RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Rajasthan Board RBSE Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Class 12 Accountancy Chapter 4 Textbook Questions

RBSE Class 12 Accountancy Chapter 4 Multiple Choice Questions

Question 1.
At the time of dissolution of the firm balance of bad debts account is transferred to :
(a) debtors account
(b) bad debts account
(c) realization account
(d) capital account
Answer:
(c)

Question 2.
On the dissolution of partnership firm, losses will be charged first :
(a) out of profit
(b) from partner’s loan account
(c) from partner’s capital account
(d) from partner’s personal resources
Answer:
(a)

Question 3.
On the dissolution of firm, to close goodwill account, it is transferred to :
(a) revaluation’s account
(b) partners’ capital account
(c) realization account
(d) profit and loss account
Answer:
(c)

Question 4.
In which ratio, capital deficiency of an insolvent partner is distributed among solvent partners, when Garner Vs. Murray applies?
(a) Profit-Loss ratio
(b) Opening capital ratio
(c) Capital ratio before charging dissolution profit and loss
(d) Equal ratio
Answer:
(c)

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 5.
When Garner Vs. Murray law applies, realization loss will bear by the partners’ in :
(a) equal ratio
(b) profit and loss ratio
(c) capital ratio
(d) none of these
Answer:
(b)

RBSE Class 12 Accountancy Chapter 4 Very Short Answer Questions

Question 1.
On the dissolution of the firm from debtors worth 50,000 realized Rs 45,000. Make necessary journal entry at the time of dissolution of the firm.
Answer:
Cash/Bank A/c Dr. 4,500
To Realization A/c 4,500
(Assets realized on dissolution)

Question 2.
What is the name of insolvent partner in Garner vs. Murray case, in which ratio his loss is distributed?
Answer:
Willkins is Insolvent partner in Garner V/s Murray case. Their loss distributed in capital ratio.

Question 3.
What is Realization Account?
Answer:
Realization account is opened on dissolution of a firm. The object of preparing this account is to determine gain (profit) or loss on the realization of assets and payment of liabilities.

Question 4.
What is the dissolution of firm?
Answer:
When partnership among all partners ends and it is decided to close or sell the business of the firm, it is called dissolution of firm.

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 5.
What is the sequence for payment at time of dissolution of firm?
Answer.
On dissolution of firm:All assets including cash brought in partner will be utilized as follows:

  • To pay all loans of the firm including partners’ wives.
  • To pay every partners’ capital proportionately.
  • If any surplus remains, to distribute among partners in the profit sharing ratio.

Question 6.
What do you mean by dissolution by court?
Answer.
The court may a are application by partner order the dissolution if the partnership firm. Called, Dissolution by court.

Question 7.
At the time of dissolution of the firm, partners capital Rs 20,000, liabilities Rs 15,000 and cash balance Rs 1,000 amount realized from sundry assets Rs 9,000. What is loss on realization?
Answer.
Total of both column of Balance Sheet should be same.
Loss on realization = Total of liability side – Total of Assets side
= (20,000 + 15,000) – (10,000 +9000)
= 35000 – 10000
= 25000
Rs 9000 realized from 34,000 Assets = It means loss on realization will Rs 25,000.

RBSE Class 12 Accountancy Chapter 4 Short Answer Questions

Question 1.
Explain Garner V/S Murray rule.
Answer.
Garner V/s Murray as follows:

  • Deficiency of capital of insolvent partner would be borne in their capital ratio by solvent partners.
  • Solvent partners should bring in cash for their share of realization loss. Capital ratio of the solvent partners would be derived from the regular balance sheet made prior the dissolution of firm.

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 2.
“There is a difference between dissolution of partnership and partnership firm.” Explain this statement.
Answer.
Dissolution of partnership only means that relation of one of the partner break with other partners in this case it is not necessary that firm’s business is closed. Remaining partner’s can continue the business. But dissolution of a firm is dissolution of partnership on dissolution of partnership all business activities end. So, it is correct that dissolution of partnership, is different from dissolution of partnership firm.

Question 3.
A, B and C’s profit sharing ratio is 1 : 2 : 2. Before debiting realization loss partners capital account balance are Rs 3,000 (Dr.), Rs 6,000 (Cr.) and Rs 2,000 (Cr.) and realization loss 5,000. A became insolvent, give journal entry for bearing deficiency of A.
Answer.
B’s Capital A/C Dr. 3000
C’s Capital A/c Dr. 1000
To A’s Capital A/C 4,000
(Deficiency of A’s amount bear by B and C their capital ratio.)

