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Numerical Questions
1. Journalise the following transactions regarding realisation expenses :
[a]
Realisation expenses amounted to ₹ 2,500.
[b]
Realisation expenses amounting to ₹ 3,000 were paid by Ashok, one of the partners.
[c]
Realisation expenses ₹ 2,300 borne by Tarun, personally.
[d]
Amit, a partner was appointed to realise the assets, at a cost of ₹ 4,000.
The actual amount of realisation expenses amounted to ₹ 3,000.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
[a]
Realisation A/c
Dr.
2,500
To Bank A/c
2,500
(Being Realisation expenses paid)
[b]
Realisation A/c
Dr.
3,000
To Bank A/c
3,000
(Being Realisation expenses paid by Ashok)
[c]
No entry is required. The realization expenses will be borne by Tarun, personally.
[d]
Realisation A/c
Dr.
4,000
To Amit’s Capital A/c
4,000
(Being Realisation expenses paid to Amit)

2. 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 Buildings valued ₹ 1,20,000 and paid cash to the firm ₹ 30,000.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
[a]
Realisation A/c
Dr.
40,000
To Cash A/c
40,000
(Being creditors worth ₹ 85,000 accepted ₹ 40,000 as cash and investment worth of ₹ 43,000 in full settlement of their claim)
[b]
No Entry is required
[c]
Cash A/c
Dr.
30,000
To Realisation A/c
30,000
(Being Creditors liability of ₹ 90,000 settled through building worth of ₹ 1,20,000 and a cash payment of ₹ 30,000)

3. There was an old computer which was written-off in the books of accounts in the pervious year. The same has been taken over by a partner Nitin for ₹ 3,000. Journalise the transaction when the firm has been dissolved.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
Nitin’s Capital A/c
Dr.
3,000
To Realisation A/c
3,000
(Being unrecorded old computer taken over by the partner Nitin)
4. What journal entries will be recorded for the following transactions on the dissolution of a firm:
[a]
Payment of unrecorded liabilities of ₹ 3,200.
[b]
Stock worth ₹ 7,500 is taken over by a partner Rohit.
[c]
Profit on Realisation amounting to ₹ 18,000 is to be distributed between the partners Ashish and Tarun in the ratio of 5:7.
[d]
An unrecorded asset realised ₹ 5,500.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
[a]
Realisation A/c
Dr.
3,200
To Bank A/c
3,200
(Being unrecorded liabilities settled)
[b]
Rohit’s Capital A/c
Dr.
7,500
To Realisation A/c
7,500
(Being stock taken over by the partner Rohit)
[c]
Realisation A/c
Dr.
18,000
To Ashish’s Capital A/c
7,500
To Tarun’s Capital A/c
10,500
(Being profit of realisation transferred to the partners capital accounts in the ratio 5:7)
[d]
Bank A/c
Dr.
5,500
To Realisation A/c
5,500
(Being unrecorded asset realised)
Working Notes:
Distribution of Realisation Profit among partners:
Share of Ashish
{= ₹~18,000 × \dfrac{5}{12}}
= ₹ 7,500
Share of Tarun
{= ₹~18,000 × \dfrac{7}{12}}
= ₹ 10,500

5. Give journal entries for the following transactions :
1.
To record the realisation of various assets and liabilities,
2.
A Firm has a Stock of ₹ 1,60,000. Aziz, a partner took over 50% of the Stock at a discount of 20%,
3.
Remaining Stock was sold at a profit of 30% on cost,
4.
Land and Buildging (book value ₹ 1,60,000) sold for ₹ 3,00,000 through a broker who charged 2%, commission on the deal,
5.
Plant and Machinery (book value ₹ 60,000) was handed over to a Creditor at an agreed valuation of 10% less than the book value,
6.
Investment whose face value was ₹ 4,000 was realised at 50%.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
1.1
For Transferring the Assets to Realisation Account:
Realisation A/c
Dr.
Book Value
To Assets (Individually) A/c
Book Value
(Being asset transferred to realisation account)
1.2
For Transferring the Liabilities to Realisation Account:
Liabilities (Individually) A/c
Dr.
Book Value
To Realisation A/c
Book Value
(Being liabilities transferred to realisation account)
1.3
For Sale of Asset:
Cash/Bank A/c
Dr.
Realisation Value
To Realisation A/c
Realisation Value
(Being asset realised)
1.4
For settlement of liability:
Realisation A/c
Dr.
Realisation Value
To Cash/Bank A/c
Realisation Value
(Being liability settled)
2
Aziz’s Capital A/c
Dr.
64,000
To Realisation A/c
64,000
(Being 50% of taken over by the partner Aziz)
3
Bank A/c
Dr.
1,04,000
To Realisation A/c
1,04,000
(Being 50% of stock worth of ₹ 80,000 sold at 30% profit)
4
Bank A/c
Dr.
2,94,000
To Realisation A/c
2,94,000
(Being land and building worth of ₹ 1,60,000 sold for ₹ 30,00,000 and 2% commission paid to the broker)
5
No entry required
6
Bank A/c
Dr.
2,000
To Ralisation A/c
2,000
(Being investment worth of ₹ 4,000 realised at 50%)
Working Notes:
2. Realised value of stock taken over by Aziz
Book Value
= ₹ 1,60,000
50% of Stock
{= ₹~1,60,000 × \dfrac{50}{100}}
= ₹ 80,000
Discount to Aziz
= 20%
Realised Value
{= ₹~80,000 × \dfrac{80}{100}}
= ₹ 64,000
3. Realised value of Remaining Stock:
Remaining Stock
= ₹ 1,60,000 – ₹ 80,000
= ₹ 80,000
Profit
= 30%
Realised Value
{= ₹~80,000 × \dfrac{130}{100}}
= ₹ 1,04,000
4. Realisation of Land and Building:
Book Value
= ₹ 1,60,000
Sale Value
= ₹ 3,00,000
Broker Commission
{= ₹~3,00,000 × \dfrac{2}{100}}
= ₹ 6,000
Realisation Value
= ₹ 3,00,000 – ₹ 6,000
= ₹ 2,94,000
6. Investment:
Face Value
= ₹ 4,000
Realised Value
{= ₹~4,000 × \dfrac{50}{100}}
= ₹ 2,000

6. How will you deal with the realisation expenses of the firm of Rashim and Bindiya in the following cases:
1.
