Revision Test - Accounting Partnership Firms Reconstitution Class 12 Notes | EduRev

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Class 12 : Revision Test - Accounting Partnership Firms Reconstitution Class 12 Notes | EduRev

 Page 1


 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
PUNEET COLLEGE 
TEST NO – 5 (2013 – 14) 
DISSOLUTION 
 12
TH
 JULY, 13 
TIME – 1 Hr 30 Min            SET – 1            MM ? 30 
Q 1: A, B and C were the partners in a firm sharing profits in the ratio of 4:3:3. The firm was dissolved on 
28.2.2007. After transfer of assets and external liabilities to Realisation Account the following 
transactions took place: 
1. J, a creditor, to whom Rs. 10, 000 were due, accepted office Furniture having a book value of Rs. 
15, 000 in full & final settlement. 
2. K, a creditor, to whom Rs. 10, 000 were due, accepted office equipment having a book value of 
Rs. 15, 000 at Rs. 8, 000 and the balance was paid to him in cash. 
3. L, a creditor, to whom Rs. 10, 000 were due took over machinery having a book value of           
Rs. 15, 000 at Rs. 14, 000. Balance was paid by him in cash. 
4. M, an unrecorded creditor of Rs. 9, 000 was paid by A at a discount of 10%. 
5. An unrecorded computer of Rs. 5, 000 was taken over by B at discount of 10%. 
6. C’s Loan of Rs. 10, 000 was discharged. 
7. The Loss on dissolution was Rs. 10, 000. 
8. A, one of the partners was to bear all the realization expenses for which he was given a 
commission of 2% of net cash realized from dissolution. Cash realised from assets was               
Rs. 25, 000 and cash paid for liabilities amounted to Rs. 5, 000. Expenses of Realisation Rs. 1, 000 
paid by A. 
9. Workmen Compensation Reserve Rs. 30, 000, Workmen Compensation paid Rs. 10, 000. 
10. Commission received in advance (Rs. 1, 000) was returned to customers after deducting Rs. 200. 
11. There was a bill for Rs. 1, 000 under discount. The bill was received from Z who proved 
insolvent and a first and final dividend of 25% was received from his estate. 
12. Bankers (who granted loan of Rs. 7, 000) accepted stock of Rs. 6, 000 at a discount of 20% and 
the balance in cash. 
13. On surrender of JLP Insurance Company paid Rs. 11, 500 after deducting an amount of           
Rs. 6, 500 towards loan and interest thereon by B against the policy. 
14. Prepaid Insurance of Rs. 5, 000 and Goodwill of Rs. 50, 000 were also appearing in the Balance 
Sheet but no other additional information was given with regard to these two items. 
Pass necessary Journal entries for the above transactions in the books of the firm.  14 
 
Q 2: The following is the Balance Sheet of X and Y as 31
st
 December 2011. 
Liabilities Amt. Rs. Assets Amt. Rs. 
Creditors 
Loan from Mrs. X 
Loan from Mrs. Y 
Workmen compensation Reserve 
Fixed Assets Replacement Reserve 
X’s Capital 
Y’s Capital 
38, 000 
  5, 000 
10, 000 
10, 000 
  1, 000 
10, 000 
10, 000 
Cash & Bank Balance 
Stock 
Investments 
Debtors 20, 000 
Less: Provision 2, 000 
Fixed Assets 
Profit and Loss A/c 
Advertisement Suspense A/c 
  8, 500 
  5, 000 
10, 000 
 
18, 000 
39, 000 
  3, 000 
      500 
 84, 000  84, 000 
Page 2


 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
PUNEET COLLEGE 
TEST NO – 5 (2013 – 14) 
DISSOLUTION 
 12
TH
 JULY, 13 
TIME – 1 Hr 30 Min            SET – 1            MM ? 30 
Q 1: A, B and C were the partners in a firm sharing profits in the ratio of 4:3:3. The firm was dissolved on 
28.2.2007. After transfer of assets and external liabilities to Realisation Account the following 
transactions took place: 
1. J, a creditor, to whom Rs. 10, 000 were due, accepted office Furniture having a book value of Rs. 
15, 000 in full & final settlement. 
2. K, a creditor, to whom Rs. 10, 000 were due, accepted office equipment having a book value of 
Rs. 15, 000 at Rs. 8, 000 and the balance was paid to him in cash. 
3. L, a creditor, to whom Rs. 10, 000 were due took over machinery having a book value of           
Rs. 15, 000 at Rs. 14, 000. Balance was paid by him in cash. 
4. M, an unrecorded creditor of Rs. 9, 000 was paid by A at a discount of 10%. 
5. An unrecorded computer of Rs. 5, 000 was taken over by B at discount of 10%. 
6. C’s Loan of Rs. 10, 000 was discharged. 
7. The Loss on dissolution was Rs. 10, 000. 
8. A, one of the partners was to bear all the realization expenses for which he was given a 
commission of 2% of net cash realized from dissolution. Cash realised from assets was               
Rs. 25, 000 and cash paid for liabilities amounted to Rs. 5, 000. Expenses of Realisation Rs. 1, 000 
paid by A. 
9. Workmen Compensation Reserve Rs. 30, 000, Workmen Compensation paid Rs. 10, 000. 
10. Commission received in advance (Rs. 1, 000) was returned to customers after deducting Rs. 200. 
11. There was a bill for Rs. 1, 000 under discount. The bill was received from Z who proved 
insolvent and a first and final dividend of 25% was received from his estate. 
12. Bankers (who granted loan of Rs. 7, 000) accepted stock of Rs. 6, 000 at a discount of 20% and 
the balance in cash. 
13. On surrender of JLP Insurance Company paid Rs. 11, 500 after deducting an amount of           
Rs. 6, 500 towards loan and interest thereon by B against the policy. 
14. Prepaid Insurance of Rs. 5, 000 and Goodwill of Rs. 50, 000 were also appearing in the Balance 
Sheet but no other additional information was given with regard to these two items. 
Pass necessary Journal entries for the above transactions in the books of the firm.  14 
 