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 4.
Himi and Shreekant are partners, as on 31st March, 2012, there capital Rs 1,00,000 and 50,000 and creditors Rs 30,000. On that date firm dissolved and realization value of assets are Rs 90,000. Prepare Realization Account on dissolution.
Answer.
Realization A/C
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 5.
In which circumstances compulsory dissolution is happen?
Answer.
Compulsory dissolution can happen in following circumstances :

  • When firm’s business becomes Illegal.
  • When any partners should resident of enemy country.
  • When all or except one partner are declared insolvent.
  • If no, of partners are excess in general partnership 50 or in banking business 20.
  • When court orders dissolution of a firm.

Question 6.
State the mode of dissolution of a partnership firm.
Answer.
The mode of dissolution of a partnership firm is followings :

  • Dissolution by Agreement.
  • Compulsory dissolution.
  • Dissolution by notice.
  • Dissolution by court.
  • Dissolution by special activity.

Question 7.
How capital accounts are closed on dissolution of partnership firm?
Answer.
Partners Capital Account: After the transfer of profit or loss on realization, undistributed profit reserves etc. to the capital account of the partners, the balance of capital account are closed in the following manner :
1. When a partner is required to bring in cash to clear off his debit balance. The entry will be
Cash/Bank A/C Dr.
To Partners’ Capital A/c
(Being required cash brought in by the partner)

2. When a partner is paid the credit balance of his account Partners
Capital A/c Dr.
To Cash/Bank A/c .
(Being excess cash paid to partner)

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 8.
State any two circumstances under which partnership is deemed to be dissolved.
Answer.

  • A, B and C are partners in a firm. C died in this case/circumstance partnership firm will dissolve.
  • A, B and C are partners in a firm. B become mental so in this case/circumstance partnership firm will dissolve.

Question 9.
State the rules of preparation of realization account on dissolution of partnership firm.
Answer.
Realization Account : Realization account is opened on the dissolution of a firm. The object of preparing this account is to determine gain (profit) or loss on the realization of assets and payment of liabilities. Realization account is prepared by:

  • Transferring all assets except cash or bank account to the debit side of the account.
  • Transferring all liabilities except partner’s loan account and partners’ capital account to the credit side of the account.
  • Amount realized on sale of assets is credited to the account.
  • Liabilities paid are debited to the account.
  • Expenses incurred by the firm on dissolution are debited.
    Balance in the account is either profit or loss which is transferred to the capital account of the partners in their profit sharing ratio.

Question 10.
State any two grounds on which a court can pass order for dissolution of firm.
Answer.
The court can pass order for dissolution of firm in following grounds :

  • When a partner other than the partner filing a suit has become permanently incapable of performing his duties as a partner.
  • When a partner other than the partner filing a suit has transferred the whole of his interest in the firm to a third party.

Question 11.
Kapil one of the partner, agreed to take over the creditors of Rs 25,000 for Rs 22,000. Pass necessary journal entry at time of dissolution of the firm.
Answer.
Realization A/c Dr. 22,000
To Kapil’s Capital A/c 22,000
(Liabilities taken over by Kapil)

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Class 12 Accountancy Chapter 4 Essay Type Questions

Question 1.
What is the difference between realization account and revaluation account?
Answer.
Difference between Realization Account and Revaluation Account

Basis of Distinction Revaluation Account Realization Account
When Prepared The account is prepared on the admission, retirement or death of a partner. This account is prepared on the dissolution of partnership firm.
Object of Preparation This account is prepared to make necessary adjustment in the value of assets and liabilities. This account is prepared to find out the profit or loss on the sale of assets and repayment of liabilities.
Result Even after the preparation of revaluation account, the firm continues to function though with a changed relationship among the partners. This firm comes to an end after preparation of this account.
Value of Assets and Liabilities Recorded Only the difference between the book values and revised value of assets and liabilities is recorded in this account. Book value of assets and liabilities the realized value of assets and the actual payment of liabilities is recorded in this account.
Time This account may be required to be prepared many times during the life time of a firm. This account is prepared only once during the life time of a firm.

