Partnership

Dissolution

Easy

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.

For taking over investment, Bharat's capital will be

Debited by 18,000

Credited by 18,000

Debited by 9,000

Credited by 9,000

✅ Correct Option: 3

When assets are taken over by a partner during dissolution, the partner's capital account is debited with the agreed value.

Calculation of investment value taken by Bharat:

Total investments in the firm = ₹20,000

Bharat took half of the investment = $\frac{20,000}{2}$ = ₹10,000

This was taken at 10% less than book value:

Value at which taken = ₹10,000 - 10% of ₹10,000

= ₹10,000 - ₹1,000

= ₹9,000

Journal Entry for this transaction:

When Bharat takes over the investment, the Realisation Account is credited (asset disposed of) and Bharat's Capital Account is debited (asset taken by partner).

Bharat's Capital A/c Dr. 9,000

To Realisation A/c 9,000

Therefore, Bharat's capital will be debited by ₹9,000.

2026: 29 May Shift 2

State the order of payment to be followed on the dissolution of a firm:

A. To each partner proportionately what is due to him/her from the firm for advances provided i.e. Partner's Loan A/c

B. To each partner proportionately what is due to him/her on account of capital

C. For the debts of the firm to outside parties

Choose the correct answer from the options given below:

2023: 28 May Shift 1

On Dissolution of partnership firm out of total debtors of Rs. 2,50,000, Rs. 10,000 became bad and the rest realised 70%. In the given case Bank A/c will be debited by :

2025: 13 May Shift 2

In case of dissolution Machine costing Rs 20,000, alongwith cash of Rs 5,000 were given to creditors of Rs 30,000 in full settlement of their claim.

In this case Realisation A/c will be Debited with ___________.

2023: 29 May Shift 2

Match List I with List II

LIST I	LIST II
A. Transfer of accumulated profits	I. Realisation account
B. Unrecorded asset sold on dissolution of firm	II. Profit and Loss Account
C. Manager's commission	III. Profit and Loss Appropriation Account
D. Partner's commission	IV. Partner's Capital account

Choose the correct answer from the options given below:

2025: 3 June Shift 2

Dissolution of a partnership firm may be ordered by the court on the following grounds:

(A) when a partner becomes insane.

(B) when a partner becomes permanently incapable of performing his duties as partner.

(D) when it is regarded just and equitable by the court.

Choose the correct answer from the options given below:

2022: 20 July Shift 1

In the balance sheet Total Debtors appear at Rs. 1,50,000 and provision for doubtful debts appear at Rs. 1,500. How much amount will be realised from debtors, if bad debts amounted to Rs. 20,000 and remaining debtors realised at a discount of 15% ?

Comprehension

Balance Sheet Ashwani and Bharat as on March 31, 2024

For taking over investment, Bharat's capital will be

Solution

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