Q 2: The following is the Balance Sheet of X and Y as 31
st
 December 2011. 
Liabilities Amt. Rs. Assets Amt. Rs. 
Creditors 
Loan from Mrs. X 
Loan from Mrs. Y 
Workmen compensation Reserve 
Fixed Assets Replacement Reserve 
X’s Capital 
Y’s Capital 
38, 000 
  5, 000 
10, 000 
10, 000 
  1, 000 
10, 000 
10, 000 
Cash & Bank Balance 
Stock 
Investments 
Debtors 20, 000 
Less: Provision 2, 000 
Fixed Assets 
Profit and Loss A/c 
Advertisement Suspense A/c 
  8, 500 
  5, 000 
10, 000 
 
18, 000 
39, 000 
  3, 000 
      500 
 84, 000  84, 000 
 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
 The firm was dissolved on 31
st
 December 2011 and the following was found: 
1. X promised to pay off Mrs. X’s Loan and took away the stock at 20% discount; 
2. Y took away half the investments at 10% discount. 
3. Debtors falling due on 1
st
 November 2012 were realised at a discount of 6% p.a. 
4. Creditors falling due on 31
st
 January, 2012 were paid @ 6% discount p.a.; 
5. Fixed assets realised Rs. 71, 000 and remaining investment realised Rs. 4, 500. 
6. There was an old furniture which has been written off completely from the books. Y agreed to 
take away the same at the price of Rs. 300. 
7. Realisation expenses were Rs. 1, 000 paid by X. 
Prepare Realisation Account.        8 
 
Q 3: Mrs. Rita Chowdhary and Miss Shobha are partners in the firm. Their Balance Sheet as on 31
st
 
March, 2011was as follows: 
Liabilities Amt. Rs. Assets Amt. Rs. 
Sundry Creditors 
Employees’ Provident Fund 
Mr. Chowdhary’s Loan 
Reserve 
Joint Life Policy Reserve 
Mrs. Rita Chowdhary’s Capital 
Miss Shobha’s Capital 
    75, 000 
    30, 000 
    15, 000 
    14, 000 
    12, 000 
    90, 000 
    30, 000 
Cash 
Bank 
Stock 
Book debts 66, 000 
Less: Provision 6, 000 
Plant & Machinery 
Land & Buildings 
Advertisement Suspense A/c 
      6, 000 
    30, 000 
    75, 000 
 
    60, 000 
    45, 000 
    48, 000 
      2, 000 
 2, 66, 000  2, 66, 000 
 Note: There is a bill for Rs. 1, 000 under discount. The bill was received from Z. 
 
 The firm was dissolved on the date given above. The following transactions took place: 
1. Mrs. Rita Chowdhary undertook to pay Mr. Chowdhary’s loan and took over 50 per cent of the 
stock at a discount of 20 per cent. 
2. Book debts realised Rs. 54,000; balance of the stock was sold off at a profit of 30 per cent on cost. 
 
3. Sundry Creditors were paid out at a discount of 10 per cent. 
4. Plant and Machinery realised Rs. 75, 000. Land and Building 150% more. 
 
5. Mrs. Rita Chowdhary took over the goodwill of the firm at a valuation Rs. 30, 000. 
6. Z proved insolvent and a dividend of 50% was received from his estate. 
 
7. Mrs. Chaudhary was to receive Rs. 4, 750 as remuneration for completing the dissolution work 
and was to bear realisation expenses. Realization expenses were Rs. 3, 750 paid by the firm. 
Show the Realisation Account.        8 
 
 
 
 
 
 
 
 
 
Page 3


 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
PUNEET COLLEGE 
TEST NO – 5 (2013 – 14) 
DISSOLUTION 
 12
TH
 JULY, 13 
TIME – 1 Hr 30 Min            SET – 1            MM ? 30 
Q 1: A, B and C were the partners in a firm sharing profits in the ratio of 4:3:3. The firm was dissolved on 
28.2.2007. After transfer of assets and external liabilities to Realisation Account the following 
transactions took place: 
1. J, a creditor, to whom Rs. 10, 000 were due, accepted office Furniture having a book value of Rs. 
15, 000 in full & final settlement. 
2. K, a creditor, to whom Rs. 10, 000 were due, accepted office equipment having a book value of 
Rs. 15, 000 at Rs. 8, 000 and the balance was paid to him in cash. 
3. L, a creditor, to whom Rs. 10, 000 were due took over machinery having a book value of           
Rs. 15, 000 at Rs. 14, 000. Balance was paid by him in cash. 
4. M, an unrecorded creditor of Rs. 9, 000 was paid by A at a discount of 10%. 
5. An unrecorded computer of Rs. 5, 000 was taken over by B at discount of 10%. 
6. C’s Loan of Rs. 10, 000 was discharged. 
7. The Loss on dissolution was Rs. 10, 000. 
8. A, one of the partners was to bear all the realization expenses for which he was given a 
commission of 2% of net cash realized from dissolution. Cash realised from assets was               
Rs. 25, 000 and cash paid for liabilities amounted to Rs. 5, 000. Expenses of Realisation Rs. 1, 000 
paid by A. 
9. Workmen Compensation Reserve Rs. 30, 000, Workmen Compensation paid Rs. 10, 000. 
10. Commission received in advance (Rs. 1, 000) was returned to customers after deducting Rs. 200. 
11. There was a bill for Rs. 1, 000 under discount. The bill was received from Z who proved 
insolvent and a first and final dividend of 25% was received from his estate. 
12. Bankers (who granted loan of Rs. 7, 000) accepted stock of Rs. 6, 000 at a discount of 20% and 
the balance in cash. 
13. On surrender of JLP Insurance Company paid Rs. 11, 500 after deducting an amount of           
Rs. 6, 500 towards loan and interest thereon by B against the policy. 
14. Prepaid Insurance of Rs. 5, 000 and Goodwill of Rs. 50, 000 were also appearing in the Balance 
Sheet but no other additional information was given with regard to these two items. 
Pass necessary Journal entries for the above transactions in the books of the firm.  14 
 
