Page 1
ACCOUNTANCY – XII
20-20
Twenty important questions from examination point of view
Ques 1
X, Y and Z were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Following was the Balance Sheet
on the date of dissolution:
Liabilities Rs. Assets Rs.
Creditors 18,500 Furniture 1,000
Mrs. X’s Loan Account 5,000 Debtors 15,000
X’s Loan 8,000 Less : Provision 1,000 14,000
Investment Fluctuation Fund 7,500 Stock 80,000
Capital Accounts : Investments 20,000
X 75,000 Plant 55,000
Y 66,000 Goodwill 35,000
Z _45,000 Y’s loan a/c 20,000
2,25,000 2,25,000
Following transactions took place :
X took over the investments at 25% more than the book value.
Y took over debtors amounting to Rs.5,000 at Rs.4,000. Remaining debtors realised 75% of their book value.
Stock is sold for Rs.59,000 and plant is sold for Rs.40,000.
Expenses of realisation amounted to Rs.1,000. It was also found that there is a liability for Rs.8,000 for damages,
which also had to be paid. Prepare necessary accounts.
Ques 2
Following was the Balance Sheet of D, G and T on 28.2.2002:
Liabilities Amount Assets Amount
Rs. Rs.
Creditors 50,000 Bank 20,000
Bill’s Payable 10,000 Debtors 30,000
G’s Loan 8,000 Stock 20,000
R’s Loan 12,000 Furniture 15,000
Workmen Compensation Reserve 20,000 Land & Building 2,45,000
Capitals : G’s Capital 20,000
D 1,00,000
T 1,50,000 2,50,000 _______
3,50,000 3,50,000
The firm was dissolved on the above date on the following terms
(i) Debtors realized Rs.28,000; and creditors and bills payable were paid at a discount of 10%.
(ii) Stock was taken over by T for Rs.15,000 and furniture was sold to N for Rs.12,000.
(iii) Land and building was sold for Rs.2,80,000.
(iv) R's loan was paid by a cheque for the same amount.
(v) There was an unrecorded asset of Rs.20,000 which was sold for Rs.14,000.
Prepare Realisation Account, Bank Account and Capital Accounts of D, G and T.
Page 2
ACCOUNTANCY – XII
20-20
Twenty important questions from examination point of view
Ques 1
X, Y and Z were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Following was the Balance Sheet
on the date of dissolution:
Liabilities Rs. Assets Rs.
Creditors 18,500 Furniture 1,000
Mrs. X’s Loan Account 5,000 Debtors 15,000
X’s Loan 8,000 Less : Provision 1,000 14,000
Investment Fluctuation Fund 7,500 Stock 80,000
Capital Accounts : Investments 20,000
X 75,000 Plant 55,000
Y 66,000 Goodwill 35,000
Z _45,000 Y’s loan a/c 20,000
2,25,000 2,25,000
Following transactions took place :
X took over the investments at 25% more than the book value.
Y took over debtors amounting to Rs.5,000 at Rs.4,000. Remaining debtors realised 75% of their book value.
Stock is sold for Rs.59,000 and plant is sold for Rs.40,000.
Expenses of realisation amounted to Rs.1,000. It was also found that there is a liability for Rs.8,000 for damages,
which also had to be paid. Prepare necessary accounts.
Ques 2
Following was the Balance Sheet of D, G and T on 28.2.2002:
Liabilities Amount Assets Amount
Rs. Rs.
Creditors 50,000 Bank 20,000
Bill’s Payable 10,000 Debtors 30,000
G’s Loan 8,000 Stock 20,000
R’s Loan 12,000 Furniture 15,000
Workmen Compensation Reserve 20,000 Land & Building 2,45,000
Capitals : G’s Capital 20,000
D 1,00,000
T 1,50,000 2,50,000 _______
3,50,000 3,50,000
The firm was dissolved on the above date on the following terms
(i) Debtors realized Rs.28,000; and creditors and bills payable were paid at a discount of 10%.
(ii) Stock was taken over by T for Rs.15,000 and furniture was sold to N for Rs.12,000.
(iii) Land and building was sold for Rs.2,80,000.
(iv) R's loan was paid by a cheque for the same amount.
(v) There was an unrecorded asset of Rs.20,000 which was sold for Rs.14,000.
Prepare Realisation Account, Bank Account and Capital Accounts of D, G and T.
ACCOUNTANCY – XII
Ques 3
A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1. They agreed to dissolve the firm. The
Balance Sheet of the firm on that date was as follows:
Liabilities Rs. Assets Rs.
