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Chapter 6 Dissolution OF Partnership Firm: Case/Source Based Questions S.N o

- The partnership firm of Vikram and Mohan located in rural Assam was dissolved on 1.3.2021 due to financial difficulties. - Vikram agreed to handle the dissolution for a fee of Rs. 2,000, which he paid himself. - Any dissolution expenses paid by Vikram would be reimbursed via an entry debiting the Realization Account and crediting Vikram's capital account.

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3K views9 pages

Chapter 6 Dissolution OF Partnership Firm: Case/Source Based Questions S.N o

- The partnership firm of Vikram and Mohan located in rural Assam was dissolved on 1.3.2021 due to financial difficulties. - Vikram agreed to handle the dissolution for a fee of Rs. 2,000, which he paid himself. - Any dissolution expenses paid by Vikram would be reimbursed via an entry debiting the Realization Account and crediting Vikram's capital account.

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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CHAPTER=6 DISSOLUTION OF

PARTNERSHIP FIRM

CASE/SOURCE BASED QUESTIONS


S.N Question
o.
Q.No.5 to 8 are based on the hypothetical situation given below
A and B were partners in a firm sharing profits in the ratio of 3 : 2. On 31st
March, 2020, the balance sheet of the firm was as follows:
Balance Sheet
as at 31st March,2020

LIABILITIES AMOUNT ASSETS AMOUNT


CAPITAL : Building 2,40,000
A 3,00,000 Stock 75,000
B 2,00,000 5,00,000 Debtors 80,000
Creditors 1,17,000 Cash 47,000

Furniture 1,75,000
6,17,000 6,17,000

The firm was dissolved on 1st April, 2011 and the assets and liabilities were
settled
1 Building was taken over by creditors as their full and final payment. How much
amount will be debited to Realisation Account?
A) Rs.1,23,000
(B) NIL
(C) Rs. 1,33,000
(D) Rs. 1,43,000
2 Furniture was taken over by B for cash payment at 5% less than the book value.
The account Debited will be:
A) Realisation A/c
(B) B’s Capital A/c
(C) A’s Capital A/c
(D) CashA/c

KVS ZIET BHUBANESWAR 12/10/2021 Page 1


3 Debtors were collected by a debt collection agency at a cost of Rs 5,000. How
much amount will be credited to Realisation Account?
A) Rs.80,000
(B) NIL
(C) Rs. 75,000
(D) Rs. 85,000
4 B agreed to bear all realisation expenses. For this service, B is paid Rs 500.
Actual expense on realisation amounted to Rs 1,000. Realisation A/c will be
debited with
A) Rs.1500
(B) Rs. 500
(C) Rs. 3,000
(D) Rs. 1,000
Q.No.5 to 8 are based on the hypothetical situation given below
Raman and Suman were partners sharing profits in the ratio of 3 : 1. On 31st
March, 2019, their balance sheet was as follows:
Balance Sheet
as at 31st March,2019

LIABILITIES AMOUNT ASSETS AMOUNT


CAPITAL : Land & Building 70,000
Raman 1,00,000 Machinery 60,000
Suman 80,000 1,80,000 Debtors 80,000
Creditors 70,000 Bank 60,000
Profit & loss A/c 20,000
2,70,000 2,70,000

The firm was dissolved on 1st April, 2011 and the assets and liabilities were
settled.
5 Creditors of Rs 50,000 took over land and building in full settlement of their
claim. Remaining creditors were paid in cash. How much amount will be debited
to Realisation Account?
A) Rs.10,000
(B) NIL
(C) Rs. 20,000
(D) Rs. 40,000
6 Machinery was sold at a depreciation of 30%. How much amount will be credited
to Realisation Account?
A) Rs.52,000
(B) Rs.62,000
(C) Rs. 42,000
(D) Rs. 72,000
7 Expenses on realisation were Rs 1,700. The account Credited will be:
A) Realisation A/c
(B) Partner’s Capital A/c
(C) Revaluation A/c
(D) BankA/c
8 Profit and Loss A/c appearing on the liabilities side of the Balance Sheet will be
transferred to
A) Realisation A/c
(B) Partner’s Capital A/c
(C) Revaluation A/c
(D) BankA/c
Read the following passage and answer any four questions given below:
The partnership firm of Vikram and Mohan located in Jorhat Assam a backward
and rural area of northeast. The firm is producing tea and producing the product
with the help of machinery and labour. This firm was dissolved on 1.3.2021 due to
bad financial position.. According to the agreement Mr. Vikram had agreed to
undertake the dissolution work for an agreed remuneration of Rs.2,000. Dissolution
expenses were paid by Vikram.
9 Who will bear the expenses of firm at
dissolution? A Vikram
B Mohan
C Firm
D None of the above

10 What will be the entry if payment made by partner Vikram?


i) Realisation A/c
Dr To Bank A/c
ii) Realisation A/c Dr
To Vikram’s Capital A/c
iii) No Entry
iv) Vikram’s Capital A/c
Dr To Bank A/c
11 What will be the entry if expenses of dissolution if expenses is paid by firm Rs.
2500 ?