Realisation expenses amount to ₹ 1,00,000,
2.
Realisation expenses amounting to ₹ 30,000 are paid by Rashim, a partner.
3.
Realisation expenses are to be borne by Rashim and he will be paid ₹ 70,000 as remuneration for completing the dissolution process. The actual expenses incurred by Rashim were ₹ 1,20,000.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
1.
Realisation A/c
Dr.
1,00,000
To Bank A/c
1,00,000
(Being realisation expenses paid)
2.
Realisation A/c
Dr.
30,000
To To Rashim’s Capital A/c
30,000
(Being realisation expenses paid by the partner Rashim)
3.
Realisation A/c
Dr.
70,000
To Rashim’s Capital A/c
70,000
(Being realisation remuneration paid to the partner Rashim)
Note: In case 3, As the partner Rashmi took the responsibility of payment of the remuneration expenses i.e. ₹ 1,20,000, no entry is required.
7. The 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.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
a.
Realisation A/c
Dr.
1,00,000
To Assets A/c
1,00,000
(Being assets, excluding cash/bank, transferred to the realisation account)
b.
Atul’s Capital A/c
Dr.
40,000
To Realisation A/c
40,000
(Being 50% of the assets worth of ₹ 1,00,000 taken over by partner Atul at 20% discount)
c.
Bank A/c
Dr.
26,000
To Realisation A/c
26,000
(Being 40% of remaining assets worth of ₹ 20,000 sold at a profit of 30%)
d
No entry is required
Working Notes
b. Assets taken over by partner Atul:
Book Value
= ₹ 1,00,000
50% worth
{= ₹~1,00,000 × \dfrac{50}{100}}
= ₹ 50,000
Discount
= 20%
Realised Value
{= ₹~50,000 × \dfrac{80}{100}}
= ₹ 40,000
c. Realisation Value of sold assets:
Remaining Assets
= ₹ 1,00,000 – ₹ 50,000
= ₹ 50,000
Sold Assets
= 40%
Book Value
{= ₹~50,000 × \dfrac{40}{100}}
= ₹ 20,000
Profit
= 30%
Realised Value
{= ₹~20,000 × \dfrac{130}{100}}
= ₹ 26,000
d. No entry is required when a creditor agrees to settle a liability by taking an asset.
8. Record necessary journal entries to realise the following unrecorded assets and liabilities in the books of Paras and Priya:
1.
There was an old furniture in the firm which had been written-off completely in the books. This was sold for ₹ 3,000,
2.
Ashish, an old customer whose account for ₹ 1,000 was written-off as bad in the previous year, paid 60%, of the amount,
3.
Paras agreed to takeover the firm’s goodwill (not recorded in the books of the firm), at a valuation of ₹ 30,000,
4.
There was an old typewriter which had been written-off completely from the books. It was estimated to realise ₹ 400. It was taken away by Priya at an estimated price less 25%,
5.
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.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
1.
Bank A/c
Dr.
3,000
To Realisation A/c
3,000
(Being unrecorded old furniture sold)
2.
Bank A/c
Dr.
600
To Realisation A/c
600
(Being bad debts previously written off partially recovered)
3.
Paras’s Capital A/c
Dr.
30,000
To Realisation A/c
30,000
(Being unrecorded goodwill taken over by the partner Paras)
4.
Priya’s Capital A/c
Dr.
300
To Realisation A/c
300
(Being unrecorded asset taken over by the the partner Priya)
5.
Paras’s Capital A/c
Dr.
300
Priya’s Capital A/c
Dr.
300
To Realisation A/c
600
(Being 100 shares each worth of ₹ 10, which were not recorded in the books, are taken over by the partners in their profit sharing ratio)
Working Notes:
4. Typewriter’s realisation value:
Estimated Value
= ₹ 400
Discount
= 25%
Realisation Value
{= ₹~400 × \dfrac{75}{100}}
= ₹ 300
5. Distribution of shares among partners in their profit sharing ratio (as no information is given, it is assumed that they are equal partners)
No. of Shares
= 100
Realisation value of each share
= ₹ 6
Total Realisation Value
= 100 × ₹ 6
= ₹ 600
Share of Paras
{= ₹~600 × \dfrac{1}{2}}
= ₹ 300
Share of Priya
{= ₹~600 × \dfrac{1}{2}}
= ₹ 300

9. All partners wish to dissolve the firm. Yastin, a partner wants that her loan of ₹ 2,00,000 must be paid off before the payment of capitals to the partners. But, Amart, another partner wants that the capitals must be paid before the payment of Yastin’s loan. You are required to settle the conflict giving reasons.
The conflict can be settled by providing the section 48 of Partnership Act 1932. As per this law, the payment of the loans of the partners will take priority over the payment of capital, which is to be done at the end. So, Yastin’s loan of ₹ 2,00,000 should be paid first.
10. What journal entries would be recorded for the following transactions on the dissolution of a firm of Arti and Karim after various assets (other than cash) on the third party liabilities have been transferred to Reliasation account.
1.
Arti took over the Stock worth ₹ 80,000 at ₹ 68,000.
2.
There was unrecorded Bike of ₹ 40,000 which was taken over by Mr. Karim.