Q 2: The following is the Balance Sheet of X and Y as 31
st
 December 2011. 
Liabilities Amt. Rs. Assets Amt. Rs. 
Creditors 
Loan from Mrs. X 
Loan from Mrs. Y 
Workmen compensation Reserve 
Fixed Assets Replacement Reserve 
X’s Capital 
Y’s Capital 
38, 000 
  5, 000 
10, 000 
10, 000 
  1, 000 
10, 000 
10, 000 
Cash & Bank Balance 
Stock 
Investments 
Debtors 20, 000 
Less: Provision 2, 000 
Fixed Assets 
Profit and Loss A/c 
Advertisement Suspense A/c 
  8, 500 
  5, 000 
10, 000 
 
18, 000 
39, 000 
  3, 000 
      500 
 84, 000  84, 000 
 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
 The firm was dissolved on 31
st
 December 2011 and the following was found: 
1. X promised to pay off Mrs. X’s Loan and took away the stock at 20% discount; 
2. Y took away half the investments at 10% discount. 
3. Debtors falling due on 1
st
 November 2012 were realised at a discount of 6% p.a. 
4. Creditors falling due on 31
st
 January, 2012 were paid @ 6% discount p.a.; 
5. Fixed assets realised Rs. 71, 000 and remaining investment realised Rs. 4, 500. 
6. There was an old furniture which has been written off completely from the books. Y agreed to 
take away the same at the price of Rs. 300. 
7. Realisation expenses were Rs. 1, 000 paid by X. 
Prepare Realisation Account.        8 
 
Q 3: Mrs. Rita Chowdhary and Miss Shobha are partners in the firm. Their Balance Sheet as on 31
st
 
March, 2011was as follows: 
Liabilities Amt. Rs. Assets Amt. Rs. 
Sundry Creditors 
Employees’ Provident Fund 
Mr. Chowdhary’s Loan 
Reserve 
Joint Life Policy Reserve 
Mrs. Rita Chowdhary’s Capital 
Miss Shobha’s Capital 
    75, 000 
    30, 000 
    15, 000 
    14, 000 
    12, 000 
    90, 000 
    30, 000 
Cash 
Bank 
Stock 
Book debts 66, 000 
Less: Provision 6, 000 
Plant & Machinery 
Land & Buildings 
Advertisement Suspense A/c 
      6, 000 
    30, 000 
    75, 000 
 
    60, 000 
    45, 000 
    48, 000 
      2, 000 
 2, 66, 000  2, 66, 000 
 Note: There is a bill for Rs. 1, 000 under discount. The bill was received from Z. 
 
 The firm was dissolved on the date given above. The following transactions took place: 
1. Mrs. Rita Chowdhary undertook to pay Mr. Chowdhary’s loan and took over 50 per cent of the 
stock at a discount of 20 per cent. 
2. Book debts realised Rs. 54,000; balance of the stock was sold off at a profit of 30 per cent on cost. 
 
3. Sundry Creditors were paid out at a discount of 10 per cent. 
4. Plant and Machinery realised Rs. 75, 000. Land and Building 150% more. 
 
5. Mrs. Rita Chowdhary took over the goodwill of the firm at a valuation Rs. 30, 000. 
6. Z proved insolvent and a dividend of 50% was received from his estate. 
 
7. Mrs. Chaudhary was to receive Rs. 4, 750 as remuneration for completing the dissolution work 
and was to bear realisation expenses. Realization expenses were Rs. 3, 750 paid by the firm. 
Show the Realisation Account.        8 
 
 
 
 
 
 
 
 
 
 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
PUNEET COLLEGE 
TEST NO – 5 (2013 – 14) 
DISSOLUTION 
 12
TH
 JULY, 13 
TIME – 1 Hr 30 Min            SET – 2            MM ? 30 
 