Bank Overdraft 4,000 Debtors 40,000
Creditors 30,000 Stock 50,000
B/P 6,000 Furniture 2,000
B’s Wife Loan 10,000 Fixed Assets 49,000
Capitals : A 70,000 Prepaid Expenses 1,000
B 70,000 Profit & Loss A/c 40,000
______ C’s Capital __8,000
1,90,000 1,90,000
1. Assets realised as follows: Stock Rs.32,000; Fixed Assets Rs.45,000 and full amount was received from Debtors.
2. A agreed to take over furniture at Rs.1,600 and also agrees to make the payment of B/P.
3. B agreed to discharge his wife's loan.
4. There was an unrecorded asset of Rs.10,000, which was taken over by C at Rs.7,000.
5. A B/R for Rs.5,000 was received from a customer Mohan and the bill was discounted from the bank. Mohan
became insolvent and 60 paise per rupee has been received from his estate.
6. Creditors were paid at a discount of Rs.1,500.
Prepare necessary accounts.
Ques 4
Following is the Balance Sheet of X and Y, who share profits and losses in the ratio of 4 : 1., as at 31st March, 2009 :
Liabilities Rs. Assets Rs.
Sundry Creditors 8,000 Cash in Hand 20,000
Bank Overdraft 6,000 Debtors 17,000
X’s Brother’s Loan 8,000 Less : Provision 2,000 15,000
Y’s Loan 3,000 Stock 15,000
Investment Fluctuation Fund 5,000 Investments 25,000
Capital : Buildings 25,000
X 50,000 Goodwill 10,000
Y _40,000 Profit & Loss A/c _10,000
1,20,000 1,20,000
The firm was dissolved on the above date and the following arrangements were decided upon:
(i) X agreed to pay off his brother's Loan.
(ii) Debtors of Rs.5,000 proved bad.
(iii) Other assets realised — Investments 20% less; and Goodwill at 60%.
(iv) One of the creditors of Rs.5,000 was paid only Rs.3,000.
(v) Buildings were auctioned for Rs.30,000 and the auctioneer's commission amounted to Rs.1,000.
(vi) Y took over part of stock at Rs.4,000 (being 20% less than the book value). Balance stock realised 50%.
(vii) Realisation expenses amounted to Rs.2,000.
Prepare :
(i) Realisation Account
(ii) Partners' Capital Accounts, and
(iii) Bank Account.
Page 3
ACCOUNTANCY – XII
20-20
Twenty important questions from examination point of view
Ques 1
X, Y and Z were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Following was the Balance Sheet
on the date of dissolution:
Liabilities Rs. Assets Rs.
Creditors 18,500 Furniture 1,000
Mrs. X’s Loan Account 5,000 Debtors 15,000
X’s Loan 8,000 Less : Provision 1,000 14,000
Investment Fluctuation Fund 7,500 Stock 80,000
Capital Accounts : Investments 20,000
X 75,000 Plant 55,000
Y 66,000 Goodwill 35,000
Z _45,000 Y’s loan a/c 20,000
2,25,000 2,25,000
Following transactions took place :
X took over the investments at 25% more than the book value.
Y took over debtors amounting to Rs.5,000 at Rs.4,000. Remaining debtors realised 75% of their book value.
Stock is sold for Rs.59,000 and plant is sold for Rs.40,000.
Expenses of realisation amounted to Rs.1,000. It was also found that there is a liability for Rs.8,000 for damages,
which also had to be paid. Prepare necessary accounts.
Ques 2
Following was the Balance Sheet of D, G and T on 28.2.2002:
Liabilities Amount Assets Amount
Rs. Rs.
Creditors 50,000 Bank 20,000
Bill’s Payable 10,000 Debtors 30,000
G’s Loan 8,000 Stock 20,000
R’s Loan 12,000 Furniture 15,000
Workmen Compensation Reserve 20,000 Land & Building 2,45,000
Capitals : G’s Capital 20,000
D 1,00,000
T 1,50,000 2,50,000 _______
3,50,000 3,50,000
The firm was dissolved on the above date on the following terms
(i) Debtors realized Rs.28,000; and creditors and bills payable were paid at a discount of 10%.
(ii) Stock was taken over by T for Rs.15,000 and furniture was sold to N for Rs.12,000.
(iii) Land and building was sold for Rs.2,80,000.
(iv) R's loan was paid by a cheque for the same amount.
(v) There was an unrecorded asset of Rs.20,000 which was sold for Rs.14,000.
Prepare Realisation Account, Bank Account and Capital Accounts of D, G and T.
ACCOUNTANCY – XII
Ques 3
A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1. They agreed to dissolve the firm. The
Balance Sheet of the firm on that date was as follows:
Liabilities Rs. Assets Rs.