3.
The firm paid ₹ 40,000 as compensation to employees.
4.
Sundry creditors amounting to ₹ 36,000 were settled at a discount of 15%.
5.
Loss on realisation ₹ 42,000 was to be distributed between Arti and Karim in the ratio of 3:4.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
1.
Arti’s Capital A/c
Dr.
68,000
To Realisation A/c
68,000
(Being stock worth of ₹ 80,000 is taken over by the partner Arti at ₹ 69,000)
2.
Karim’s Capital A/c
Dr.
40,000
To Realisation A/c
40,000
(Being unrecorded bike asset worth of ₹ 40,000 taken over by the partner Mr. Karim)
3.
Realisation A/c
Dr.
40,000
To Bank A/c
40,000
(Being compensation paid to the employees)
4.
Realisation A/c
Dr.
30,600
To Bank A/c
30,600
(Being creditors liability worth of ₹ 36,000 settled for a discount of 15%)
5.
Arti’s Capital A/c
Dr.
18,000
Karim’s Capital A/c
Dr.
24,000
To Realisation A/c
42,000
(Being realisation loss transferred to the partners’ capital accounts in the ratio 3:4)
Working Notes:
4. Settlement of Creditors’ liability:
Book Value
= ₹ 36,000
Discount
= 15%
Settlement Value
{= ₹~36,000 × \dfrac{85}{100}}
= ₹ 30,600
5. Distribution of loss among partners in the ratio 3:4
Arti’s share
{= ₹~42,000 × \dfrac{3}{7}}
= ₹ 18,000
Karim’s share
{= ₹~42,000 × \dfrac{4}{7}}
= ₹ 24,000
11. Rose and Lily shared profits in the ratio of 2:3. Their Balance Sheet on March 31, 2017 was as follows:
Balance Sheet of Rose and Lily as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Creditors
40,000
Cash
16,000
Lily’s Loan
32,000
Debtors
80,000
Profit and Loss
50,000
Provision for
Capitals:
doubtful debts
3,600
76,400
Lily
1,60,000
Inventory
1,09,600
Rose
2,40,000
Bills receivable
40,000
Buildings
2,80,000
5,22,000
5,22,000
Rose and Lily decided to dissolve the firm on the above date. Assets (except bills receivables) realised ₹ 4,84,000. Creditors agreed to take ₹ 38,000. Cost of realisation was ₹ 2,400. There was a Motor Cycle in the firm which was bought out of the firm’s money, was not shown in the books of the firm. It was now sold for ₹ 10,000. There was a contingent liability in respect of outstanding electric bill of ₹ 5,000 which was paid Bill Receivable taken over by Rose at ₹ 33,000.
Show Realisation Account, Partners Capital Acount, Loan Account and Cash Account.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Debtors A/c
80,000
By Provision for
3,600
To Inventory A/c
1,09,600
doubtful debts A/c
To Bills Receivable A/c
40,000
By Creditors
40,000
To Buildings A/c
2,80,000
By Cash A/c
To Cash A/c
Motor Cycle
10,000
Outstanding
5,000
Other Assets
4,84,000
4,94,000
Electricity Bill
By Rose’s Capital A/c
33,000
Creditors
38,000
(Bills Receivable)
Expenses
2,400
45,400
Profit Transferred:
To Rose’s Capital A/c
6,240
To Lily’s Capital A/c
9,360
15,600
5,70,600
5,70,600
Date
Particulars
J.F.
Rose
Amount
₹
Lily
Amount
₹
Date
Particulars
J.F.
Rose
Amount
₹
Lily
Amount
₹
To Realisation A/c
33,000
By Balance b/d
2,40,000
1,60,000
(Bills Receivable)
By Profit and Loss A/c
20,000
30,000
To Cash A/c
2,33,240
1,99,360
By Realisation A/c
6,240
9,360
(Profit)
2,66,240
2,66,240
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Cash A/c
32,000
By Balance b/d
32,000
32,000
32,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Balance b/d
16,000
By Realisation A/c
To Realisation A/c
Creditors
38,000
Motor Cycle
10,000
Outstanding
Other Assets
4,84,000
4,94,000
Electricity Bill
5,000
Expenses
2,400
45,400
By Lily’s Loan A/c
32,000
By Rose’s Capital A/c
2,33,240
By Lily’s Capital A/c
1,99,360
5,10,000
5,10,000

12. Shilpa, Meena and Nanda decided to dissolve their partnership on March 31, 2017. Their profit sharing ratio was 3:2:1 and their Balance Sheet was as under:
Balance Sheet of Shilpa, Meena and Nanda as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capitals
Land
81,000
Shilpa
80,000
Stock
56,760
Meena
40,000
Debtors
18,600
Bank Loan
20,000
Nanda’s Capital
23,000
Creditors
37,000
Cash
10,840
Provision for doubtful debts
1,200
General Reserve
12,000
1,90,200
1,90,200
The stock of value of ₹ 41,660 are taken over by Shilpa for ₹ 35,000 and she agreed to discharge bank loan. The remaining stock was sold at ₹ 14,000 and debtors amounting to ₹ 10,000 realised ₹ 8,000. land is sold for ₹ 1,10,000. The remaining debtors realised 50% at their book value. Cost of realisation amounted to ₹ 1,200. There was a typewriter not recorded in the books worth ₹ 6,000 which were taken over by one of the Creditors at this value. Prepare Realisation Account.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Land A/c
81,000
By Bank Loan A/c
20,000
To Stock A/c
56,700
By Creditors A/c
37,000
To Debtors A/c
18,600
By Provision for
1,200
To Shilpa’s Capital A/c
20,000
doubtful debts A/c
To Cash A/c
By Shilpa’s Capital A/c
35,000
Creditors
31,000
(Stock)
Realisation Expenses
1,200
32,200
By Cash A/c
Realisation Profit:
Stock
14,000
To Shilpa’s Capital A/c
10,470
Debtors
12,300
To Meena’s Capital A/c
6,980
Land
1,10,000
1,36,300
To Nanda’s A/c
3,490
20,940
2,29,500
2,29,500
Date
Particulars
J.F.
