Important Questions - Dissolution of a Partnership Firm | Crash Course of Accountancy - Class 12 - Commerce PDF Download

 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