Bank Overdraft 4,000 Debtors 40,000
Creditors 30,000 Stock 50,000
B/P 6,000 Furniture 2,000
B’s Wife Loan 10,000 Fixed Assets 49,000
Capitals : A 70,000 Prepaid Expenses 1,000
B 70,000 Profit & Loss A/c 40,000
______ C’s Capital __8,000
1,90,000 1,90,000
1. Assets realised as follows: Stock Rs.32,000; Fixed Assets Rs.45,000 and full amount was received from Debtors.
2. A agreed to take over furniture at Rs.1,600 and also agrees to make the payment of B/P.
3. B agreed to discharge his wife's loan.
4. There was an unrecorded asset of Rs.10,000, which was taken over by C at Rs.7,000.
5. A B/R for Rs.5,000 was received from a customer Mohan and the bill was discounted from the bank. Mohan
became insolvent and 60 paise per rupee has been received from his estate.
6. Creditors were paid at a discount of Rs.1,500.
Prepare necessary accounts.
Ques 4
Following is the Balance Sheet of X and Y, who share profits and losses in the ratio of 4 : 1., as at 31st March, 2009 :
Liabilities Rs. Assets Rs.
Sundry Creditors 8,000 Cash in Hand 20,000
Bank Overdraft 6,000 Debtors 17,000
X’s Brother’s Loan 8,000 Less : Provision 2,000 15,000
Y’s Loan 3,000 Stock 15,000
Investment Fluctuation Fund 5,000 Investments 25,000
Capital : Buildings 25,000
X 50,000 Goodwill 10,000
Y _40,000 Profit & Loss A/c _10,000
1,20,000 1,20,000
The firm was dissolved on the above date and the following arrangements were decided upon:
(i) X agreed to pay off his brother's Loan.
(ii) Debtors of Rs.5,000 proved bad.
(iii) Other assets realised — Investments 20% less; and Goodwill at 60%.
(iv) One of the creditors of Rs.5,000 was paid only Rs.3,000.
(v) Buildings were auctioned for Rs.30,000 and the auctioneer's commission amounted to Rs.1,000.
(vi) Y took over part of stock at Rs.4,000 (being 20% less than the book value). Balance stock realised 50%.
(vii) Realisation expenses amounted to Rs.2,000.
Prepare :
(i) Realisation Account
(ii) Partners' Capital Accounts, and
(iii) Bank Account.
ACCOUNTANCY – XII
Ques 5
A, B and C are three partners sharing profits in the ratio of 3 : 1 : 1. On 31st March 1986, - they decided to dissolve
their firm. On that date their balance sheet was as under:-
Liabilities Rs. Assets Rs.
Creditors 6,000 Cash 3,200
Loan 1,500 Debtors 24,200
Capital Accounts : Less : Provision for
A 27,500 bad debts 1,200 23,000
B 10,000 Stock in Trade 7,800
C 7,000 44,500 Furniture 1,000
______ Sundry Assets 17,000
52,000 52,000
It is agreed that:—
(i) A is to take over Furniture at Rs.800 and Debtors amounting to Rs.20,000 at Rs.17,200; the Creditors of Rs.6,000
to be paid by him at this figure.
(ii) B is to take over all the Stock in Trade at Rs.7,000 and some of the Sundry Assets at Rs.7,200 (being 10% less than
book value).
(iii) C is to take over the remaining Sundry Assets at 90% of the book value, less Rs.100 as discount and assume the
responsibility for the discharge of the loan together with accrued interest of Rs.30 which has not been recorded
in the books.
(iv) The expenses of dissolution were Rs.270. The remaining debtors were sold to a debt collecting agency for 50% of
the book value.
Prepare necessary accounts to close the books of the firm.
Ques 6
A, B and C shared profits in the ratio of 3 : 2 : 1. They dissolved the firm and appointed A to realise the assets. A is to
receive 5% commission on the sale of assets (except cash) and is to bear all expenses of realisation. The position of
the firm was as follows:
Liabilities Rs. Assets Rs.
Bank Overdraft 25,000 Cash in Hand 22,500
Creditors 60,000 Debtors 52,300
Provident Fund 12,000 Stock 36,000
Investment Fluctuation Fund 6,000 Investments 15,000
Commission Received in Advance 8,000 Plant 91,200
Capitals : Profit & Loss A/c 54,000
A 90,000
B 60,000
C _10,000 _______
2,71,000 2,71,000
Informations: 1. A realised the assets as follows: — Debtors Rs.30,000; Stock Rs.26,000; Investments at 75% value;
Plant at Rs.42,750. Expenses of realisation announced to Rs.4,100
2. Commission received in advance is returned to the customers after deducting Rs.3,000 for work done.
3. Firm had to pay Rs.7,200 for outstanding salaries, not provided for earlier.
4. Compensation to employees paid by the firm amounted to Rs.9,800. This liability was not provided for in the
above balance sheet.
