Ravi Sirs Nimble Education for ISC,CBSE,ICSE, IB, AS & A

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Contact : 9033311500, 8866611600

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Dissolution
Time: 1.5 hrs
------------------------------------------------------------------------------------------------------------------------------------------------Q1. The following is the Balance sheet of A & B 3:1 as on 31.3.14
Liabilities
Amount
Assets
Amount
Creditors
30,000 Cash
500
Bills payable
8,000 Bank
8,000
Mrs. As Loan
5,000 Stock
5,000
Mrs. Bs Loan
10,000 Investment
10,000
General Reserve
10,000 Debtors
20,000
Investment Reserve
1,000 (-)Provisions
(2,000)
18,000
As Capital
10,000 Plant
20,000
Bs Capital
10,000 Building
15,000
Goodwill
4,000
Advertisement Suspense
3,500
84,000
84,000
The firm was dissolved on Balance sheet date on following terms:
(i)A paid Mrs. As Loan & took stock at Rs 4,000. B took half of the investments at 10% discount.
(ii)Debtors realized Rs 19,000. Creditors & Bills payable were payable were due on an average one month
after balance sheet date, but were paid immediately at 6% discount.
(iii)Plant realized Rs 25,000, Building Rs 40,000, Goodwill Rs 6,000 & remaining investments Rs 4,500.
(iv)There is an old typewriter in the firm completely written off, taken over by B at Rs 300.
(v)A was to be credited with Rs 2,000 for undertaking dissolution process and was to bear the dissolution
expenses. Actual dissolution expenses paid by firm Rs 5,000.
Prepare Realization a/c, Capital a/c & Bank a/c.
[12]
Q2.A,B & C are partners in the ratio of 3:1:1.
Liabilities
Amount
Creditors
6,000
Loan
1,500
Capital A
27,500
B
10,000
C
7,000

Assets
Cash
Debtors
Less :Provision
Stock
Furniture
Sundry Assets

Amount
3,200
25,000
(2,000)

23,000
7,800
1,000
17,000
52,000

52,000
The following terms were agreed upon:
A agreed to take over furniture at Rs 800 & Debtors amounting to Rs 20,000 at Rs 17,200. The creditors of Rs
6,000 were paid by him. B took over stock at Rs 7,000 & some sundry assets at Rs 7,200 being 90% of book
value. C took remaining sundry assets at 90% less Rs 100 as discount & assume the responsibility for the
discharge of loan together with outstanding interest of Rs 30(interest not appearing in balance sheet). The
expenses of dissolution were Rs 270. Remaining debtors were sold for 50%.
Prepare Journals.
[12]

Ravi Sirs Nimble Education for ISC,CBSE,ICSE, IB, AS & A

Levels

Contact : 9033311500, 8866611600

Ravi Sirs Nimble Education for ISC,CBSE,ICSE, IB, AS & A

Levels

Contact : 9033311500, 8866611600

Q3.X & Y started business with Rs 100,000 and Rs 75,000 respectively on 1.4.2015. For the year ended
31.3.2016 their profits were Rs 120,000. Interest on drawings was allowed @ 10% pa. Their drawings were
Rs 20,000 each. There were difference of opinion and they decided to dissolve the firm. On the day of
dissolution liability of the firm apart from partners capital were : Creditors Rs 30,000, outstanding expenses
Rs 20,000. X had taken a loan from firm Rs 10,000. Cash balance was Rs 5,000.
The assets of the firm realized Rs 200,000 and there was a contingent liability of Rs 15,000 which had to be
settled. Dissolution expenses amounted to Rs 5,000.
Prepare Memorandum Balance sheet and other relevant accounts.
[12]
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Ravi Sirs Nimble Education for ISC,CBSE,ICSE, IB, AS & A

Levels

Contact : 9033311500, 8866611600