Q1: A, B and C were partners in a company sharing profits in the ratio 4:3:3. On 1-4-2015 they decided to dissolve the company. On that date, A's capital was Rs. 1,25,000, B's capital was Rs. 45,000 and C's capital was Rs. 15,000(Dr.). The creditors amounted to Rs. 23,150 and cash in hand was Rs. 3,920. The assets realized Rs. 1,44,910 and the expenses of dissolution were Rs. 1,860. Prepare realization account and show your working clearly.
Ans:
Q2: Give the necessary journal entries in each of the following alternative cases:
(i) Realization expenses amounted to 500
(ii) Realization expenses paid by the company amounted to Rs. 500 and the partner has to bear the realization expenses
(iii) '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 realized from assets was Rs. 25,000 and cash paid for liabilities amounted to Rs. 5,000
Ans:
Q3: A and B share profits and losses in the ratio of 3:2. They have decided to dissolve the firm. Assets and external liabilities have been transferred to realization A/c. Pass the journal entries to affect the following.
(1) Bank Loan of Rs. 12,000 is paid off.
(2) A was to bear all expenses of realization for which he is given a commission of Rs. 400
(3) Deferred Advertisement Expenditure A/c appeared in the book at 28,000
(4) Stock worth Rs. 1,600 was taken over by B at Rs. 1,200
(5) An unrecorded computer realized Rs. 7,000
(6) There was an outstanding bill of repairs for Rs. 2,000, which was paid off.
Ans:
Q4: If the total assets are Rs. 5,00,000, total liabilities are Rs. 1,00,000, the amount realized on the sale of assets is Rs. 4,20,000 and realization expenses are Rs. 5,000, what will be the profit or loss on realization?
Ans: Profit and loss of realization can be calculated by preparing a realization account as follows.