Question 2.
Under what circumstances a firm may be dissolved?
Answer.
A partnership firm can be dissolved in any of the following ways:
1. Without the Intervention of the Court

  • When all partners agree to dissolve the firm. (Section 40)
  • Compulsory dissolution (Section 41)
    (a) When all or all but one partner of the firm becomes insolvent.
    (b) When business of the firm becomes unlawful.
  • On the happening of any one of the following incidents (Section 42)
    (a) On the insolvency of a partner.
    (b) On the fulfillment of the object for which the firm was formed.
    (c) On the expiry of the period for which the firm was formed.
  • When the duration of the partnership firm is not fixed and it is at will any partner by giving notice to other partners can dissolve the firm. (Section 43).

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

2. By Order of the Court (Section 44)
The court may on an application by a partner order the dissolution of the partnership firm under the following circumstances :

  • When a partner has become of unsound mind.
  • When a partner other than the partner filing a suit has become permanently incapable of performing his duties as a partner.
  • When a partner other than the partner filing a suit is guilty of misconduct that may harm the partnership.
  • When a partner other than the partner filing a suit willfully or persistently commits breach of partnership agreement.
  • When a partner other than the partner filing a suit has transferred the whole of his interest in the firm to a third party.
  • When the court is satisfied that the firm cannot be carried on except at a loss.
  • When the court is satisfied that the dissolution is just and equitable due to some other reasons.

Question 3.
What do you mean by Garner V/s Murray rule? How it is applicable in case of fixed capital method and fluctuating capital method? Explain.
Answer.
Insolvency of Partner :
It is possible that after making entries relating to dissolution a partners capital account shows debit balance. If the partner is solvent then he will bring cash and settle his account. But if such a partner is declared insolvent then he will not be able to pay off his liability towards the firm. The deficiency will have to be met by other solvent partners. Now, one important question arises which ratio this deficiency will be borne by the remaining partners. Whether in the profit sharing ratio or in capital ratio? Before 1903 the partners used to share deficiency of an insolvent partner in profit sharing ratio. But in that year a British Court pronounced an important verdict in the case of Garner Vs. Murray establishing a new principle. According to this principle the deficiency of insolvent partner shall be borne by remaining partners in their capital ratio. The details and the principle laid down in the case are as under

Facts of the Case : Garner, Murray and Wilkins were partners. They were equal partners. The dissolution of the firm took place on 30th June, 1900 and assets of the firm were sold and creditors paid. After all this firm’s status was as under:
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
Wilkins was declared insolvent and nothing could be realized. His total liability towards firm was £ 263 + (1/3 of £ 635) = £ 475. The question before the court was by which ratio should Garner and Murray share Willkins capital loss ?

Verdict Delivered in the Case
It was pronounced that insolvent partner’s deficiency of capital shall be borne by remaining partners in the capital ratio showing in the balance sheet mad prior to dissolution of firm. The verdict was based on the principle that the loss arising out of insolvency of a partner is different from business loss.

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Explanation of Verdict
On the basis of verdict in the case following two points emerge out:

  • Deficiency of capital of insolvent partner would be borne in their capital ratio.
  • Solvent partners should bring in cash for their share of realization loss.

Capital ratio of the solvent partners would be derived from the regular balance sheet made prior to the dissolution of firm. For example, if firm’s balance sheet is made on 31st December every year then balance sheet made on 31st December prior to dissolution of firm would be used to find capital ratio for purpose. It is to be remembered that this capital can only be basis if capital account is fixed and not fluctuating. If capital accounts are fluctuating then adjustment will have to be made in partners’ capital account for reserves profit-loss account etc. But only prior to adjustment related to dissolution). The adjusted capital thus obtained would be used for sharing capital loss of the insolvent partner. It is to be remembered further that if there is debit balance in any partners’ capital account before distribution of realization loss then that partner will not share deficiency of insolvent partner.
[Note: In the absence of any information the question must be solved on the basis of Garner vs. Murray rule.]

Question 4.
Explain the method of accounting for settlement of accounts at the time of dissolution.
Answer.
Accounting Treatment in Case of Dissolution : With the dissolution of firm normal business activity stops and process of realization of firm’s assets and payment of liabilities starts. To complete this process following accounts are prepared :

  • Realization account
  • Bank or cash account
  • Partners’ capital account
  • Other necessary accounts.

