner sharing Profits and losses in the ratio of 2 : 1 : 1.They decided to dissolve their firm on 1st April, 2018. Complete the Realisation Account, Partners' Capital Accounts and Bank Account from the information given below:

Pass journal entries for the following transactions at the time of dissolution of the firm:

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

Pass journal entries for the following at the time of dissolution of a firm:

1. Sale of Asset ₹ 50,000.
2. Payment of Liabilities ₹ 10,000.
3. A commission of 5% allowed to Mr. X, a partner on sale of assets.
4. Realisation expenses amounted to ₹ 15,000. The firm had agreed with Amrit, a partner, to reimburse him up to ₹ 10,000.
5. Z, an old customer, whose account for ₹ 6,000 was writte off as bad in the previous year, paid 60% of the amount written off.
6. Investment (Book Value ₹ 10,000) realised at 150%.