Shilpa
Amount
₹
Meena
Amount
₹
Nanda
Amount
₹
Date
Particulars
J.F.
Shilpa
Amount
₹
Meena
Amount
₹
Nanda
Amount
₹
To Balance b/d
23,000
By Balance b/d
80,000
40,000
To Realisation A/c
35,000
By General Reserve A/c
6,000
4,000
2,000
(Stock)
Realisation A/c
20,000
To Cash A/c
81,470
50,980
(Bank Loan)
By Realisation A/c
10,470
6,980
3,490
(Profit)
By Cash A/c
17,510
1,16,470
50,980
23,000
1,16,470
50,980
23,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Balance b/d
10,840
By Realisation A/c
32,200
To Realisation A/c
1,36,300
(Expenses)
(Assets)
By Shilpa’s Capital A/c
81,470
To Nanda’s Capital A/c
17,510
By Meena’s Capital A/c
50,980
1,64,650
1,64,650
Working Notes:
Debtors:
Case 1
Total Debtors
= ₹ 18,600
Realised Debtors
= ₹ 10,000
Realisation Value
= ₹ 8,000
Case 2
Remaining Debtors
= ₹ 18,600 – ₹ 10,000
= ₹ 8,600
Realisation Value
{= ₹~8,600 × \dfrac{50}{100}}
= ₹ 4,300
Total Realised Value
= ₹ 8,000 + ₹ 4,300
= ₹ 12,300

13. Surjit and Rahi were sharing profits (losses) in the ratio of 3:2, their Balance Sheet as on March 31, 2017 is as follows:
Balance Sheet of Surjit and Rahi as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Creditors
38,000
Bank
11,500
Mrs. Surjit loan
10,000
Stock
6,000
Reserve
15,000
Debtors
19,000
Rahi’s Loan
5,000
Furniture
4,000
Capitals:
Plant
28,000
Surjit
10,000
Investment
10,000
Rahi
8,000
Profit and Loss
7,500
86,000
86,000
The firm was dissolved on March 31, 2017 on the following terms:
1.
Surjit agreed to take the investments at Rs. 8,000 and to pay Mrs. Surojit’s loan.
2.
Other assets were realised as follows:
Stock
₹ 5,000
Debtors
₹ 18,500
Furniture
₹ 4,500
Plant
₹ 25,000
3.
Expenses on realisation amounted to ₹ 1,600.
4.
Creditors agreed to accept ₹ 37,000 as a final settlement.
You are required to prepare Realisation account, Partner’s Capital account and Bank account.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Stock A/c
6,000
By Creditors A/c
38,000
To Debtors A/c
19,000
By Mrs. Surjit’s Loan A/c
10,000
To Furniture A/c
4,000
By Surjit’s Capital A/c
8,000
To Plant A/c
28,000
(Investment)
To Investment A/c
10,000
By Bank A/c
To Surjit’s Capital A/c
10,000
Stock
5,000
(Mrs. Surjit’s Loan)
Debtors
18,500
To Bank A/c
Furniture
4,500
Expenses
1,600
Plant
25,000
53,000
Creditors
37,000
38,600
Loan Transferred:
By Surjit’s Capital A/c
3,960
By Rahi’s Capital A/c
2,640
6,600
1,15,600
1,15,600
Date
Particulars
J.F.
Surjit
Amount
₹
Rahi
Amount
₹
Date
Particulars
J.F.
Surjit
Amount
₹
Rahi
Amount
₹
To Realisation A/c
8,000
By Balance b/d
10,000
8,000
(Investment)
By Realisation A/c
10,000
To Realisation A/c
3,960
2,640
(Mrs. Surjit’s Loan)
(Loss)
By Reserve A/c
9,000
6,000
To Profit and Loss A/c
4,500
3,000
To Bank A/c
12,540
8,360
29,000
14,000
29,000
14,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Bank A/c
5,000
By Balance b/d
5,000
5,000
5,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Balance b/d
11,500
By Realisation A/c
38,600
To Realisation A/c
53,000
(Creditors and Expenses)
(Assets realised)
By Rahi’s Loan A/c
5,000
By Surjit’s Capital A/c
12,540
By Rahi’s Capital A/c
8,360
64,500
64,500

14. Rita, Geeta and Ashish were partners in a firm sharing profits/losses in the ratio of 3:2:1. On March 31, 2017 their balance sheet was as follows:
Liabilities
Amount
₹
Assets
Amount
₹
Capitals:
Cash
22,500
Rita
80,000
Debtors
52,300
Geeta
50,000
Stock
36,000
Ashish
30,000
1,60,000
Investments
60,000
Creditors
65,000
Plant
91,200
Bills Payable
26,000
General Reserve
20,000
2,71,000
2,71,000
On the date of above mentioned date the firm was dissolved:
1.
Rita was appointed to realise the assets. Rita was to receive 5% commission on the sale of assets (except cash) and was to bear all expenses of realisation,
2.
Assets were realised as follows:
₹
Debtors
30,000
Stock
26,000
Plant
42,750
3.
Investments were realised at 85% of the book value,
4.
Expenses of realisation amounted to ₹ 4,100,
5.
Firm had to pay ₹ 7,200 for outstanding salary not provided for earlier,
6.