Realisation Account : Realisation account is opened on the dissolution of a firm. The object of preparing this account is to determine gain (profit) or loss on the realisation of assets and payment of liabilities. Realisation account is prepared by:

  • Transferring all assets except cash or bank account to the debit side of the account.
  • Transferring all liabilities except partner’s loan account and partners’ capital account to the credit side of the account.
  • Amount realised on sale of assets is credited to the account.
  • Liabilities paid are debited to the account.
  • Expenses incurred by the firm on dissolution are debited. Balance in the account is either profit or loss which is transferred to the capital account of the partners in their profit sharing ratio.

Account Entries Regarding Dissolution
(i) On Transfer of Assets (Except Bank or Cash Balance)
Realisation A/C
To Sundry Assets A/C
(Being balance of assets transferred)

(ii) On Transfer of Liabilities (Except Capital Account. Current Account, Reserve, P&L Account, Reserve Fund and Partners’ Loan Account) Sundry Liabilities A/c
To Realisation A/C
(Being balance of sundry liabilities transferred)

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

(iii) On Sale of Assets
Cash/Bank/A/C Dr.
To Realisation A/C
(Being cash realized from sale of assets)

(iv) On Taking Over Some Assets by a Partner
Partners Capital A/C Dr.
To Realisation A/C
(Being assets taken over by the partner)

(v) On Payment of Transferred Liabilities
Realisation A/c Dr.
To Cash/Bank A/C
(Being sundry liabilities paid off)

(vi) On Taking Responsibility of Payment of Any Liability by a Partner
Realisation A/C Dr.
To Partners’ Capital A/c
(Being liabilities taken over by the partners’)

(vii) On Payment of Unforeseen Liability or Dissolution Expenses
Realisation A/c Dr.
To Cash/Bank A/C
(Being expenses paid)

(viii) On Transfer of Credit Balance of (Profit) Realisation Account
Realisation A/C Dr.
To Partners’ Capital A/C
(Being profit transferred to capital Account)

(ix) Transfer of Debit Balance of (Loss) Realisation Account
Partners’ Capital A/C Dr.
To Realisation A/c
(Being loss transferred to capital Account)

(x) Expenses Paid by a Partner
Realisation A/C Dr.
To Partners’ Capital A/C
(Being expenses paid by partner)

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

(xi) On Bearing Any Realisation Expenses by a Partner as Realisation Agent.
Realisation A/c Dr.
To Partners’ Capital A/C
(Being commission allowed to partner)

[Note : Sometimes, liabilities are not transferred to realisation account. In such a case the liabilities are directly paid only profit loss if any arising out of it is transferred to realisation account. When such liabilities along with other liabilities which are not transferred to realisation account are paid and the following accounting entries are done in the following manner.]

(xii) On Payment of Liabilities over and Above the Book Value
Sundry Liabilities A/c Dr. (by book value)
Realisation A/C Dr. (by difference)
To Cash/Bank A/C (by amount paid)
(Being liabilities paid off and loss transferred)

(xiii) On Payment of Liabilities Below the Book Value Sundry
Liabilities A/c Dr. (by book value)
To Cash/Bank A/C (by amount paid)
To Realisation A/C (by difference amount)
(Being sundry liabilities paid off and profit transferred)

(xiv) On Payment of Partner’s Loan
Partner’s Loan A/c Dr. (by amount paid)
To Cash/Bank A/c
(Being loan paid off)

(xv) On Distribution of Old Undistributed Profit Dissolution is as follows
General Reserve A/C Dr.
Reserve Fund A/C Dr.
Profit and Loss A/C Dr.
To Partners’ Capital A/c
(Being undistributed profit transferred)

(xvi) On Distribution of Old Undistributed Loss
Partners’ Capital A/c Dr. (in profit sharing ratio)
To Profit and Loss A/C (by undistributed loss)
(Being undistributed loss transferred)

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

(xvii) On Bringing Cash by a Partner to Make up Deficiency of Capital
Cash/Bank A/C Dr. (by amount brought in)
To Partners’ Capital A/C
(Being cash brought by partners)

(xviii) On Payment of Capital Account Balance to Partners
Partners’ Capital A/C Dr. (by amount paid)
To Cash/Bank A/C
(Being balance of capital account paid)

[Note: Lastly, the balance in cash/bank is only as much as it is to be paid to the partners hence, with the last entry all accounts of the firm close automatically.]

