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Accountancy · 2022 · 5 marks
Dissolution of Partnership FirmAccounting Treatment on Dissolution of a Partnership Firm5 markslong answer
CBSE 2022 · Region 1 · Set 2 · Q9
Chanda, Tara and Nisha were partners in a firm sharing profits and losses in the ratio of 3: 2: 1. They decided to dissolve the firm on 31st March,…
Chanda, Tara and Nisha were partners in a firm sharing profits and losses in the ratio of $\displaystyle 3$ : $\displaystyle 2$ : 1. They decided to dissolve the firm on 31st March, 2021. Pass necessary Journal Entries for the following transactions after all assets (other than cash and bank) and third party liabilities have been transferred to Realisation Account. (i) A typewriter completely written off from the books was sold for ₹ $\displaystyle 9$,000. (ii) Chanda took over stock worth ₹ $\displaystyle 96,000$ at ₹ $\displaystyle 84$,000. (iii) Nisha was to get remuneration of ₹ $\displaystyle 42,000$ for completing the dissolution process. (iv) Creditors of ₹ $\displaystyle 23,500$ took over all the investments at ₹ $\displaystyle 10$,000. Remaining amount was paid to them in Cash. (V) Sundry Creditors amounting to ₹ $\displaystyle 40,000$ were settled at a discount of $\displaystyle 10$%.
Hcena, Mina and Tina are partners in a firm sharing profits and losses equally. Their Balance Sheet on April 1st, $\displaystyle 2020$ was as follows :
Balance Sheet of Heena, Meena & Tina as on 1st April, $\displaystyle 2020$
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Bills Payable | $\displaystyle 12,000$ | Building | $\displaystyle 40,000$ |
| Sundry Creditors | $\displaystyle 18,000$ | Machinery | $\displaystyle 30,000$ |
| General Reserve | $\displaystyle 12,000$ | Furniture | $\displaystyle 12,000$ |
| Capitals :Heena | $\displaystyle 30,000$ | Stock | $\displaystyle 22,000$ |
| Meena | $\displaystyle 30,000$ | Debtors $\displaystyle 20,000$ | |
| Tina | $\displaystyle 28,000$ | Less : Provision for doubtful debts $\displaystyle 1,000$ | $\displaystyle 19,000$ |
| Bank | $\displaystyle 7,000$ | ||
| $\displaystyle 1,30,000$ | $\displaystyle 1,30,000$ |
Tina retired from the firm on the above date and the following was agreed upon : (a) Building was to be appreciated by $\displaystyle 20$%. (b) Machinery was to be depreciated by ₹ $\displaystyle 1$,500. ($\displaystyle 0$) Provision for doubtful debts was to be increased to ₹ $\displaystyle 1$,500. (d) Goodwill was valued at ₹ $\displaystyle 21,000$ on Tina's rctirerncnt and the same was to be treated without opening goodwill account. (e) The balance in Tina's Capital account will be transferred to her Loan account. Prepare Revaluation Account and Partners' Capital Accounts.
Marking-scheme solution
Journal
Date Particulars L.F. Debit Credit
Amount Amount
(₹) (₹)
$\displaystyle 1$ Bank A/c/ Cash A/c Dr. $\displaystyle 9,000$
To Realization A/c $\displaystyle 9,000$
(Old typewriter written off earlier, now
sold)
$\displaystyle 2$ Chanda’s Capital A/c Dr. $\displaystyle 84,000$
To Realization A/c $\displaystyle 84,000$
(Stock taken over by Chanda)
$\displaystyle 3$ Realization A/c Dr. $\displaystyle 42,000$
To Nisha’s Capital A/c $\displaystyle 42,000$
(Remuneration allowed to Nisha)
$\displaystyle 4$ Realization A/c Dr. $\displaystyle 13,500$
To Bank A/c / Cash A/c $\displaystyle 13,500$
(Balance Creditors paid in cash)
$\displaystyle 5$ Realization A/c Dr. $\displaystyle 36,000$
To Bank A/c / Cash A/c $\displaystyle 36,000$
(Creditors paid at a discount of $\displaystyle 10$%)
Heena, Meena and Tina are partners in a firm…….
Ans.
Dr. Revaluation A/c Cr.
Particulars Amount Particulars Amount
(₹) (₹)
To Machinery A/c $\displaystyle 1,500$ By Building A/c $\displaystyle 8,000$
To Provision for Doubtful
debts A/c $\displaystyle 500$
To Gain on Revaluation
transferred to:
Heena’s Capital $\displaystyle 2,000$
Meena’s Capital $\displaystyle 2,000$ $\displaystyle 6,000$
Tina’s Capital $\displaystyle 2,000$
$\displaystyle 8,000$ $\displaystyle 8,000$
Dr. Partners’ Capital A/c Cr.
Particulars Heena Meena Tina Particulars Heena Meena Tina
(₹) (₹) (₹) (₹) (₹) (₹)
To Tina’s Cap. A/c $\displaystyle 3,500$ $\displaystyle 3,500$ By Balance b/d $\displaystyle 30,000$ $\displaystyle 30,000$ $\displaystyle 28,000$
To Tina’s Loan A/c $\displaystyle 41,000$ By General Reserve A/c $\displaystyle 4,000$ $\displaystyle 4,000$ $\displaystyle 4,000$
To Balance c/d $\displaystyle 32,500$ $\displaystyle 32,500$ By Revaluation A/c $\displaystyle 2,000$ $\displaystyle 2,000$ $\displaystyle 2,000$
By Heena’s Cap. A/c $\displaystyle 3,500$
By Meena’s Cap. A/c $\displaystyle 3,500$
$\displaystyle 36,000$ $\displaystyle 36,000$ $\displaystyle 41,000$ $\displaystyle 36,000$ $\displaystyle 36,000$ $\displaystyle 41,000$
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