Wednesday, February 28, 2018

AHSEC - Class 12: Dissolution of Partnership Firm Practical Problems

Dissolution of Partnership Firm
1. Amal and Bimal are two partner in a firm. They share profits in the ratio of 3:2. Following is their Balance Sheet as on 31st December, 2008 on which day they dissolved their partnership firm.
Balance Sheet
Liabilities
Amount
Assets
Amount
Creditors
Reserve fund
Capital :
Amal    = 20,000
Bimal   = 15,000
20,000
5,000


35,000
Fixed assets
Stocks
Debtors
Cash
Profit & Loss A/c
30,000
10,000
15,000
3,000
2,000

60,000

60,000
Fixed assets realised Rs. 28,000. Stock at 8,000 and Bad debts Rs. 2,000. Goodwill realised Rs. 5,000. Creditors were paid at a discount of 10%. Expenses of realisation were Rs. 1,500. Pass the Journal entries in the books of the firm.
2. Kumar and Gaurav are partners sharing profits and losses as three – fourth and one – fourth. They agreed to dissolve their firm. On the date of dissolution, they have the following Balance Sheet was as follows:

Liabilities
Rs.
Assets
Rs.
Capital A/c :
Kumar                                                    40.000
Gaurav                                                   35,000
Creditors
Loan from Mrs. Gaurav


75,000
16,000
13,000
Land & Building
Plant & Machinery
Sundry Debtors                                    22,000
Less : Reserve                                         2,000
Bills Receivable
Cash in hand
50,000
18,000

20,000
7,500
8,500

1,04,000

1,04,000
The assets realised as follows :
(i)      Land & Building Rs. 48,000.
(ii)    Sundry Debtors Rs. 18,000.
(iii)   Goodwill Rs. 16,500.
Kumar took over the plant and machinery at 5% more than the book value. Gaurav agreed to discharge his wife’s loan. Creditors are paid expenses on realisation amounted Rs. 700. You are required to show Realisation Account , Cash Account and Capital Accounts of the partners on dissolution.
3. Ram and Shyam share the profits equally. They decided to dissolve their firm. Their liabilities were : Ram’s Capital Rs. 25,000; Shyam’s Capital Rs. 30,000; Creditors Rs. 12,500; Bills payable Rs.7,500; Assets of the firm realized Rs.1,00,000. Prepare a Realization Account.
4. The following is the Balance Sheet of Anju and Manju sharing profits in the ratio of 3:2 as on December 31, 2003 :
Balance Sheet as at December 31, 2003
Liabilities
Amount
Assets
Amount
Creditors
Loan by Anju’s brother
Loan by Manju
General Reserve
Capitals :
Anju
Manju
Profit and Loss
19,000
 5,000
7,500
1,250

5,000
4,000
2,500
Plant and Machinery
Furniture and Fixtures
Investment
Stock
Debtors                                                           10,000
Less: provision                                                     500
Bank
14,000
2,000
5,000
3,000

9,500
5,750

41,750

41,750
The firm was dissolved on March 31, 2003. As a result,
(a)    Anju took over investments at an agreed value of Rs. 4,000 and agreed to pay loan taken from her brother
(b)   Realization of assets is as follows : Stock Rs. 2,500, Debtors Rs. 9,250, Furniture and Fixture Rs. 2,250, Plant and Machinery Rs. 12,500
(c)    Expenses of realization were Rs. 300
(d)   Creditors allowed 2.5% discount in full settlement. Record necessary journal entries and close the books of the firm.
6. Dinesh, Ramesh and Satish were partners in a firm sharing-profits in the ratio of 5:3:2. They agreed to dissolve their partnership firm on March 31, 2002. Dinesh was asked to realize the assets and pay off liabilities. He had to bear the realization expenses for which he was promised a lump sum amount of Rs. 2,000. Their financial position on that date was as follows :
Balance Sheet as at March 31, 2002
Liabilities
Amount
Assets
Amount
Creditors
Investment fluctuation fund
Capitals :
Dinesh
Ramesh
Suresh
27,500
9,000