Partners Capital Account: After the transfer of profit or loss on realisation, undistributed profit reserves etc. to the capital account of the partners, the balance of capital account are closed in the following manner :

1. When a partner is required to bring in cash to clear off his debit balance. The entry will be
Cash/Bank A/C Dr.
To Partners’ Capital A/C
(Being required cash brought in by the partner)

2. When a partner is paid the credit balance of his account
Partners’ Capital A/C Dr.
To Cash/Bank A/C
(Being excess cash paid to partner)

Cash or Bank Account:Opening balance of cash and bank and all the receipts are entered on the debit side of this account and all the payments are entered on the credit side of this account. This account must be prepared and closed last of all and the total of both the sides of this account must be equal. In this way this account also helps in the verification of the arithmetical accuracy of the account.

[Note: If cash balance and bank balance both are given in the balance sheet, only one account either a cash account or a bank account is prepared. If cash account is prepared an entry is passed for withdrawing the bank balance and if a bank account is prepared, the cash balance is deposited into the bank.]

Other Required Accounts : On the dissolution of firm, partner’s loan Account, partners current account, reserve and undistributed losses accounts are prepared and deficiency account in case of insolvency of all partners is also prepared.

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Class 12 Accountancy Chapter 4 Numerical Questions

Question 1.
Ramesh, Naresh and Mahesh are partner sharing profits in 3:2:1 ratio. They decided the dissolution of partnership on 31 Dec. 2014. On this data balance sheet as under.
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
Following transactions are made on dissolution :

  1. Joint life insurance policy surrendered on Rs 15,000.
  2. Ramesh takes investment on Rs 17,500 and agreed to pay his wife’s loan.
  3. Naresh takes stock on Rs 7,500 and debtors Rs 4000 of Rs 5000.
  4. Realisation from machine 50,000 and from debtors 50% of their book value.
  5. Realisation expenses was Rs 1000.
  6. Rs 3000 realized from investment which was not shown in the books.

Make journal entries to close the books and prepare necessary accounts.
Solution.
Journal
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 2.
Gopesh and Rakesh are partner sharing profit equally. They decided to dissolve their partnership business. On 31 March 2014 their balance sheet was as under :
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
Assets realized as follows :

  1. Gopesh takes plant & machine and furniture on 10% less on their book value.
  2. Rekesh takes stock and goodwill at Rs 35,000.
  3. Realised from debtors Rs 37,000.
  4. Creditors paid on 5% discount.