5. Rs.25,000 had to be paid for Provident Fund.
Prepare necessary accounts.
Page 4
ACCOUNTANCY – XII
20-20
Twenty important questions from examination point of view
Ques 1
X, Y and Z were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Following was the Balance Sheet
on the date of dissolution:
Liabilities Rs. Assets Rs.
Creditors 18,500 Furniture 1,000
Mrs. X’s Loan Account 5,000 Debtors 15,000
X’s Loan 8,000 Less : Provision 1,000 14,000
Investment Fluctuation Fund 7,500 Stock 80,000
Capital Accounts : Investments 20,000
X 75,000 Plant 55,000
Y 66,000 Goodwill 35,000
Z _45,000 Y’s loan a/c 20,000
2,25,000 2,25,000
Following transactions took place :
X took over the investments at 25% more than the book value.
Y took over debtors amounting to Rs.5,000 at Rs.4,000. Remaining debtors realised 75% of their book value.
Stock is sold for Rs.59,000 and plant is sold for Rs.40,000.
Expenses of realisation amounted to Rs.1,000. It was also found that there is a liability for Rs.8,000 for damages,
which also had to be paid. Prepare necessary accounts.
Ques 2
Following was the Balance Sheet of D, G and T on 28.2.2002:
Liabilities Amount Assets Amount
Rs. Rs.
Creditors 50,000 Bank 20,000
Bill’s Payable 10,000 Debtors 30,000
G’s Loan 8,000 Stock 20,000
R’s Loan 12,000 Furniture 15,000
Workmen Compensation Reserve 20,000 Land & Building 2,45,000
Capitals : G’s Capital 20,000
D 1,00,000
T 1,50,000 2,50,000 _______
3,50,000 3,50,000
The firm was dissolved on the above date on the following terms
(i) Debtors realized Rs.28,000; and creditors and bills payable were paid at a discount of 10%.
(ii) Stock was taken over by T for Rs.15,000 and furniture was sold to N for Rs.12,000.
(iii) Land and building was sold for Rs.2,80,000.
(iv) R's loan was paid by a cheque for the same amount.
(v) There was an unrecorded asset of Rs.20,000 which was sold for Rs.14,000.
Prepare Realisation Account, Bank Account and Capital Accounts of D, G and T.
ACCOUNTANCY – XII
Ques 3
A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1. They agreed to dissolve the firm. The
Balance Sheet of the firm on that date was as follows:
Liabilities Rs. Assets Rs.
Bank Overdraft 4,000 Debtors 40,000
Creditors 30,000 Stock 50,000
B/P 6,000 Furniture 2,000
B’s Wife Loan 10,000 Fixed Assets 49,000
Capitals : A 70,000 Prepaid Expenses 1,000
B 70,000 Profit & Loss A/c 40,000
______ C’s Capital __8,000
1,90,000 1,90,000
1. Assets realised as follows: Stock Rs.32,000; Fixed Assets Rs.45,000 and full amount was received from Debtors.
2. A agreed to take over furniture at Rs.1,600 and also agrees to make the payment of B/P.
3. B agreed to discharge his wife's loan.
4. There was an unrecorded asset of Rs.10,000, which was taken over by C at Rs.7,000.
5. A B/R for Rs.5,000 was received from a customer Mohan and the bill was discounted from the bank. Mohan
became insolvent and 60 paise per rupee has been received from his estate.
6. Creditors were paid at a discount of Rs.1,500.
Prepare necessary accounts.
Ques 4
Following is the Balance Sheet of X and Y, who share profits and losses in the ratio of 4 : 1., as at 31st March, 2009 :
Liabilities Rs. Assets Rs.
Sundry Creditors 8,000 Cash in Hand 20,000
Bank Overdraft 6,000 Debtors 17,000
X’s Brother’s Loan 8,000 Less : Provision 2,000 15,000
Y’s Loan 3,000 Stock 15,000
Investment Fluctuation Fund 5,000 Investments 25,000
Capital : Buildings 25,000
X 50,000 Goodwill 10,000
Y _40,000 Profit & Loss A/c _10,000
1,20,000 1,20,000
The firm was dissolved on the above date and the following arrangements were decided upon:
(i) X agreed to pay off his brother's Loan.
(ii) Debtors of Rs.5,000 proved bad.
