DISSOLUTION

IMP QUESTIONS

1.

On 1.4.2004 A, B and C started business sharing profits in 4 : 3 : 3 ratio, with capitals of Rs. 1,00,000, Rs. 80,000 and Rs. 60,000 respectively. During the year ended 31.3.2005 the firm earned a profit of Rs. 50,000. During the year each partner with drew Rs. 10,000. On 31.3.2005 the firm was dissolved. Creditors on that date were Rs. 20,000 and there was a cash balance of Rs. 30,000. The assets realised Rs. 3, 00,000. Expenses on realisation were Rs. 2,000. Prepare Realisation Account, Partners Capital Accounts and Cash Account. B and C were partners in a firm sharing profits in 3 : 1 ratio. On 1.3.2007 their firm was dissolved. On that date Bs capital was Rs. 1,20,000 and Cs capital was Rs. 90,000. Creditors on that date were Rs. 40,000 and there was a balance of Rs. 68,000 in general reserve. Cash balance was Rs. 10,000.Sundry assets realised Rs. 6,00,000 and expenses on dissolution were Rs. 15,000 which were paid by C. Prepare Realisation Account, Cash Account and Partners Capital Accounts. 6 Ravi and Mohan were partners in a firm sharing profits in the ratio of 3 : 2. On 1.3.2007 the firm was dissolved. On that date the Balance Sheet of the firm was as follows : Balance Sheet of Ravi and Mohan as on 1.3.2007 Liabilities Loan Creditors Capitals : Ravi 6,00,000 Mohan 2,00,000 Amount Rs. Assets 1,40,000 Cash 2,60,000 Building Stock Profit & Loss A/c 8,00,000 12,00,000 12,00,000 Amount Rs. 20,000 10,00,000 80,000 1,00,000

2.

3.

Building realised Rs. 4,50,000; Stock Rs. 2,00,000. Rs. 2,40,000 were paid to the creditors in full settlement of their account. The firm has a joint life policy of Rs. 2,00,000 which was surrendered for Rs. 90,000. The annual premium paid on the joint life policy was debited to the Profit and Loss Account. Prepare Realisation Account, Cash Account and Partners Capital Accounts. 6

4.

Following is the Balance Sheet as on 31st March , 2009 of Arun and Tarun sharing profits in the ratio of 2 : 3. Liabilities Creditors Bills Payable Aruns Capital Taruns Capital Amount(Rs.) 65,000 5,000 8,000 10,000 Assets Cash Stock Debtors (net) Plant Investments P & L A/C (Dr.) 88,000 Amount(Rs.) 14,000 12,000 17,000 30,000 10,000 5,000 88,000

Note :There is a balance of Rs.1,000 in provision for doubtful debts A/C. On the above date , the firm was dissolved. Arun took over investments at Rs.8,000. Stock realized Rs. 10,000 ; Plant realized Rs. 3,000 less ;Debtors were sold to a collection agency for Rs.16,500 ; Liabilities were settled at a discount of 10 % ; and incurred Rs. 2,000 as cost of realization. Prepare Realisation A/C , Partners Capital A/C and Cash A/C.

SUBRAMANIAM C.

DISSOLUTION

IMP QUESTIONS

5.

X and Y are in partnership sharing profits and losses in the proportion of two-fifth and three-fifth. Following is their Balance Sheet as on 31st March, 2009. (6)

Liabilities Creditors Ys Loan Profit and Loss A/c Capital A/c X Y

Rs. 40,000 32,000 50,000 1,60,000 2,40,000

4,00,000 5,22,000

Assets Cash Debtors 80,000 Less: Provision for Doubtful Debts 3,600 Stock Bills Receivable Buildings

Rs. 16,000

76,400 1,09,600 40,000 2,80,000 5,22,000

They decide to dissolve the partnership on this date. Assets (except Bills Receivable) realized Rs.4,84,000. Creditors agreed to take Rs. 38,000 in settlement of their claims. Realization expenses were Rs. 2,400. There was a motor cycle in the firm which was bought out of the firms money, was not shown in the books of the firm. It was now sold for Rs. 10,000. There was an outstanding electricity bill of Rs. 5,000. Bills Receivable taken over by Y at Rs. 33,000. You are required to prepare the Realization Account; Partners Capital Accounts and the Cash Account.

6.

Jaya, Shree and Jothi were partners in a business with a profit sharing ratio of 3 : 2. 1 They decided to dissolve the partnership on January 31st December, 2009. On that date the assets (other than cash Rs. 6,000) of the firm realized Rs. 2,20,000. The liabilities and other particulars on that date of the firm were as follows:Creditors Rs. 40,000, Jayas capital Rs. 90,000, Shrees capital Rs. 30,000 and Jothis capital Rs. 40,000. Expenses on realization were Rs. 1,000 paid by Mr. Shree. Creditors were settled for Rs. 39,000. Prepare balance sheet of the firm as on 31-122009 and necessary ledger a/c.

SUBRAMANIAM C.