Lalit and Madan were partners in a firm sharing profits and losses in the ratio of 7 : 3. On 31st March, 2024 their firm was dissolved. After transferring sundry assets (other than cash) and third-party liabilities to Realisation Account, the following transactions took place:
\begin{itemize}
\item[(i)] The firm had stock of \rupee2,00,000. 40% of this stock was taken over by a creditor of \rupee1,00,000 in full settlement of his claim. The remaining stock was sold at a loss of 10%.
\item[(ii)] The remaining creditors were paid \rupee2,10,000.
\item[(iii)] Plant and Machinery of \rupee5,00,000 were accepted by Mrs. Madan against the settlement of her loan of \rupee5,40,000.
\item[(iv)] Debtors of \rupee3,50,000 were sold to a debt collection agency who charged a commission of \rupee25,000.
\item[(v)] Investments of \rupee1,00,000 were taken over by the partners in their profit-sharing ratio.
\item[(vi)] Expenses of dissolution were \rupee8,000.
\end{itemize}
Pass necessary journal entries for the above transactions in the books of the firm.
Show Hint
Solution and Explanation
(i) Stock taken over by creditor: 40% of ₹2,00,000 = ₹80,000
Creditor’s claim = ₹1,00,000 → stock of ₹80,000 given → loss = ₹20,000 (credited to Realisation A/c)
Remaining stock = ₹1,20,000 → sold at 10% loss → sale value = ₹1,08,000
(ii) Remaining creditors paid = ₹2,10,000
(iii) Plant and Machinery worth ₹5,00,000 settled against loan of ₹5,40,000 → loss = ₹40,000
(iv) Debtors sold = ₹3,50,000, commission = ₹25,000 → amount received = ₹3,25,000
(v) Investments taken over in 7:3 ratio:
Lalit = \( \frac{7}{10} \times ₹1,00,000 = ₹70,000 \), Madan = ₹30,000
(vi) Dissolution expenses = ₹8,000 paid by firm
Journal Entries in the books of the firm:
| Particulars | Dr. (₹) | Cr. (₹) |
|---|---|---|
| Creditors A/c Dr. To Realisation A/c (Stock of ₹80,000 given to creditor, ₹20,000 loss) | 1,00,000 | 1,00,000 |
| Cash A/c Dr. To Realisation A/c (Remaining stock sold at 10% loss) | 1,08,000 | 1,08,000 |
| Realisation A/c Dr. To Cash A/c (Payment to remaining creditors) | 2,10,000 | 2,10,000 |
| Mrs. Madan’s Loan A/c Dr. To Realisation A/c To Capital A/c (Asset of ₹5,00,000 given in settlement of ₹5,40,000) | 5,40,000 | 5,00,000 40,000 |
| Cash A/c Dr. Realisation A/c Dr. To Debtors A/c (Debtors sold for ₹3,50,000, ₹25,000 commission) | 3,25,000 25,000 | 3,50,000 |
| Lalit’s Capital A/c Dr. Madan’s Capital A/c Dr. To Realisation A/c (Investments taken over in profit sharing ratio) | 70,000 30,000 | 1,00,000 |
| Realisation A/c Dr. To Cash A/c (Dissolution expenses paid by firm) | 8,000 | 8,000 |
Top CBSE CLASS XII Accountancy Questions
From the following Balance Sheet of Hira Ltd. as at 31st March, 2023, prepare Comparative Balance Sheet:
- On 1st May, 2023, Amrit Ltd. issued 10,000, 10% debentures of ₹100 each at a premium of 10%, redeemable at a premium of 10%. Loss on issue of debentures will be:
- Gupta and Sharma are partners in a firm sharing profit in the ratio of 4:1. They admitted Preeti as a new partner for \( \frac{1}{4} \) share in the profits, which she acquired wholly from Gupta. The new profit sharing ratio of Gupta, Sharma, and Preeti will be:
- On the dissolution of a partnership firm, there were debtors of ₹34,000. Debtors of ₹1,000 became bad, and 60% was realized from the remaining debtors. Which account will be debited and by how much amount on the realization from debtors?
- If vendors are issued fully paid shares of ₹1,25,000 in purchase consideration of net assets of ₹1,50,000, the balance of ₹25,000 will be credited to:
Top CBSE CLASS XII Dissolution of Partnership Firms Questions
- Piyush and Mita were partners in a firm sharing profits and losses in the ratio of 5 : 2. On 31st March, 2024, the firm was dissolved. After transferring various assets (other than cash) and third-party liabilities to the Realisation Account, the following transactions took place:
(i) Investments whose book value was ₹50,000 were realised at 70%.
(ii) Unrecorded liabilities of ₹21,000 were paid.
(iii) Piyush took over stock worth ₹78,000 at ₹65,000.
Pass necessary journal entries for the above transactions in the books of Piyush and Mita. - In the event of dissolution of a partnership firm, the order of payment of losses including deficiencies of capital shall be:
Rishi, Manu and Komal were partners in a firm sharing profits and losses in the ratio of 3 : 4 : 5. On 31st March, 2024 their firm was dissolved. After transferring sundry assets (except cash in hand and cash at bank) and third party liabilities to realisation account, the following transactions took place:
(i) A creditor of ₹2,00,000 took over an old machine for ₹70,000 that had been completely written off and his balance was settled at a discount of 10%.
(ii) Remaining creditors of ₹8,00,000 agreed to take over stock of ₹6,00,000 in full settlement of their claim.
(iii) The remaining stock of ₹3,00,000 was sold at a loss of 30%.
(iv) Dissolution expenses amounting to ₹90,000 were paid by Komal.
(v) Saransh, an old customer whose account for ₹40,000 was written off as bad debt in the previous year, paid ₹36,000.
(vi) Loss on dissolution amounted to ₹2,40,000.
Pass necessary journal entries for the above transactions to close the books of Rishi, Manu and Komal at the time of dissolution of the firm.- Show the following items under major heads and sub-heads (if any) in the Balance Sheet of the company as per Schedule III, Part I of the Companies Act, 2013:
(a) Calls in advance
(b) Public deposits
(c) Intangible assets under development From the following information of Jamna Ltd., prepare a Comparative Statement of Profit and Loss for the year ended 31st March, 2024.
Particulars 2022–23 (₹) 2023–24 (₹) Revenue from operations 16,00,000 20,00,000 Cost of revenue from operations 8,00,000 10,00,000 Other expenses 2,00,000 4,00,000
Tax Rate: $40%$
Top CBSE CLASS XII Questions
- 2, b, c are in A.P. and the range of determinant $\begin{vmatrix}1&1&1\\ 2&b&c\\ 4&b^{2}&c^{2}\end{vmatrix}$ is [2, 16]. Then find range of c is
- A boy of mass 50 kg is standing at one end of a, boat of length 9 m and mass 400 kg. He runs to the other, end. The distance through which the centre of mass of the boat boy system moves is
- A capillary tube of radius r is dipped inside a large vessel of water. The mass of water raised above water level is M. If the radius of capillary is doubled, the mass of water inside capillary will be
- A circular disc is rotating about its own axis. An external opposing torque 0.02 Nm is applied on the disc by which it comes rest in 5 seconds. The initial angular momentum of disc is
- A circular disc is rotating about its own axis at uniform angular velocity \(\omega.\) The disc is subjected to uniform angular retardation by which its angular velocity is decreased to \(\frac {\omega}{2}\) during 120 rotations. The number of rotations further made by it before coming to rest is