Q 1: Sun, Moon and Star were the partners in a firm sharing profits in the ratio of 5:3:2. The firm was 
dissolved on 31.3.08. After transfer of Assets and external liabilities to Realisation Account the 
following transactions took place: 
1. Commission received in advance (Rs. 1, 000) was returned to customer after deducting Rs. 200. 
2. Star loan of Rs. 20, 000 was discharged. 
3. An unrecorded creditor of Rs. 10, 000 was paid by Sun at a discount of 10%. 
4. Prepaid insurance of Rs. 1, 000 and Goodwill of Rs. 20, 000 were also appearing in the Balance 
Sheet but no other additional information was given with regard to these two items. 
5. There was a bill of Rs. 2, 000 under discount. The bill was received from Ravi who proved 
insolvent and a first and final dividend of 25% was received from his estate. 
6. A creditor to whom Rs. 20, 000 were due, accepted office furniture having a book value of                    
Rs. 30, 000 in full & final settlement. 
7. The loss on dissolution was Rs. 20, 000. 
8. Workmen compensation Reserve Rs. 40, 000. Workmen compensation paid Rs. 10, 000. 
9. A creditor to whom Rs. 20, 000 were due, accepted office equipment having a book valued of Rs. 
30, 000 at Rs. 16, 000 and the balance was paid to him cash. 
10. An unrecorded computer of Rs. 10, 000 was taken over by Moon at a discount of 10%. 
11. Sun, one of the partner was to bear all the realization expenses for which he was given a 
commission of 2% of net cash realised from dissolution. Cash realised from assets was                
Rs. 25, 000 and Cash paid for liabilities amounted to Rs. 5, 000. Expenses of Realisation                 
Rs. 2, 000 paid by Sun. 
12. On surrender of JLP insurance company paid Rs. 23, 000 after deduction an amount of            
Rs. 10, 000 towards loan and interest thereon by Moon against the policy. 
13. Bankers (who granted loan of Rs. 10, 000) accepted stock of Rs. 7, 000 at a discount of 20% and 
the balance in cash. 
14. A creditor to whom Rs. 20, 000 were due took over machinery having a book value of Rs. 30, 000 
at Rs. 28, 000. Balance was paid by him in cash.     14 
 
Q 2: Following was the Balance Sheet of D, G and T on 28.2.2012: 
 
Liabilities Amt. Rs. Assets Amt. Rs. 
Creditors 
Bills Payable 
G’s Loan 
R’s Loan 
General Reserve 
Capitals:                D 
                                T 
    50, 000 
    10, 000 
      8, 000 
    12, 000 
    20, 000 
1, 00, 000 
1, 50, 000 
Bank 
Debtors 
Stock 
Furniture 
Land & Building 
G’s Capital 
    20, 000 
    30, 000 
    20, 000 
    15, 000 
2, 45, 000 
    20, 000 
 3, 50, 000  3, 50, 000 
Page 4


 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
PUNEET COLLEGE 
TEST NO – 5 (2013 – 14) 
DISSOLUTION 
 12
TH
 JULY, 13 
TIME – 1 Hr 30 Min            SET – 1            MM ? 30 
Q 1: A, B and C were the partners in a firm sharing profits in the ratio of 4:3:3. The firm was dissolved on 
28.2.2007. After transfer of assets and external liabilities to Realisation Account the following 
transactions took place: 
1. J, a creditor, to whom Rs. 10, 000 were due, accepted office Furniture having a book value of Rs. 
15, 000 in full & final settlement. 
2. K, a creditor, to whom Rs. 10, 000 were due, accepted office equipment having a book value of 
Rs. 15, 000 at Rs. 8, 000 and the balance was paid to him in cash. 
3. L, a creditor, to whom Rs. 10, 000 were due took over machinery having a book value of           
Rs. 15, 000 at Rs. 14, 000. Balance was paid by him in cash. 
4. M, an unrecorded creditor of Rs. 9, 000 was paid by A at a discount of 10%. 
5. An unrecorded computer of Rs. 5, 000 was taken over by B at discount of 10%. 
6. C’s Loan of Rs. 10, 000 was discharged. 
7. The Loss on dissolution was Rs. 10, 000. 
8. A, one of the partners was to bear all the realization expenses for which he was given a 
commission of 2% of net cash realized from dissolution. Cash realised from assets was               
Rs. 25, 000 and cash paid for liabilities amounted to Rs. 5, 000. Expenses of Realisation Rs. 1, 000 
paid by A. 
9. Workmen Compensation Reserve Rs. 30, 000, Workmen Compensation paid Rs. 10, 000. 
10. Commission received in advance (Rs. 1, 000) was returned to customers after deducting Rs. 200. 
11. There was a bill for Rs. 1, 000 under discount. The bill was received from Z who proved 
insolvent and a first and final dividend of 25% was received from his estate. 
12. Bankers (who granted loan of Rs. 7, 000) accepted stock of Rs. 6, 000 at a discount of 20% and 
the balance in cash. 
13. On surrender of JLP Insurance Company paid Rs. 11, 500 after deducting an amount of           
Rs. 6, 500 towards loan and interest thereon by B against the policy. 
14. Prepaid Insurance of Rs. 5, 000 and Goodwill of Rs. 50, 000 were also appearing in the Balance 
Sheet but no other additional information was given with regard to these two items. 
Pass necessary Journal entries for the above transactions in the books of the firm.  14 
 
Q 2: The following is the Balance Sheet of X and Y as 31
st
 December 2011. 
Liabilities Amt. Rs. Assets Amt. Rs. 
Creditors 
Loan from Mrs. X 
Loan from Mrs. Y 
Workmen compensation Reserve 
Fixed Assets Replacement Reserve 
X’s Capital 
Y’s Capital 
38, 000 
  5, 000 
10, 000 
10, 000 
  1, 000 
10, 000 
10, 000 
Cash & Bank Balance 
Stock 
Investments 
Debtors 20, 000 
Less: Provision 2, 000 
Fixed Assets 
Profit and Loss A/c 
Advertisement Suspense A/c 
  8, 500 
  5, 000 
10, 000 
 
18, 000 
39, 000 
  3, 000 
      500 
 84, 000  84, 000 
 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
 The firm was dissolved on 31
st
 December 2011 and the following was found: 
1. X promised to pay off Mrs. X’s Loan and took away the stock at 20% discount; 
2. Y took away half the investments at 10% discount. 
3. Debtors falling due on 1
st
 November 2012 were realised at a discount of 6% p.a. 
4. Creditors falling due on 31
st
 January, 2012 were paid @ 6% discount p.a.; 
5. Fixed assets realised Rs. 71, 000 and remaining investment realised Rs. 4, 500. 
6. There was an old furniture which has been written off completely from the books. Y agreed to 
take away the same at the price of Rs. 300. 
7. Realisation expenses were Rs. 1, 000 paid by X. 
Prepare Realisation Account.        8 
 