Contingent liability in respect of bills discounted with the bank was also materialised and paid off ₹ 9,800,
Prepare Realisation account, Capital Accounts of Partner’s and Cash Account.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Debtors A/c
52,300
By Creditors A/c
65,000
To Stock A/c
36,000
By Bills Payable A/c
26,000
To Investment A/c
69,000
By Cash A/c
To Plant A/c
91,200
Debtors
30,000
To Cash A/c
Stock
26,000
Outstasnding Salaries
7,200
Plant
42,750
Discounted Bill
9,800
Intestment
58,650
1,57,400
Creditors
65,000
By Loss Transferred:
Bills Payable
26,000
1,08,000
By Rita’s Capital A/c
57,985
To Rita’s CApital A/c
7,870
By Geeta’s Capital A/c
38,657
By Ashish’s Capital A/c
19,328
1,15,970
3,64,370
3,64,370
Date
Particulars
J.F.
Rita
Amount
₹
Geeta
Amount
₹
Ashish
Amount
₹
Date
Particulars
J.F.
Rita
Amount
₹
Geeta
Amount
₹
Ashish
Amount
₹
To Realisation A/c
57,985
38,657
19,328
By Balance b/d
80,000
50,000
30,000
(Loss)
By General Reserve A/c
10,000
6,667
3,333
To Bank A/c
39,885
18,010
14,005
By Realisation A/c
7,870
(Balancing Figure)
(Commission)
97,870
56,667
33,333
97,870
56,667
33,333
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Balance b/d
22,500
By Realisation A/c
1,08,000
To Realisation A/c
1,57,400
By Rita’s Capital A/c
39,885
By Geeta’s Capital A/c
18,010
By Ashish’s Capital A/c
14,005
1,79,900
1,79,900
Working Notes:
1. Rita’s Commission:
To find Rita’s commission we should find the realisation value of all the assets.
Debtors
= ₹ 30,000
Stock
= ₹ 26,000
Plant
= ₹ 42,750
Investments
{= ₹~69,000 × \dfrac{85}{100}}
= ₹ 58,650
Total
= ₹ 30,000 + ₹ 26,000 + ₹ 42,750 + ₹ 58,650
= ₹ 1,57,400
Commission
{= ₹~1,57,440 × \dfrac{5}{100}}
= ₹ 7,870
Distribution of General Reserves among the partners in their profit/loss sharing ratio 3:2:1
Rita
{= ₹~20,000 × \dfrac{3}{6}}
= ₹ 10,000
Geeta
{= ₹~20,000 × \dfrac{2}{6}}
= ₹ 6,667
Ashish
{= ₹~20,000 × \dfrac{1}{6}}
= ₹ 3,333
Note: As Rita has to bear the realisation expenses, only the commission will be paid to Rita. However, the realization expenses i.e. ₹ 4,100 have to be borne by Rita. In otherwords, realisation expenses will not be paid by the firm. So, there won’t be any entries for the realisation expenses in the realisation account.
15. Anup and Sumit are equal partners in a firm. They decided to dissolve the parntership on March 31, 2017. When the balance sheet is as under :
Balance Sheet of Anup and Sumit as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Sundry Creditors
27,000
Cash at bank
11,000
General Reserve
10,000
Sundry Debtors
12,000
Loan
40,000
Plants
47,000
Capital
Stock
42,000
Anup
60,000
Lease hold land
60,000
Sumit
60,000
1,20,000
Furniture
25,000
1,97,000
1,97,000
The Assets were realised as follows :
₹
Lease hold land
72,000
Furniture
22,500
Stock
40,500
Plant
48,000
Sundry Debtors
10,500
The Creditors were paid ₹ 25,500 in full settlement. Expenses of realisation amount to ₹ 2,500.
Prepare Realisation Account, Bank Account, Partners Capital Accounts to close the books of the firm.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Sundry Debtors A/c
12,000
By Sundry Creditors A/c
27,000
To Plants A/c
47,000
By Loan A/c
40,000
To Stock A/c
42,000
By Bank A/c
To Lease on Hold Land
60,000
Lease Hold Land
72,000
To Furniture A/c
25,000
Furniture
22,500
To Bank A/c
Stock
40,500
Creditors
25,500
Plant
48,000
Loan
40,000
Sundry Debtors
10,500
1,93,500
Expenses
2,500
68,000
Profits Transferred
To Anup’s Capital A/c
3,250
To Sumit’s Capital A/c
3,250
6,500
2,60,500
2,60,500
Date
Particulars
J.F.
Anup
Amount
₹
Sumit
Amount
₹
Date
Particulars
J.F.
Anup
Amount
₹
Sumit
Amount
₹
To Bank A/c
68,250
68,250
By Balance b/d
60,000
60,000
By Reserve Fund A/c
5,000
5,000
By Realisation A/c
3,250
3,250
68,250
68,250
68,250
68,250
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Balance b/d
11,000
By Realisation A/c
68,000
To Realisation A/c
1,93,500
(Expenses and Liabilities)
(Assets)
By Anup’s Capital A/c
68,250
By Sumit’s Capital A/c
68,250
2,04,500
2,04,500

16. Ashu and Harish are partners sharing profit and losses as 3:2. They decided to dissolve the firm on March 31, 2017. Their balance sheet on the above date was:
Balance Sheet of Ashu and Harish as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capitals:
Building
80,000
Ashu
1,08,000
Machinery
70,000
Harish
54,000
1,62,000
Furniture
14,000
Creditors
88,000
Stock
20,000
Bank Overdraft
50,000
Investments
60,000
Debtors
48,000
Cash in hand
8,000
3,00,000
3,00,000
Ashu is to take over the building at ₹ 95,000 and Machinery and Furniture is take over by Harish at value of ₹ 80,000. Ashu agreed to pay Creditor and Harish agreed to meet Bank overdraft. Stock and Investments are taken by both partner in profit sharing ratio. Debtors realised for ₹ 46,000, expenses of realisation amounted to ₹ 3,000. Prepare necessary ledger account.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Building A/c
80,000
By Creditors A/c
88,000
To Machinery A/c
70,000
By Bank Overdraft
50,000
To Furniture A/c
14,000
By Ashu’s Capital A/c
To Stock A/c
20,000
Building
95,000
To Investment A/c
60,000
Stock
12,000
To Debtors A/c
48,000
Investment
36,000
1,43,000
To Ashu’s Capital A/c
88,000
By Harish’s Capital A/c
(Creditors)
Machinery and Furniture
80,000
To Harish’s Capital A/c
50,000
Stock
8,000
(Bank Overdraft)
Investment
24,000
1,12,000
To Cash A/c
3,000
By Cash A/c
46,000
(Expenses)
(Debtors)
Realisation Profit
To Ashu’s Capital A/c
3,600
To Harish’s Capital A/c
2,400
6,000
4,39,000
4,39,000
Date
Particulars
J.F.