(iii) Other assets realised — Investments 20% less; and Goodwill at 60%.
(iv) One of the creditors of Rs.5,000 was paid only Rs.3,000.
(v) Buildings were auctioned for Rs.30,000 and the auctioneer's commission amounted to Rs.1,000.
(vi) Y took over part of stock at Rs.4,000 (being 20% less than the book value). Balance stock realised 50%.
(vii) Realisation expenses amounted to Rs.2,000.
Prepare :
(i) Realisation Account
(ii) Partners' Capital Accounts, and
(iii) Bank Account.
ACCOUNTANCY – XII
Ques 5
A, B and C are three partners sharing profits in the ratio of 3 : 1 : 1. On 31st March 1986, - they decided to dissolve
their firm. On that date their balance sheet was as under:-
Liabilities Rs. Assets Rs.
Creditors 6,000 Cash 3,200
Loan 1,500 Debtors 24,200
Capital Accounts : Less : Provision for
A 27,500 bad debts 1,200 23,000
B 10,000 Stock in Trade 7,800
C 7,000 44,500 Furniture 1,000
______ Sundry Assets 17,000
52,000 52,000
It is agreed that:—
(i) A is to take over Furniture at Rs.800 and Debtors amounting to Rs.20,000 at Rs.17,200; the Creditors of Rs.6,000
to be paid by him at this figure.
(ii) B is to take over all the Stock in Trade at Rs.7,000 and some of the Sundry Assets at Rs.7,200 (being 10% less than
book value).
(iii) C is to take over the remaining Sundry Assets at 90% of the book value, less Rs.100 as discount and assume the
responsibility for the discharge of the loan together with accrued interest of Rs.30 which has not been recorded
in the books.
(iv) The expenses of dissolution were Rs.270. The remaining debtors were sold to a debt collecting agency for 50% of
the book value.
Prepare necessary accounts to close the books of the firm.
Ques 6
A, B and C shared profits in the ratio of 3 : 2 : 1. They dissolved the firm and appointed A to realise the assets. A is to
receive 5% commission on the sale of assets (except cash) and is to bear all expenses of realisation. The position of
the firm was as follows:
Liabilities Rs. Assets Rs.
Bank Overdraft 25,000 Cash in Hand 22,500
Creditors 60,000 Debtors 52,300
Provident Fund 12,000 Stock 36,000
Investment Fluctuation Fund 6,000 Investments 15,000
Commission Received in Advance 8,000 Plant 91,200
Capitals : Profit & Loss A/c 54,000
A 90,000
B 60,000
C _10,000 _______
2,71,000 2,71,000
Informations: 1. A realised the assets as follows: — Debtors Rs.30,000; Stock Rs.26,000; Investments at 75% value;
Plant at Rs.42,750. Expenses of realisation announced to Rs.4,100
2. Commission received in advance is returned to the customers after deducting Rs.3,000 for work done.
3. Firm had to pay Rs.7,200 for outstanding salaries, not provided for earlier.
4. Compensation to employees paid by the firm amounted to Rs.9,800. This liability was not provided for in the
above balance sheet.
5. Rs.25,000 had to be paid for Provident Fund.
Prepare necessary accounts.
ACCOUNTANCY – XII
Ques 7
X and Y were partners sharing profits in the ratio of 3 : 2. Give Journal entries under following situation at the time of
dissolution of firm:
(i) Workmen Compensation Reserve stood at Rs. 75,000 in the Balance Sheet and there was no liability towards
Workmen Compensation.
(ii) Workmen Compensation Reserve stood at Rs. 60,000 and liability for it was ascertained at Rs. 35,000.
(iii) Workmen Compensation Reserve stood at Rs. 60,000 and liability in respect of it was ascertained at Rs. 75,000.
(iv) Workmen Compensation Reserve stood at Rs. 60,000 and liability in respect of it was ascertained at Rs. 60,000.
(v) There was no Workmen Compensation Reserve and firm had to pay Rs. 15,000 as compensation to the workers.
Solution: JOURNAL
Date Particulars LF. Dr.(Rs.) Cr. (Rs.)