Q 3: Mrs. Rita Chowdhary and Miss Shobha are partners in the firm. Their Balance Sheet as on 31
st
 
March, 2011was as follows: 
Liabilities Amt. Rs. Assets Amt. Rs. 
Sundry Creditors 
Employees’ Provident Fund 
Mr. Chowdhary’s Loan 
Reserve 
Joint Life Policy Reserve 
Mrs. Rita Chowdhary’s Capital 
Miss Shobha’s Capital 
    75, 000 
    30, 000 
    15, 000 
    14, 000 
    12, 000 
    90, 000 
    30, 000 
Cash 
Bank 
Stock 
Book debts 66, 000 
Less: Provision 6, 000 
Plant & Machinery 
Land & Buildings 
Advertisement Suspense A/c 
      6, 000 
    30, 000 
    75, 000 
 
    60, 000 
    45, 000 
    48, 000 
      2, 000 
 2, 66, 000  2, 66, 000 
 Note: There is a bill for Rs. 1, 000 under discount. The bill was received from Z. 
 
 The firm was dissolved on the date given above. The following transactions took place: 
1. Mrs. Rita Chowdhary undertook to pay Mr. Chowdhary’s loan and took over 50 per cent of the 
stock at a discount of 20 per cent. 
2. Book debts realised Rs. 54,000; balance of the stock was sold off at a profit of 30 per cent on cost. 
 
3. Sundry Creditors were paid out at a discount of 10 per cent. 
4. Plant and Machinery realised Rs. 75, 000. Land and Building 150% more. 
 
5. Mrs. Rita Chowdhary took over the goodwill of the firm at a valuation Rs. 30, 000. 
6. Z proved insolvent and a dividend of 50% was received from his estate. 
 
7. Mrs. Chaudhary was to receive Rs. 4, 750 as remuneration for completing the dissolution work 
and was to bear realisation expenses. Realization expenses were Rs. 3, 750 paid by the firm. 
Show the Realisation Account.        8 
 
 
 
 
 
 
 
 
 
 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
PUNEET COLLEGE 
TEST NO – 5 (2013 – 14) 
DISSOLUTION 
 12
TH
 JULY, 13 
TIME – 1 Hr 30 Min            SET – 2            MM ? 30 
 
Q 1: Sun, Moon and Star were the partners in a firm sharing profits in the ratio of 5:3:2. The firm was 
dissolved on 31.3.08. After transfer of Assets and external liabilities to Realisation Account the 
following transactions took place: 
1. Commission received in advance (Rs. 1, 000) was returned to customer after deducting Rs. 200. 
2. Star loan of Rs. 20, 000 was discharged. 
3. An unrecorded creditor of Rs. 10, 000 was paid by Sun at a discount of 10%. 
4. Prepaid insurance of Rs. 1, 000 and Goodwill of Rs. 20, 000 were also appearing in the Balance 
Sheet but no other additional information was given with regard to these two items. 
5. There was a bill of Rs. 2, 000 under discount. The bill was received from Ravi who proved 
insolvent and a first and final dividend of 25% was received from his estate. 
6. A creditor to whom Rs. 20, 000 were due, accepted office furniture having a book value of                    
Rs. 30, 000 in full & final settlement. 
7. The loss on dissolution was Rs. 20, 000. 
8. Workmen compensation Reserve Rs. 40, 000. Workmen compensation paid Rs. 10, 000. 
9. A creditor to whom Rs. 20, 000 were due, accepted office equipment having a book valued of Rs. 
30, 000 at Rs. 16, 000 and the balance was paid to him cash. 
10. An unrecorded computer of Rs. 10, 000 was taken over by Moon at a discount of 10%. 
11. Sun, one of the partner was to bear all the realization expenses for which he was given a 
commission of 2% of net cash realised from dissolution. Cash realised from assets was                
Rs. 25, 000 and Cash paid for liabilities amounted to Rs. 5, 000. Expenses of Realisation                 
Rs. 2, 000 paid by Sun. 
12. On surrender of JLP insurance company paid Rs. 23, 000 after deduction an amount of            
Rs. 10, 000 towards loan and interest thereon by Moon against the policy. 
13. Bankers (who granted loan of Rs. 10, 000) accepted stock of Rs. 7, 000 at a discount of 20% and 
the balance in cash. 
14. A creditor to whom Rs. 20, 000 were due took over machinery having a book value of Rs. 30, 000 
at Rs. 28, 000. Balance was paid by him in cash.     14 
 
Q 2: Following was the Balance Sheet of D, G and T on 28.2.2012: 
 
Liabilities Amt. Rs. Assets Amt. Rs. 
Creditors 
Bills Payable 
G’s Loan 
R’s Loan 
General Reserve 
Capitals:                D 
                                T 
    50, 000 
    10, 000 
      8, 000 
    12, 000 
    20, 000 
1, 00, 000 
1, 50, 000 
Bank 
Debtors 
Stock 
Furniture 
Land & Building 
G’s Capital 
    20, 000 
    30, 000 
    20, 000 
    15, 000 
2, 45, 000 
    20, 000 
 3, 50, 000  3, 50, 000 
 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
 The firm was dissolved on the above date on the following terms: 
1. Debtors realized Rs. 28, 000; and creditors and bills payable were paid at a discount of 10%. 
2. Stock was taken over by T for Rs. 15, 000 and furniture was sold to N for Rs. 12, 000. 
3. Land and Building was sold for Rs. 2, 80, 000. 
4. R’s Loan was paid by a cheque for the same amount. 
5. The firm had a joint life policy of Rs. 5, 00, 000 with a surrender value of Rs. 1, 00, 000. The 
policy was surrendered at its surrender value. 
Prepare Realisation Account.        8 
 