75,000
30,000
16,000
Plant and Machinery
Investment
Stock
Debtors                                                          14,200
Less: provision                                                   900
Bank
Profit and losses account
60,000
30,000
11,000

13,300
11,200
32,000

1,57,500

1,57,500
Dinesh agreed to purchase investments at Rs. 25,000. Ramesh took over stock at Rs. 10,500 and Debtors at Rs. 11,800. Plant and Equipment was sold for Rs. 45,000. Unrecorded assets realized cash of Rs. 3,000. Actual realization expenses amounted to Rs. 1,800. Prepare necessary ledger accounts on the dissolution of firm.
7. Lata, Geeta and Neeta were partners sharing profits in the ratio of 5:3:1. They decided to dissolve the partnership on March 31, 2001 and their balance sheet was as under.
Balance Sheet Lata, Geeta and Neeta as at March 31, 2001
Liabilities
Amount
Assets
Amount
Creditors
Bills Payable
Mortgage loan
General Reserve
Capitals :
Lata
Geeta
Neeta
16,600
3,400
15,000
4,500

22,000
18,000
10,000
Plant and Machinery
Investment
Stock
Debtors                                                          25,000
Less: provision                                                5,000
Bank
Deferred Revenue Expenditure
Suspense
30,000
10,000
10,000

20,000
9,500
5,000
5,000

89,500

89,500
There was a typewriter written off which realised Rs. 500. They had a joint life policy of Rs. 20,000 which was surrendered for Rs. 5,000. Goodwill was sold for Rs. 5,000. Other assets realized – stock Rs. 6,700; debtors 50%; plant and machinery 10% less than its book value. Creditors were paid Rs. 16,000. But an outstanding bill of Rs. 400 for repairs was to be paid off. Expenses on realization amounted to Rs. 620. Give journal entries to record the above transactions and also prepare necessary ledger accounts.
8. Following is the Balance Sheet of Raman and Ramesh on June 30, 2002.
Liabilities
Amount
Assets
Amount
Creditors
Bills Payable
Bank overdraft
Mrs. Raman’s loan
Ramesh’s loan
Investment fluctuation fund
Employees provident fund
Ramesh’s loan
General Reserve
Raman’s Capital
Ramesh’ Capital
20,000
20,000
10,000
5,000
5,000
2,800
1,200
10,000
2,000
20,000
20,000
Goodwill
Building
Plant and fitting
Investment
Stock
Debtors                                                          17,000
Less: provision                                                2,000
Bills Receivable
Deferred Revenue Expenditure
Suspense
10,000
25,000
25,000
15,300
8,700

15,000
10,000
2,000
5,000

1,16,000

89,500
The firm was dissolved on June 30, 2002 and following was the position:
a)      Raman agreed to pay off his wife’s loan.
b)      Debtors realized Rs. 12,000.
c)       Ramesh’s loan transferred to his capital account.
d)      Ramesh took away all the investments at Rs. 12,000.
e)      Other assets realized as follows : Plant and Fittings 20,000, Building 50,000, Goodwill 6,000
f)       Sundry creditors and Bills payable were settled at 5% discount.
g)      Raman accepted stock at Rs 8,000 and Ramesh took over bills receivable at 20% discount.
h)      Realization expenses amounted to Rs. 2,000.
Record journal entries and also prepare various ledger accounts.
9. R, M and H were in partnership sharing profits and losses in the ratio of 8: 5: 3 respectively. The firm’s balance sheet as on 31st March, 2015 was as under:
Balance Sheet
Liabilities
(Rs.)
Assets
(Rs.)
Capitals :
    R          =      5,000/-
    M         =     2,000/-
    H          =     1,000/-
Sundry Creditors
Bank Loan



8,000
2,953
5,500
Current Account :
R        =       2,195/-
M       =       1,733/-
H        =       1,520/-
Machinery
Stock
Sundry Debtors
Cash



5,448
1,050
6,059
3,572
324

TOTAL
16,453
TOTAL
16,453
It was resolved to dissolve the partnership as on that date. The assets were realised as follows:
Machinery
Stock
Sundry Debtors
600/-
5,230/-
3,555/-

Pass Journal Entries and necessary ledger Accounts.