(i) Workmen Compensation Reserve A/c ...Dr. 75,000
To X's Capital A/c 45,000
To Y's Capital A/c 30,000
(Being the balance of WCR transferred to Partners'
Capital Accounts in the profit-sharing ratio)
(ii) (a) Workmen Compensation Reserve A/c ...Dr. 35,000
To Realisation A/c 35,000
(Being WCR to the extent of liability transferred to
Realisation Account)
(b) Workmen Compensation Reserve A/c ...Dr. 25,000
To X's Capital A/c 15,000
To Y's Capital A/c 10,000
(Being surplus of Workmen Compensation Reserve
transferred to Partners' Capital Accounts in their
profit-sharing ratio)
(c) Realisation A/c ...Dr. 35,000
To Bank A/c 35,000
(Being the liability on account of Workmen
Compensation paid)
(iii)
(a)
Workmen Compensation Reserve A/c ...Dr. 60,000
To Realisation A/c 60,000
(Being the balance of Workmen Compensation
Reserve transferred to Realisation Account)
(b) Realisation A/c ...Dr. 75,000
To Bank A/c 75,000
(Being the liability on account of workmen
compensation paid)
(iv)
(a)
Workmen Compensation Reserve A/c ...Dr. 60,000
To Realisation A/c 60,000
(Being the balance of Workmen Compensation
Reserve transferred to Realisation Account)
(b) Realisation A/c ...Dr. 60,000
To Bank A/c 60,000
(Being the liability on account of Workmen
Compensation paid)
(v) Realisation A/c ...Dr. 15,000
To Bank A/c 15,000
(Being the unrecorded liability on account of
Workmen Compensation paid)
Page 5
ACCOUNTANCY – XII
20-20
Twenty important questions from examination point of view
Ques 1
X, Y and Z were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Following was the Balance Sheet
on the date of dissolution:
Liabilities Rs. Assets Rs.
Creditors 18,500 Furniture 1,000
Mrs. X’s Loan Account 5,000 Debtors 15,000
X’s Loan 8,000 Less : Provision 1,000 14,000
Investment Fluctuation Fund 7,500 Stock 80,000
Capital Accounts : Investments 20,000
X 75,000 Plant 55,000
Y 66,000 Goodwill 35,000
Z _45,000 Y’s loan a/c 20,000
2,25,000 2,25,000
Following transactions took place :
X took over the investments at 25% more than the book value.
Y took over debtors amounting to Rs.5,000 at Rs.4,000. Remaining debtors realised 75% of their book value.
Stock is sold for Rs.59,000 and plant is sold for Rs.40,000.
Expenses of realisation amounted to Rs.1,000. It was also found that there is a liability for Rs.8,000 for damages,
which also had to be paid. Prepare necessary accounts.
Ques 2
Following was the Balance Sheet of D, G and T on 28.2.2002:
Liabilities Amount Assets Amount
Rs. Rs.
Creditors 50,000 Bank 20,000
Bill’s Payable 10,000 Debtors 30,000
G’s Loan 8,000 Stock 20,000
R’s Loan 12,000 Furniture 15,000
Workmen Compensation Reserve 20,000 Land & Building 2,45,000
Capitals : G’s Capital 20,000
D 1,00,000
T 1,50,000 2,50,000 _______
3,50,000 3,50,000
The firm was dissolved on the above date on the following terms
(i) Debtors realized Rs.28,000; and creditors and bills payable were paid at a discount of 10%.
(ii) Stock was taken over by T for Rs.15,000 and furniture was sold to N for Rs.12,000.
(iii) Land and building was sold for Rs.2,80,000.
(iv) R's loan was paid by a cheque for the same amount.
(v) There was an unrecorded asset of Rs.20,000 which was sold for Rs.14,000.
Prepare Realisation Account, Bank Account and Capital Accounts of D, G and T.
ACCOUNTANCY – XII
Ques 3
A, B and C are partners sharing profits and losses in the ratio of 2 : 2 : 1. They agreed to dissolve the firm. The
Balance Sheet of the firm on that date was as follows:
Liabilities Rs. Assets Rs.
Bank Overdraft 4,000 Debtors 40,000
Creditors 30,000 Stock 50,000
B/P 6,000 Furniture 2,000
B’s Wife Loan 10,000 Fixed Assets 49,000
Capitals : A 70,000 Prepaid Expenses 1,000
B 70,000 Profit & Loss A/c 40,000
______ C’s Capital __8,000
1,90,000 1,90,000
1. Assets realised as follows: Stock Rs.32,000; Fixed Assets Rs.45,000 and full amount was received from Debtors.
2. A agreed to take over furniture at Rs.1,600 and also agrees to make the payment of B/P.
3. B agreed to discharge his wife's loan.
4. There was an unrecorded asset of Rs.10,000, which was taken over by C at Rs.7,000.
5. A B/R for Rs.5,000 was received from a customer Mohan and the bill was discounted from the bank. Mohan
became insolvent and 60 paise per rupee has been received from his estate.
6. Creditors were paid at a discount of Rs.1,500.
Prepare necessary accounts.
Ques 4
Following is the Balance Sheet of X and Y, who share profits and losses in the ratio of 4 : 1., as at 31st March, 2009 :
Liabilities Rs. Assets Rs.
