Partnership

Dissolution

Medium

Comprehension

From the information provided below, calculate various questions asked in questions

Following is the Balance Sheet of Ashwani and Bharat on March 31, 2024.

Balance Sheet Ashwani and Bharat as on March 31, 2024

Liabilities	Amount ( $₹$ )	Assets	Amount ( $₹$ )
Creditors	$76,000$	Cash at bank	$17,000$
Mrs.Ashwani's loan	$10,000$	Stock	$10,000$
Mrs.Bharat loan	$20,000$	Investments	$20,000$
Investment fluctuation reserve	$2,000$	Debtors $\quad 40,000$ Less: Provision for doubtful debts $\quad 4,000$	$36,000$
General Reserve	$20,000$	Buildings	$70,000$
Capitals: Ashwani $20,000$ Bharat $20,000$	$40,000$	Goodwill	$15,000$
Total	$1,68,000$	Total	$1,68,000$

The firm was dissolved on that date. The following was agreed transactions took place:

Ashwani promised to pay Mrs. Ashwani’s loan and took away stock for Rs. 8,000.
Bharat took away half of the investment at 10% less. Debtors realised for Rs. 38,000. Creditor’s were paid at less of Rs. 380. Buildings realised for Rs. 1,30,000. Goodwill Rs. 12,000 and the remaining Investment were sold at Rs. 9,000. An old typewriter not recorded in the books was taken over by Bharat for Rs. 600. Realisation expenses amounted to Rs. 2,000.

Amount of Assets realized debited to Bank Account will be:

₹ 1,89,000

₹ 1,55,000

₹ 1,89,600

₹ 1,55,600

✅ Correct Option: 1

During dissolution, assets realized in cash are debited to Bank Account. Assets taken over by partners are adjusted against their capital accounts and don't pass through the Bank Account.

Assets realized in cash (debited to Bank):

Debtors realized: ₹38,000

Buildings realized: ₹1,30,000

Goodwill sold: ₹12,000

Remaining Investment sold: ₹9,000

Total debited to Bank Account = ₹38,000 + ₹1,30,000 + ₹12,000 + ₹9,000 = ₹1,89,000

Assets NOT debited to Bank (taken over by partners):

Stock taken by Ashwani: ₹8,000
Half investment taken by Bharat: ₹9,000 (10% less of ₹10,000)
Typewriter taken by Bharat: ₹600

These are directly adjusted in the partner's capital accounts, hence no bank entry is made.

The correct answer is Option 1: ₹1,89,000

2025: 16 May Shift 1

While settlement of Accounts, what should be the order of application of assets of Firm

(A) In paying the debts of the firm to the third parties

(B) In paying to each partner proportionately what is due to him on account of capital

(D) In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner's loan)

Choose the correct answer from the options given below:

2022: 16 July Shift 2

At the time of dissolution of their firm, Ahmed and Subhash, who are partners of that firm, agreed that Ahmed will pay realization expenses for a fixed remuneration of Rs.12,000. The actual expenses were Rs. 16,000. The Journal entry to be passed is

2023: 20 June Shift 2

Arrange the following in the context of dissolution of partnership firm.

A. Payment of loan from Partners

B. Payment of secured outsider's liabilities

C. Realisation of assets into cash

D. Settlement of partner's capital

E. Payment of unsecured outsider's liability

Choose the correct answer from the options given below:

2025: 30 May Shift 1

Which item among the following is NOT listed on the credit side of a Realization Account?

2026: 13 May Shift 1

At the time of Dissolution of a Partnership Firm, the assets of the firm, including any sum contributed by the partners to make up deficiencies of capital, shall be applied among the partners in the following manner and order:

(A) The residue, if any, shall be divided among the partners in their profit sharing ratio.

(B) In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner' loan);

(D) In paying to each partner proportionately what is due to him on account of capital; and

Choose the correct answer from the options given below:

2026: 24 May Shift 1

"Adjudication of a partner as an insolvent" leads to ________.

Comprehension

Balance Sheet Ashwani and Bharat as on March 31, 2024

Amount of Assets realized debited to Bank Account will be:

Solution

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