Make Journal Entries to close the books and prepare necessary accounts.
Solution.
Journal Entries
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 3.
X, Y and Z are partner sharing profits in 2 : 2 : 1 ratio. They agreed to dissolve the partnership on 31st March, 2010. On that date balance sheet was as under :
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
Amount realised from plant and machine Rs 10,000. From furniture Rs 5000 and from debtors full, from stock Rs 4000. Investment ware taken by Z (on book value). Creditors are paid on 10% discount, realisation exp. Rs 100. There was no entry of Rs 550 Assets which X · takes in Rs 450. Rs 100 liabilities was not shown in the books. Close the books of firm and prepare necessary accounts.
Solution.
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 4.
Tanu and Manu are partners in a firm sharing Profit ratio in 3: 1. They agreed to dissolve the firm. Realisation from assets Rs 1,08,500 except cash Rs 2,000. On the dissolution date firm’s liabilities and other particulars were as follows :
Creditors Rs 40,000, Capital A/c of Tanu Rs 1,00,000 credit, Manu’s capital account is Rs 10,000 debit, profit and loss Rs 8,000 debit, Realisation exp. Rs 1,000. It was known that investment Rs 2,000 which was not entered in books, it was taken by a creditors in Rs 1,500. Remaining creditors was paid off Rs 36,500 in Full settlement. Prepare Realisation A/c, Cash A/c, and Partner’s Capital A/C.
Solution.
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 5.
Ram, Rahim and Karim are partners in a firm sharing profit 2:2:1 ratio. They decided to dissolution at 31 March, 2012. On that date Balance Sheet was as under :
 RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
Following amount realized from fixtures and other assets – Rs 9,000 from stock Rs 4,520, from debtors Rs 1,800, creditors were paid off Rs 3,800 in full settlement. Realization expenses Rs 120. Prepare necessary account to close the books.
Solution.
 RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
 RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 6.
Following Balance Sheet shows the position of Rakesh and Deepak as on 31 December, 2012. They decided the dissolution of their business. The Balance Sheet is as follows :
 RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
Book debts are realized on 7.5% loss. Stock sold out in Rs 3,000. Plant & Machinery sold in Rs 700 and Furniture in Rs 250. They divided profit & loss equally. Make necessary accounts on dissolution.
Solution.
 RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
 RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 7.
X, Y and Z are partner in a firm sharing profits in 4:3:3. They decided to dissolve the partnership on 31 Dec., 2015. Their Balance Sheet is as under :
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
Y was depute for realisation of assets and distribution of received amount. He will get 5% of received amount from stock and debtors as a remuneration and will bear all realisation expenses. Y reports the result of realisation as under.
Realised from stock Rs 96,000 and from debtors Rs 72,000. Creditors paid off Rs 76,000 in Full settlement. Outstanding creditors Rs 1,000 paid which was not entered in the balance sheet. Z become insolvent Rs 7,720 realised from his assets. Garner V/s Murray rules apply.
Prepare Realisation A/C, Capital A/c and Cash A/C.
Solution.
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 8.
A, B and C are partner sharing profits in 5:3:2 ratio. Business was dissolved on 31st March, 2008 on that date Balance Sheet was as under :
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
Amount realized from Machine Rs 50,000 and from stock Rs 36,000. Motor car was taken by B in Rs 24,000. Realized from debtors Rs 40,000. Deficiency of capital of any partner will bear by remaining partners in their profit sharing ratio. A became insolvent, not any amount can received from A. Prepare necessary accounts.
Solution.
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 9.
Between Ram & Shyam’s partnership was dissolved on 31 March, 2010. Ram’s capital was Rs 17,000 and Shyam’s capital was Rs 3,000, Rs 2,000 was payable to firm by Shyam. Rs 10,000 was payable to Ram by firm. & Payable to creditors Rs 20,000. In the books of firm cash and furniture was Rs 300 & Rs 1,200 shown, they divided profit and loss in 2:1 ratio. Rs 40,000 was realised from the assets representing the above liabilities (except cash and furniture and payale by Shyam Rs 2,000). Furniture was taken by Ram in Rs 800. Liabilities was paid off on Book value. Realisation Exp. were Rs 200. On the dissolution date, prepare Balance
Sheet before dissolution and necessary account on dissolution.
Solution.
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 10.
The Balance Sheet of Ram, Shyam & Mohan was as under on 31 March, 2014 :
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
Mohan became insolvent, he can pay only Rs 4,000 decided of partnership dissolution. Assets were realised as follows : Sundry Debtors Rs 15,000, Bill receivable Rs 14,000, Stock Rs 32,000, Plant & Machinery Rs 28,000, Realisation expenses Rs 5,000.
Prepare necessary accounts to close books.
Solution.
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 11.
A, B and C are partners. The balance sheet on 31 March, 2012 was as under :
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
On that date firm dissolved. A became insolvent. Realised from debtors of firm Rs 80,000 from stock. Rs 50,000, creditors were paid off Rs 86,000 in full settlement. Realisation expenses were Rs 4,000. Not any amount can be realised from A.
Prepare Realisation A/c, Capital A/c and Cash A/C.
Solution.
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm

Question 12.
Kapil, Bharat, Vivek and Bhavesh are equally partners. Firm dissolved on 31 March, 2009. On that date Balance Sheet is as follows :
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
Realised from debtors less 20% of from Book value. Stock can sold in Rs 4,000. There was contingent liabilities of Rs 2,000 which was not shown in the books was paid in Rs 1,600. Bharat became insolvent realised from his only Rs 6,000. Realisation expenses were Rs 4,800. Apply Garner V/s Murray rules prepare necessary accounts.
Solution.
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
RBSE Solutions for Class 12 Accountancy Chapter 4 Dissolution of Firm
Working Notes : Deficiency of capital of Bharat is divided by Vivek and Bhavesh in capital ratio in 2:1. The Balance of Kapil’s capital is debit, so he will not give share in capital deficiency.

RBSE Solutions for Class 12 Accountancy