Ashu
Amount
₹
Harish
Amount
₹
Date
Particulars
J.F.
Ashu
Amount
₹
Harish
Amount
₹
To Realisation A/c
1,43,000
1,12,000
By Balance b/d
1,08,000
54,000
(Assets Taken)
By Realisation A/c
88,000
50,000
To Cash A/c
56,000
(Liabilities)
By Realisation A/c
3,600
2,400
(Profit)
By Cash A/c
5,600
1,99,000
1,12,000
1,99,000
1,12,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Balance b/d
8,000
By Realisation A/c
3,000
To Realisation A/c
46,000
(Expenses)
(Debtors)
By Ashu’s Capital A/c
56,600
To Harish’s Capital A/c
5,600
59,600
59,600
Working Notes:
Sharing of Stock in the profit sharing ratio 3:2
Ashu’s Share
{= ₹~20,000 × \dfrac{3}{5}}
= ₹ 12,000
Harish’s Share
{= ₹~20,000 × \dfrac{2}{5}}
= ₹ 8,000
Sharing of Investment in the profit sharing ratio 3:2
Ashu’s Share
{= ₹~60,000 × \dfrac{3}{5}}
= ₹ 36,000
Harish’s Share
{= ₹~60,000 × \dfrac{2}{5}}
= ₹ 24,000

17. Sanjay, Tarun and Vineet shared profit in the ratio of 3:2:1. On March 31, 2017 their balance sheet was as follows :
Balance Sheet of Sanjay, Tarun and Vineet as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Capitals
Plant
90,000
Sanjay
1,00,000
Debtors
60,000
Tarun
1,00,000
Furniture
32,000
Vineet
70,000
2,70,000
Stock
60,000
Creditors
80,000
Investments
70,000
Bills payable
30,000
Bills receivable
36,000
Cash in hand
32,000
3,80,000
3,80,000
On this date the firm was dissolved. Sanjay was appointed to realise the assets. Sanjay was to receive 6% commission on the sale of assets (except cash) and was to bear all expenses of realisation.
Sanjay realised the assets as follows : Plant ₹ 72,000, Debtors ₹ 54,000, Furniture ₹ 18,000, Stock 90% of the book value, Investments ₹ 76,000 and Bills receivable ₹ 31,000. Expenses of realisation amounted to ₹ 4,500.
Prepare Realisation Account, Capital Accounts and Cash Account
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Plant A/c
90,000
By Creditors A/c
80,000
To Sundry Debtors A/c
60,000
By Bills Payable A/c
30,000
To Furniture A/c
32,000
By Bank A/c
To Stock A/c
60,000
Plant
72,000
To Investment A/c
70,000
Debtors
54,000
To Bills Receivalble A/c
36,000
Furniture
18,000
To Bank A/c
Stock
54,000
Creditors
80,000
Investment
76,000
Bills Receivable
30,000
1,10,000
Bills Receivable
31,000
3,05,000
To Sanjay’s Capital A/c
18,300
Loan Transferred:
(Commission)
By Sanjay’s Capital A/c
30,650
By Tarun’s Capital A/c
20,433
By Vineet’s Capital A/c
10,217
61,300
4,76,300
4,76,300
Date
Particulars
J.F.
Sanjay
Amount
₹
Tarun
Amount
₹
Vineet
Amount
₹
Date
Particulars
J.F.
Sanjay
Amount
₹
Tarun
Amount
₹
Vineet
Amount
₹
To Realisation A/c
30,650
20,433
10,217
By Balance b/d
1,00,000
1,00,000
70,000
(Loss)
By Realisation A/c
18,300
To Bank A/c
87,650
79,567
59,783
(Commission)
(Balancing Figure)
1,18,300
1,00,000
70,000
1,18,300
1,00,000
70,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Balance b/d
32,000
By Realisation A/c
To Realisation A/c
Creditos
80,000
Investments
76,000
Bills Payable
30,000
1,10,000
Debtors
54,000
By Sanjay’s Capital A/c
87,650
Plant
72,000
By Tarun’s Capital A/c
79,567
Furniture
18,000
By Vineet’s Capital A/c
59,783
Stock
54,000
Bills Receivable
31,000
3,05,000
3,37,000
3,37,000
18. The following is the Balance Sheet of Gupta and Sharma as on March 31, 2017:
Balance Sheet of Gupta and Sharma as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Sundry Creditors
38,000
Cash at bank
12,500
Mrs. Gupta’s loan
20,000
Sundry Debtors
55,000
Mrs. Sharma’s loan
30,000
Stock
44,000
General Reserve
6,000
Bills Receivable
19,000
Provision of
4,000
Machinery
52,000
doubtful debts
Investment
38,500
Capital
Fixtures
27,000
Gupta
90,000
Sharma
60,000
1,50,000
2,48,000
2,48,000
The firm was dissolved on December 31, 2017 and asset realised and settlements of liabilities as follows:
(a)
The realisation of the assets were as follows:
₹
Sundry Debtors
52,000
Stock
42,000
Bills receivable
16,000
Machinery
49,000
Fixtures
20,000
(b)
Investment was taken over by Gupta at agreed value of ₹ 36,000 and agreed to pay of Mrs. Gupta’s loan.