Q 3: The following is the Balance Sheet of A and B as on 31
st
 December 2011: 
 
Liabilities Amt. Rs. Assets Amt. Rs. 
Sundry Creditors 
Bills Payable 
Mrs. A’s Loan 
Mrs. B’s Loan 
General Reserve 
Plant Replacement Reserve 
Joint Life Policy Reserve 
A’s Capital 
B’s Capital 
30, 000 
  8, 000 
  5, 000 
10, 000 
  5, 000 
  1, 000 
  5, 000 
10, 000 
10, 000 
Cash in Hand 
Cash at Bank 
Stock – in – trade 
Investment 
Debtors 20, 000 
Less: Provision 2, 000 
Plant and Fittings 
Buildings 
Goodwill 
Profit & Loss A/c 
Advertisement Suspense A/c 
      500 
  8, 000 
  5, 000 
10, 000 
 
18, 000 
20, 000 
15, 000 
  4, 000 
  1, 750 
  1, 750 
 84, 000  84, 000 
 Note: There is a bill for Rs. 200 under discount. The bill was received from Mr. Z. 
 
 The firm was dissolved on 31
st
 December, 2011 and the following was found: 
1. A promised to pay off Mr. A’s Loan and took away stock – in – trade at 80%. 
2. B took away half the investment at 10% discount. 
 
3. Debtors realised 95%. 
4. Creditors and bills payable were due on an average basis of one month after 31
st
 December but 
they were paid immediately on 31
st
 December at 6% discount per annum. 
 
5. Plant realised Rs. 25, 000; Building Rs. 40, 000; Goodwill 50% more; and remaining investments 
at Rs. 4, 500. 
6. There was an old typewriter in the firm which had been written off completely from the books. It 
is now estimated to realise Rs. 300. It was taken away by B at this estimated price. 
 
7. A was to receive Rs. 900 as remuneration for completing the dissolution work and was to bear 
realisation expenses. Realisation expenses were Rs. 400 paid by the firm. 
8. Z proved insolvent and a dividend of 50% was received from his estate. 
Show the Realisation Account.                 8 
 
 
 
 
 
 
 
Page 5


 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
PUNEET COLLEGE 
TEST NO – 5 (2013 – 14) 
DISSOLUTION 
 12
TH
 JULY, 13 
TIME – 1 Hr 30 Min            SET – 1            MM ? 30 
Q 1: A, B and C were the partners in a firm sharing profits in the ratio of 4:3:3. The firm was dissolved on 
28.2.2007. After transfer of assets and external liabilities to Realisation Account the following 
transactions took place: 
1. J, a creditor, to whom Rs. 10, 000 were due, accepted office Furniture having a book value of Rs. 
15, 000 in full & final settlement. 
2. K, a creditor, to whom Rs. 10, 000 were due, accepted office equipment having a book value of 
Rs. 15, 000 at Rs. 8, 000 and the balance was paid to him in cash. 
3. L, a creditor, to whom Rs. 10, 000 were due took over machinery having a book value of           
Rs. 15, 000 at Rs. 14, 000. Balance was paid by him in cash. 
4. M, an unrecorded creditor of Rs. 9, 000 was paid by A at a discount of 10%. 
5. An unrecorded computer of Rs. 5, 000 was taken over by B at discount of 10%. 
6. C’s Loan of Rs. 10, 000 was discharged. 
7. The Loss on dissolution was Rs. 10, 000. 
8. A, one of the partners was to bear all the realization expenses for which he was given a 
commission of 2% of net cash realized from dissolution. Cash realised from assets was               
Rs. 25, 000 and cash paid for liabilities amounted to Rs. 5, 000. Expenses of Realisation Rs. 1, 000 
paid by A. 
9. Workmen Compensation Reserve Rs. 30, 000, Workmen Compensation paid Rs. 10, 000. 
10. Commission received in advance (Rs. 1, 000) was returned to customers after deducting Rs. 200. 
11. There was a bill for Rs. 1, 000 under discount. The bill was received from Z who proved 
insolvent and a first and final dividend of 25% was received from his estate. 
12. Bankers (who granted loan of Rs. 7, 000) accepted stock of Rs. 6, 000 at a discount of 20% and 
the balance in cash. 
13. On surrender of JLP Insurance Company paid Rs. 11, 500 after deducting an amount of           
Rs. 6, 500 towards loan and interest thereon by B against the policy. 
14. Prepaid Insurance of Rs. 5, 000 and Goodwill of Rs. 50, 000 were also appearing in the Balance 
Sheet but no other additional information was given with regard to these two items. 
Pass necessary Journal entries for the above transactions in the books of the firm.  14 
 
Q 2: The following is the Balance Sheet of X and Y as 31
st
 December 2011. 
Liabilities Amt. Rs. Assets Amt. Rs. 
Creditors 
Loan from Mrs. X 
Loan from Mrs. Y 
Workmen compensation Reserve 
Fixed Assets Replacement Reserve 
X’s Capital 
Y’s Capital 
38, 000 
  5, 000 
10, 000 
10, 000 
  1, 000 
10, 000 
10, 000 
Cash & Bank Balance 
Stock 
Investments 
Debtors 20, 000 
Less: Provision 2, 000 
Fixed Assets 
Profit and Loss A/c 
Advertisement Suspense A/c 
  8, 500 
  5, 000 
10, 000 
 