i) Realisation A/c Dr 2500


To Bank A/c 2500

ii) Realisation A/c Dr 2500


To Vikram’s Capital A/c 2500

iii) No Entry

iv) Vikram’s Capital A/c Dr 2500


To Bank A/c 2500

12 What will be the entry if expenses of dissolution if expenses is paid by mohan


Rs.2000?

i) Realisation A/c Dr 2000


To Bank A/c 2000

ii) Realisation A/c Dr 2000


To Vikram’s Capital A/c 2000

iii) Vikram’s Capital A/c Dr 2000


To Mohan’s Capital A/c 2000

iv) Vikram’s Capital A/c Dr 2000


To Bank A/c 2000

On the basis of the following case, answer the question number 1 to 4:


Gopal, Mohan and Sohan were partners in a firm sharing in 2:2:1. On 31st March
2021, they decided to dissolve the firm. On the date following was their position:
Balance Sheet
(as on 31.3.2021)
Liabilities ` Assets `
Creditors 50,000 Cash at bank 20,000
Gopal 1,10,000 S. Debtors 1,50,000
Mohan 90,000 Less: Provision 10,000 1,40,000
Sohan 70,000 2,70,000 Stock 60,000
Fixed Assets 1,00,000
3,20,000 3,20,000
The assets and liabilities of settled as follows:
(i) One of the creditors for `20,000 agreed to accept half of the stock in
full settlement. Balance of the creditors were paid at a discount of 5%.
(ii) Remaining half of the stock was sold in the market at a profit of 331%.
3
(iii) All other assets realised at rupees `2,00,000.
(iv) Sohan was appointed to look after all the dissolution procedure and hence,
he was allowed a remuneration of 15% on the cash realised to from sale of
assets.

13 What is the amount paid to creditors at the time of dissolution?


(A) `48,500
(B)
`30,000
(C)
`58,500
(D)
`28,500

14 State the amount realised from sale of


stock. (A) `33,333
(B)
`40,000
(C)
`30,000
(D)
`33,000

15 What is the amount of remuneration payable to


Sohan? (A) `36,000
(B) `30,000
(C) `6,000
(D)
`37,500

What is the amount of gain or loss on realisation?


16
(A) `76,000 Gain
(B) `76,000 Loss
(C) `74,500 Gain
(D) `74,500 Loss

On the basis of the following case, answer the question number 5 to 8:


X and Y were partners in a firm in equal ratio. Following was their balance sheet as
on 31st March 2021:
Balance Sheet
(as on
31.3.2021)
Liabilities ` Assets `
Provision for DD 5,000 Cash at Bank 15,000
Creditors 45,000 S. Debtors 80,000
Mrs. Y’s Loan 25,000 Stock 50,000
Capitals: Machinery 75,000
X 1,00,000 Profit & Loss A/C 20,000
Y 65,000 1,65,000
2,40,000 2,40,000
They dissolve the firm on the above date and following agreements were decided
upon:
(i) X took over a part of the stock at `18,000 being 10% less than its book
value. Balance of the stock was taken over by Y at 75% of its book value
less
`2,500.
(ii) One of the creditors of `20,000 agreed to accept a part of machine at an
agreed valuation of `25,000 being 25% more than its book value. Balance of
the creditors were paid in full.
(iii) Balance of the machine and the debtors were realised at `1,00,000.
17 State the amount at which stock was taken over by
Y: (A) `30,000
(B) `22,500
(C) `20,000
(D)
`24,000

18 What is the book value of the machine which was taken over by one of the
creditors? (A) `20,000
(B) `25,000
(C) `31,500
(D) None of the above

19 State the treatment of balance in profit and loss account appears on the asset side.
(A) Transfer to the credit side of partners’ capital account
(B) Transfer to the debit side of partners’ capital account
(C) Transfer to the credit side of realisation account
(D) Transferred to the debit side of realisation account

20 State the total amount paid to various external liabilities at the time of
dissolution. (A) `25,000
(B)
`55,000
(C)
`50,000
(D)
`20,000
ANSWER KEY
Q.No.1 (B) NIL
Q.No.2 (D) CashA/c
Q.No.3 (C) Rs. 75,000
Q.No.4 B) Rs. 500
Q.No.5 C) Rs. 20,000
Q.No.6 (C) Rs. 42,000
Q.No.7 (D) BankA/c
Q.No.8 (B) Partner’s Capital A/c
Q9 VIKRAM
Q 10 NO ENTRY
Q 11 VIKRAM DR 2500
TO BANK ACCOUNT 2500
Q 12 VIKRAM DR 2000
TO MOHAN 2000
Q.No.13 (D) `28,500
Q.No.14 (B) `40,000
Q.No.15 (A) `36,000
Q.No.16 (D) `74,500 Loss
Q.No.17 (C) `20,000
Q.No.18 (A) `20,000
Q.No.19 (B) Transfer to the debit side of partners’ capital account
Q.No.20 (C) `55,000

PREPARED BY THE PGTs ( COMMERCE ) OF BHUBANESWAR,


GUWAHATI, KOLKATA, RANCHI, SILCHAR AND TINSUKIA REGIONS.

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