(c)
The Sundry Creditors were paid off less 3% discount.
(d)
The realisation expenses incurred amounted to ₹ 1,200.
Journalise the entries to be made on the dissolution and prepare Realisation Account, Bank Account and Partners Capital Accounts.
Journal
Date
Particulars
L.F.
Debit
Amount
₹
Credit
Amount
₹
2017
Mar 31
Revaluation A/c
Dr.
2,35,500
To Sundry Debtors A/c
55,000
To Stock A/c
44,000
To Bills Receivable A/c
19,000
To Machinery A/c
52,000
To Investment A/c
38,500
To Fixtures A/c
27,000
(Being assts transferred to Realisation account)
Mar 31
Sundry Creditors A/c
Dr.
38,000
Mrs. Gupta’s Loan A/c
Dr.
20,000
Mrs. Sharma’s Loan A/c
Dr.
30,000
Provision for Doubtful Debts A/c
Dr.
4,000
To Realisation A/c
92,000
(Being liabilities transferred to realisation account)
Mar 31
Bank A/c
Dr.
1,59,000
To Realisation A/c
1,59,000
(Being assets realised)
Mar 31
Realisation A/c
Dr.
20,000
To Gupta’s Capital A/c
20,000
(Being Mrs. Gupta’s loan taken over by Gupta)
Mar 31
Gupta’s Capital A/c
Dr.
36,000
To Realisation A/c
36,000
(Being Investment taken over by Gupta)
Mar 31
Realisation A/c
Dr.
66,860
To Bank A/c
66,860
(Being liabilities settled)
Mar 31
Realisation A/c
Dr.
1,200
To Bank A/c
1,200
(Being realisation expenses paid)
Mar 31
Gupta’s Capital A/c
Dr.
18,280
Sharma’s Capital A/c
Dr.
18,280
To Realisation A/c
36,560
(Being Loss on realisation transferred to the partners’ capital accounts)
Mar 31
Reserve Fund A/c
Dr.
6,000
To Gupta’s Capital A/c
3,000
To Sharma’s Capital A/c
3,000
(Being resurve fund distributed among partmers)
Mar 31
Gupta’s Capital A/c
Dr.
58,720
Sharma’s Capital A/c
Dr.
44,720
To Bank A/c
1,03,440
(Being partners’ accuonts settled)
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Sundry Debtors A/c
55,000
By Sundry Creditors A/c
38,000
To Stock A/c
44,000
By Mrs. Gupta’s Loan A/c
20,000
To Bills Receivable A/c
19,000
By Mrs. Sharma’s Loan A/c
30,000
To Machinery A/c
52,000
By Provision for
4,000
To Investment A/c
38,500
doubtful debts A/c
To Fixtures A/c
27,000
Bank
To Gupta’s Capital A/c
20,000
Sundry Debtors
52,000
(Mrs. Gupta’s Loan)
Stock
42,000
To Bank A/c
Bills Receivable
16,000
Creditors
36,860
Machinery
49,000
1,59,000
Mrs. Sharma’s Loan
30,000
By Gupta’s Capital A/c
36,000
Expense
1,200
68,060
Loan Transferred:
By Gupta’s Capital A/c
18,280
By Sharma’s Capital A/c
18,280
36,560
3,23,560
3,23,560
Date
Particulars
J.F.
Gupta
Amount
₹
Sharma
Amount
₹
Date
Particulars
J.F.
Gupta
Amount
₹
Sharma
Amount
₹
To Realisation A/c
36,000
By Balance b/d
90,000
60,000
(Investment)
By Realisation A/c
20,000
To Realisation A/c
18,280
18,280
(Mrs. Gupta’s Loan)
(Loss)
By Reserve Fund A/c
3,000
3,000
To Bank A/c
58,720
44,720
1,13,000
63,000
1,13,000
63,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Balance b/d
12,500
By Realisation A/c
68,060
To Realisation A/c
1,59,000
(Payment of Expenses
(Assets realised)
and liabilities)
By Gupta’s Capital A/c
58,720
By Sharma’s Capital A/c
44,720
1,71,500
1,71,500
Note: There is a typo in the bank account total specified in the text book where in is printed as ₹ 1,91,500. However, as per the solution it is ₹ 1,71,500.
Working Notes:
Payment to Sundry Creditors:
Creditors
= ₹ 38,000
Discount
= 3%
Settlement Amount
{= ₹~38,000 × \dfrac{97}{100}}
= ₹ 36,860
19. Ashok, Babu and Chetan are in partnership sharing profit in the proportion of 1/2, 1/3, 1/6 respectively. They dissolve the partnership of the December 31, 2017, when the balance sheet of the firm as under:
Balance Sheet of Ashok, Babu and Chetan as on December 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Sundry Creditors
20,000
Bank
7,500
Bills payable
25,500
Sundry Debtors
58,000
Chetan’s loan
30,000
Stock
39,500
Capitals :
Machinery
48,000
Ashok
70,000
Investment
42,000
Babu
55,000
Freehold property
50,500
Chetan
27,000
1,52,000
Current accounts:
Ashok
10,000
Babu
5,000
Chetan
3,000
18,000
2,45,500
2,45,500
The machinery was taken over by Babu for ₹ 45,000, Ashok took over the Investment for ₹ 40,000 and Freehold property took over by Chetan at ₹ 55,000. The remaining Assets realised as follows: Sundry Debtors ₹ 56,500 and Stock ₹ 36,500. Sundry Creditors were settled at discount of 7%. A Office computer, not shown in the books of accounts realised Rs.9,000. Realisation expenses amounted to ₹ 3,000.