18, 000 
39, 000 
  3, 000 
      500 
 84, 000  84, 000 
 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
 The firm was dissolved on 31
st
 December 2011 and the following was found: 
1. X promised to pay off Mrs. X’s Loan and took away the stock at 20% discount; 
2. Y took away half the investments at 10% discount. 
3. Debtors falling due on 1
st
 November 2012 were realised at a discount of 6% p.a. 
4. Creditors falling due on 31
st
 January, 2012 were paid @ 6% discount p.a.; 
5. Fixed assets realised Rs. 71, 000 and remaining investment realised Rs. 4, 500. 
6. There was an old furniture which has been written off completely from the books. Y agreed to 
take away the same at the price of Rs. 300. 
7. Realisation expenses were Rs. 1, 000 paid by X. 
Prepare Realisation Account.        8 
 
Q 3: Mrs. Rita Chowdhary and Miss Shobha are partners in the firm. Their Balance Sheet as on 31
st
 
March, 2011was as follows: 
Liabilities Amt. Rs. Assets Amt. Rs. 
Sundry Creditors 
Employees’ Provident Fund 
Mr. Chowdhary’s Loan 
Reserve 
Joint Life Policy Reserve 
Mrs. Rita Chowdhary’s Capital 
Miss Shobha’s Capital 
    75, 000 
    30, 000 
    15, 000 
    14, 000 
    12, 000 
    90, 000 
    30, 000 
Cash 
Bank 
Stock 
Book debts 66, 000 
Less: Provision 6, 000 
Plant & Machinery 
Land & Buildings 
Advertisement Suspense A/c 
      6, 000 
    30, 000 
    75, 000 
 
    60, 000 
    45, 000 
    48, 000 
      2, 000 
 2, 66, 000  2, 66, 000 
 Note: There is a bill for Rs. 1, 000 under discount. The bill was received from Z. 
 
 The firm was dissolved on the date given above. The following transactions took place: 
1. Mrs. Rita Chowdhary undertook to pay Mr. Chowdhary’s loan and took over 50 per cent of the 
stock at a discount of 20 per cent. 
2. Book debts realised Rs. 54,000; balance of the stock was sold off at a profit of 30 per cent on cost. 
 
3. Sundry Creditors were paid out at a discount of 10 per cent. 
4. Plant and Machinery realised Rs. 75, 000. Land and Building 150% more. 
 
5. Mrs. Rita Chowdhary took over the goodwill of the firm at a valuation Rs. 30, 000. 
6. Z proved insolvent and a dividend of 50% was received from his estate. 
 
7. Mrs. Chaudhary was to receive Rs. 4, 750 as remuneration for completing the dissolution work 
and was to bear realisation expenses. Realization expenses were Rs. 3, 750 paid by the firm. 
Show the Realisation Account.        8 
 
 
 
 
 
 
 
 
 
 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
PUNEET COLLEGE 
TEST NO – 5 (2013 – 14) 
DISSOLUTION 
 12
TH
 JULY, 13 
TIME – 1 Hr 30 Min            SET – 2            MM ? 30 
 
Q 1: Sun, Moon and Star were the partners in a firm sharing profits in the ratio of 5:3:2. The firm was 
dissolved on 31.3.08. After transfer of Assets and external liabilities to Realisation Account the 
following transactions took place: 
1. Commission received in advance (Rs. 1, 000) was returned to customer after deducting Rs. 200. 
2. Star loan of Rs. 20, 000 was discharged. 
3. An unrecorded creditor of Rs. 10, 000 was paid by Sun at a discount of 10%. 
4. Prepaid insurance of Rs. 1, 000 and Goodwill of Rs. 20, 000 were also appearing in the Balance 
Sheet but no other additional information was given with regard to these two items. 
5. There was a bill of Rs. 2, 000 under discount. The bill was received from Ravi who proved 
insolvent and a first and final dividend of 25% was received from his estate. 
6. A creditor to whom Rs. 20, 000 were due, accepted office furniture having a book value of                    
Rs. 30, 000 in full & final settlement. 
7. The loss on dissolution was Rs. 20, 000. 
8. Workmen compensation Reserve Rs. 40, 000. Workmen compensation paid Rs. 10, 000. 
9. A creditor to whom Rs. 20, 000 were due, accepted office equipment having a book valued of Rs. 
30, 000 at Rs. 16, 000 and the balance was paid to him cash. 
10. An unrecorded computer of Rs. 10, 000 was taken over by Moon at a discount of 10%. 
11. Sun, one of the partner was to bear all the realization expenses for which he was given a 
commission of 2% of net cash realised from dissolution. Cash realised from assets was                
Rs. 25, 000 and Cash paid for liabilities amounted to Rs. 5, 000. Expenses of Realisation                 
Rs. 2, 000 paid by Sun. 
12. On surrender of JLP insurance company paid Rs. 23, 000 after deduction an amount of            
Rs. 10, 000 towards loan and interest thereon by Moon against the policy. 
13. Bankers (who granted loan of Rs. 10, 000) accepted stock of Rs. 7, 000 at a discount of 20% and 
the balance in cash. 
14. A creditor to whom Rs. 20, 000 were due took over machinery having a book value of Rs. 30, 000 
at Rs. 28, 000. Balance was paid by him in cash.     14 
 
Q 2: Following was the Balance Sheet of D, G and T on 28.2.2012: 
 