Sundry Creditors 8,000 Cash in Hand 20,000
Bank Overdraft 6,000 Debtors 17,000
X’s Brother’s Loan 8,000 Less : Provision 2,000 15,000
Y’s Loan 3,000 Stock 15,000
Investment Fluctuation Fund 5,000 Investments 25,000
Capital : Buildings 25,000
X 50,000 Goodwill 10,000
Y _40,000 Profit & Loss A/c _10,000
1,20,000 1,20,000
The firm was dissolved on the above date and the following arrangements were decided upon:
(i) X agreed to pay off his brother's Loan.
(ii) Debtors of Rs.5,000 proved bad.
(iii) Other assets realised — Investments 20% less; and Goodwill at 60%.
(iv) One of the creditors of Rs.5,000 was paid only Rs.3,000.
(v) Buildings were auctioned for Rs.30,000 and the auctioneer's commission amounted to Rs.1,000.
(vi) Y took over part of stock at Rs.4,000 (being 20% less than the book value). Balance stock realised 50%.
(vii) Realisation expenses amounted to Rs.2,000.
Prepare :
(i) Realisation Account
(ii) Partners' Capital Accounts, and
(iii) Bank Account.
ACCOUNTANCY – XII
Ques 5
A, B and C are three partners sharing profits in the ratio of 3 : 1 : 1. On 31st March 1986, - they decided to dissolve
their firm. On that date their balance sheet was as under:-
Liabilities Rs. Assets Rs.
Creditors 6,000 Cash 3,200
Loan 1,500 Debtors 24,200
Capital Accounts : Less : Provision for
A 27,500 bad debts 1,200 23,000
B 10,000 Stock in Trade 7,800
C 7,000 44,500 Furniture 1,000
______ Sundry Assets 17,000
52,000 52,000
It is agreed that:—
(i) A is to take over Furniture at Rs.800 and Debtors amounting to Rs.20,000 at Rs.17,200; the Creditors of Rs.6,000
to be paid by him at this figure.
(ii) B is to take over all the Stock in Trade at Rs.7,000 and some of the Sundry Assets at Rs.7,200 (being 10% less than
book value).
(iii) C is to take over the remaining Sundry Assets at 90% of the book value, less Rs.100 as discount and assume the
responsibility for the discharge of the loan together with accrued interest of Rs.30 which has not been recorded
in the books.
(iv) The expenses of dissolution were Rs.270. The remaining debtors were sold to a debt collecting agency for 50% of
the book value.
Prepare necessary accounts to close the books of the firm.
Ques 6
A, B and C shared profits in the ratio of 3 : 2 : 1. They dissolved the firm and appointed A to realise the assets. A is to
receive 5% commission on the sale of assets (except cash) and is to bear all expenses of realisation. The position of
the firm was as follows:
Liabilities Rs. Assets Rs.
Bank Overdraft 25,000 Cash in Hand 22,500
Creditors 60,000 Debtors 52,300
Provident Fund 12,000 Stock 36,000
Investment Fluctuation Fund 6,000 Investments 15,000
Commission Received in Advance 8,000 Plant 91,200
Capitals : Profit & Loss A/c 54,000
A 90,000
B 60,000
C _10,000 _______
2,71,000 2,71,000
Informations: 1. A realised the assets as follows: — Debtors Rs.30,000; Stock Rs.26,000; Investments at 75% value;
Plant at Rs.42,750. Expenses of realisation announced to Rs.4,100
2. Commission received in advance is returned to the customers after deducting Rs.3,000 for work done.
3. Firm had to pay Rs.7,200 for outstanding salaries, not provided for earlier.
4. Compensation to employees paid by the firm amounted to Rs.9,800. This liability was not provided for in the
above balance sheet.
5. Rs.25,000 had to be paid for Provident Fund.
Prepare necessary accounts.
ACCOUNTANCY – XII
Ques 7
X and Y were partners sharing profits in the ratio of 3 : 2. Give Journal entries under following situation at the time of
dissolution of firm:
(i) Workmen Compensation Reserve stood at Rs. 75,000 in the Balance Sheet and there was no liability towards
Workmen Compensation.
(ii) Workmen Compensation Reserve stood at Rs. 60,000 and liability for it was ascertained at Rs. 35,000.
(iii) Workmen Compensation Reserve stood at Rs. 60,000 and liability in respect of it was ascertained at Rs. 75,000.
(iv) Workmen Compensation Reserve stood at Rs. 60,000 and liability in respect of it was ascertained at Rs. 60,000.