Prepare Realisation Account, Partners Capital Account, Bank Account.
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Sundry Debtors A/c
58,000
By Sundry Creditors A/c
20,000
To Stock A/c
39,500
By Bills Payable A/c
25,500
To Machinery A/c
48,000
By Ashok’s Current A/c
49,000
To Investment A/c
42,000
(Investment)
40,000
To Feehold property A/c
50,500
By Babu’s Current A/c
45,000
To Bank A/c
(Machinery)
Sundry Creditors
18,600
By Chetan’s Current A/c
55,000
Bills Payable
22,500
(Freehold property)
Expenses
3,000
47,100
By Bank A/c
Profit Transferred:
Sundry Debtors
56,500
To Ashok’s Current A/c
1,200
Stock
36,500
To Babu’s Current A/c
800
Computer
9,000
1,02,000
To Chetan’s Current A/c
400
2,400
(Unrecorded)
2,87,500
2,87,500
Date
Particulars
J.F.
Ashok
Amount
₹
Babu
Amount
₹
Chetan
Amount
₹
Date
Particulars
J.F.
Ashok
Amount
₹
Babu
Amount
₹
Chetan
Amount
₹
To Realisation A/c
40,000
45,000
45,000
By Balance b/d
10,000
5,000
3,000
(Assets taken over)
By Realisation A/c
1,200
800
400
(Profit)
By Ashok’s Capital A/c
28,800
By Babu’s Capital A/c
39,200
By Chetan’s Capital A/c
51,600
40,000
45,000
55,000
40,000
45,000
55,000
Date
Particulars
J.F.
Ashok
Amount
₹
Babu
Amount
₹
Chetan
Amount
₹
Date
Particulars
J.F.
Ashok
Amount
₹
Babu
Amount
₹
Chetan
Amount
₹
To Ashok’s Current A/c
28,800
By Balance b/d
70,000
55,000
77,000
To Babu’s Current A/c
39,200
By Bank A/c
24,600
To Chetan’s Current A/c
51,600
To Bank A/c
41,200
15,800
70,000
55,000
51,600
70,000
55,000
51,600
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Cash A/c
30,000
By Balance b/d
30,000
30,000
30,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Balance b/d
7,500
By Realisation A/c
47,100
To Realisation A/c
1,02,000
(Payment of Expenses
(Assets Realised)
24,600
and liabilities)
To Chetan’s Capital A/c
24,600
By Babu’s Loan A/c
30,000
By Ashok’s Capital A/c
41,200
20. The following is the Balance sheet of Tanu and Manu, who shares profit and losses in the ratio of 5:3, On March 31, 2017:
Balance Sheet of Tanu and Manu as on March 31, 2017
Liabilities
Amount
₹
Assets
Amount
₹
Sundry Creditors
62,000
Cash at bank
16,000
Bills payable
32,000
Sundry Debtors
55,000
Bank Loan
50,000
Stock
75,000
General Reserve
16,000
Motor car
90,000
Capital
Machinery
45,000
Tanu
1,10,000
Investment
70,000
Manu
90,000
2,00,000
Fixtures
9,000
3,60,000
3,60,000
On the above date the firm is dissolved and the following agreement was made:
Tanu agree to pay the bank loan and took away the sundry debtors. Sundry creditors accepts stock and paid ₹ 10,000 to the firm. Machinery is taken over by Manu for ₹ 40,000 and agreed to pay of bills payable at a discount of 5%. Motor car was taken over by Tanu for ₹ 60,000. Investment realised ₹ 76,000 and fixtures ₹ 4,000. The expenses of dissolution amounted to ₹ 2,200.
Prepare Realisation Account, Bank Account and Partners Capital Accounts.
Books of Tanu and Manu
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Sundry Debtors A/c
55,000
By Sundry Creditors A/c
62,000
To Stock A/c
75,000
By Bills Payable A/c
32,000
To Motor Car A/c
90,000
By Bank Loan A/c
50,000
To Machinery A/c
45,000
By Tanu’s Capital A/c
To Investment A/c
70,000
Sundry Debtors
55,000
To Fixtures A/c
9,000
Motor Car
60,000
1,15,000
To Manu’s Capital A/c
30,400
By Bank A/c
(Bills Payable)
Stock
10,000
To Bank A/c
2,200
Investment
76,000
(Expenses)
2,200
Fixtures
4,000
90,000
To Tanu’s Capital A/c
50,000
By Manus Capital A/c
40,000
(Bank Loan)
(Machinery)
Loan Transferred:
By Tanu’s Capital A/c
23,500
By Manu’s Capital A/c
14,100
37,600
4,26,600
4,26,600
Date
Particulars
J.F.
Tanu
Amount
₹
Manu
Amount
₹
Date
Particulars
J.F.
Tanu
Amount
₹
Manu
Amount
₹
To Realisation A/c
1,15,000
40,000
By Balance b/d
1,10,000
90,000
(Assets taken over)
By Realisation A/c
50,000
30,400
To Realisation A/c
23,500
14,100
(Laibilities settled)
(Loss)
By Reserve Fund A/c
10,000
6,000
To Bank A/c
31,500
72,300
1,70,000
1,70,000
Date
Particulars
J.F.
Amount
₹
Date
Particulars
J.F.
Amount
₹
To Balance b/d
16,000
By Realisation A/c
2,200
To Realisation A/c
90,000
(Expenses)
(Assets)
By Tanu’s Capital A/c
31,500
By Manu’s Capital A/c
72,300
1,06,000
1,06,000