Liabilities Amt. Rs. Assets Amt. Rs. 
Creditors 
Bills Payable 
G’s Loan 
R’s Loan 
General Reserve 
Capitals:                D 
                                T 
    50, 000 
    10, 000 
      8, 000 
    12, 000 
    20, 000 
1, 00, 000 
1, 50, 000 
Bank 
Debtors 
Stock 
Furniture 
Land & Building 
G’s Capital 
    20, 000 
    30, 000 
    20, 000 
    15, 000 
2, 45, 000 
    20, 000 
 3, 50, 000  3, 50, 000 
 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
 The firm was dissolved on the above date on the following terms: 
1. Debtors realized Rs. 28, 000; and creditors and bills payable were paid at a discount of 10%. 
2. Stock was taken over by T for Rs. 15, 000 and furniture was sold to N for Rs. 12, 000. 
3. Land and Building was sold for Rs. 2, 80, 000. 
4. R’s Loan was paid by a cheque for the same amount. 
5. The firm had a joint life policy of Rs. 5, 00, 000 with a surrender value of Rs. 1, 00, 000. The 
policy was surrendered at its surrender value. 
Prepare Realisation Account.        8 
 
Q 3: The following is the Balance Sheet of A and B as on 31
st
 December 2011: 
 
Liabilities Amt. Rs. Assets Amt. Rs. 
Sundry Creditors 
Bills Payable 
Mrs. A’s Loan 
Mrs. B’s Loan 
General Reserve 
Plant Replacement Reserve 
Joint Life Policy Reserve 
A’s Capital 
B’s Capital 
30, 000 
  8, 000 
  5, 000 
10, 000 
  5, 000 
  1, 000 
  5, 000 
10, 000 
10, 000 
Cash in Hand 
Cash at Bank 
Stock – in – trade 
Investment 
Debtors 20, 000 
Less: Provision 2, 000 
Plant and Fittings 
Buildings 
Goodwill 
Profit & Loss A/c 
Advertisement Suspense A/c 
      500 
  8, 000 
  5, 000 
10, 000 
 
18, 000 
20, 000 
15, 000 
  4, 000 
  1, 750 
  1, 750 
 84, 000  84, 000 
 Note: There is a bill for Rs. 200 under discount. The bill was received from Mr. Z. 
 
 The firm was dissolved on 31
st
 December, 2011 and the following was found: 
1. A promised to pay off Mr. A’s Loan and took away stock – in – trade at 80%. 
2. B took away half the investment at 10% discount. 
 
3. Debtors realised 95%. 
4. Creditors and bills payable were due on an average basis of one month after 31
st
 December but 
they were paid immediately on 31
st
 December at 6% discount per annum. 
 
5. Plant realised Rs. 25, 000; Building Rs. 40, 000; Goodwill 50% more; and remaining investments 
at Rs. 4, 500. 
6. There was an old typewriter in the firm which had been written off completely from the books. It 
is now estimated to realise Rs. 300. It was taken away by B at this estimated price. 
 
7. A was to receive Rs. 900 as remuneration for completing the dissolution work and was to bear 
realisation expenses. Realisation expenses were Rs. 400 paid by the firm. 
8. Z proved insolvent and a dividend of 50% was received from his estate. 
Show the Realisation Account.                 8 
 
 
 
 
 
 
 
 
PUNEET COLLEGE                                   PKL|CHD                           98155 – 00062                 www.facebook.com/puneetcollege 
+2 ACC TEST NO – 5 DISSOLUTION SET – 1, 12
TH
 JULY, 13 (SOLUTION) 
 
Ans 1:  
  Dr. Rs. Cr. Rs. 
1 
2 
 
3 
 
4 
 
5 
 
6 
 
7 
 
 
 
8 
 
 
 
 
 
 
 
 
 
9 
 
 
 
 
 
 
 
10 
 
11 
 
 
 
 
 
 
12 
 
13 
 
14 
 
15 
No Entry  
  2, 000 
 
  4, 000 
 
  8, 100 
 
  4, 500 
 
10, 000 
 
  4, 000 
  3, 000 
  3, 000 
 
      400 
 
 
 
 
 
  1, 000 
 
 
10, 000 
 
10, 000 
 
20, 000 
 
 
 
      800 
 
      250 
 
  1, 000 
 
 
 
     750 
 
  2, 200 
 
11, 500 
 
  6, 500 
 
 
  2, 000 
 
  4, 000 
 
  8, 100 
 
  4, 500 
 
10, 000 
 
 
 
10, 000 
 
     400 
 
 
 
 
 
  1, 000 
 
 
10, 000 
 
10, 000 
 
  8, 000 
  6, 000 
  6, 000 
 
     800 
 
    250 
 
  1, 000 
 
 
 
    750 
 
  2, 200 
 
11, 500 
 
  6, 500 
Realisation A/c Dr. 
    To cash 
Cash  Dr. 
    To realisation 
Realisation Dr. 
    To A Capital 
B Capital Dr. 
    To Realisation 
C’ Loan Dr. 
    To Cash 
A Capital  Dr. 
B Capital Dr. 
C Capital Dr. 
    To Realisation 
Realisation A/c Dr. 
    To A Capital 
[Exp of Real paid by A] 
No Entry 
Assuming paid by A out of own funds 
Or 
A’ Capital Dr. 
    To Cash 
Assuming paid by A out by business funds 
W.C. Reserve Dr. 
    To Realisation 
Realisation Dr. 
    To cash 
W. C. Reserve Dr. 
    To A Capital 
    To B Capital 
    To C Capital 
Realisation  Dr. 
    To Cash 
Cash Dr. 
    To Realisation 
Realisation Dr. 
    To cash 
Or 
Realisation Dr. 
    To cash 
Realisation Dr. 
    To Cash 
Cash Dr. 
    To Realisation 
B’ Capital Dr. 
    To Realisation 
No Entry 
According to question already transferred to Realisation A/c 
  
 
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