(v) There was no Workmen Compensation Reserve and firm had to pay Rs. 15,000 as compensation to the workers.
Solution: JOURNAL
Date Particulars LF. Dr.(Rs.) Cr. (Rs.)
(i) Workmen Compensation Reserve A/c ...Dr. 75,000
To X's Capital A/c 45,000
To Y's Capital A/c 30,000
(Being the balance of WCR transferred to Partners'
Capital Accounts in the profit-sharing ratio)
(ii) (a) Workmen Compensation Reserve A/c ...Dr. 35,000
To Realisation A/c 35,000
(Being WCR to the extent of liability transferred to
Realisation Account)
(b) Workmen Compensation Reserve A/c ...Dr. 25,000
To X's Capital A/c 15,000
To Y's Capital A/c 10,000
(Being surplus of Workmen Compensation Reserve
transferred to Partners' Capital Accounts in their
profit-sharing ratio)
(c) Realisation A/c ...Dr. 35,000
To Bank A/c 35,000
(Being the liability on account of Workmen
Compensation paid)
(iii)
(a)
Workmen Compensation Reserve A/c ...Dr. 60,000
To Realisation A/c 60,000
(Being the balance of Workmen Compensation
Reserve transferred to Realisation Account)
(b) Realisation A/c ...Dr. 75,000
To Bank A/c 75,000
(Being the liability on account of workmen
compensation paid)
(iv)
(a)
Workmen Compensation Reserve A/c ...Dr. 60,000
To Realisation A/c 60,000
(Being the balance of Workmen Compensation
Reserve transferred to Realisation Account)
(b) Realisation A/c ...Dr. 60,000
To Bank A/c 60,000
(Being the liability on account of Workmen
Compensation paid)
(v) Realisation A/c ...Dr. 15,000
To Bank A/c 15,000
(Being the unrecorded liability on account of
Workmen Compensation paid)
ACCOUNTANCY – XII
Ques 8
Pass Journal entries for the following transactions:
(i) Realisation expenses amounted to Rs. 10,000.
(ii) Realisation expenses amounted to Rs. 5,000 were paid by a partner.
(iii) Realisation expenses amounted to Rs. 5,000 were paid by the firm on behalf of a partner.
(iv) A partner was paid remuneration (including expenses) of Rs. 7,500 to carry out dissolution of the firm. Actual
expenses were Rs. 10,000.
(v) Dissolution expenses were Rs. 8,000. Out of the said expenses, Rs. 3,000 were to be borne by the firm and the
balance by a partner. Rs. 8,000 are paid by the firm.
(vi) Dissolution expenses were Rs. 8,000; Rs. 3,000 were to be borne by the firm and the balance by a partner. The
expenses were paid by a partner.
(vii) Realisation expenses of Rs. 5,000 were to be borne and paid by a partner,
(viii) X, the partner, is paid remuneration of Rs. 5,000 for dissolution of the firm. Realisation expenses of Rs. 8,000
are met by the firm.
(ix) Realisation expenses of Rs. 5,000 were to be borne by X, a partner. However, it was paid by Y.
Solution: JOURNAL
Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)
(i) Realisation A/c ...Dr. 10,000
To Cash/Bank A/c 10,000
(Being the dissolution expenses paid)
Explanation: The expenses of dissolution are borne
and paid by the firm, since the question does not
specify who is to bear the dissolution expenses.
Therefore, the expenses are treated to be expenses
of the firm.
(ii) Realisation A/c ...Dr. 5,000
To Partner's Capital A/c 5,000
(Being the dissolution expenses paid by the partner
credited to his Capital Account)
Explanation: The expenses of dissolution are borne
by the firm but paid by the partner on behalf of the
firm. Therefore, Partner's Capital Account is
credited.
(iii) Partner's Capital A/c ...Dr. 5,000
To Cash/Bank A/c 5,000
(Being the dissolution expenses paid by the firm on
behalf of the partner debited to his Capital Account)
Explanation: The expenses of dissolution are borne
by the partner but are paid by the firm. Therefore,
Partner's Capital Account is debited. Since the
amount is paid by the firm, Cash/Bank Account is
credited.
(iv) Realisation A/c ...Dr. 7,500
To Partner's Capital A/c (Being the remuneration to
partner credited to his Capital Account)
7,500
Explanation: Partner is paid X 7,500 towards his
remuneration and expenses of dissolution. The
excess expenses, i.e., Rs. 2,500
[ Rs. 10,000 - X 7,500) will be borne by the partner
and not by the firm.
(v) Realisation A/c ...Dr. 3,000
Partner's Capital A/c ...Dr. 5,000
To Cash/Bank A/c 8,000
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