Dissolution of Partnership Test

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Dissolution of Partnership Test - 6

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Weekly Quiz Competition

Question 1
1 / -0

A and B share profits and losses in the ratio of 5:2. They have decided to dissolve the firm. Assets and external liabilities have been transferred to Realisation A/c. It is found that an unrecorded Computer was realized ₹7,000. How would you record it?

A

Bank A/c Dr. To Computer A/c 7000 7000

B

Computer Dr. To Realisation A/c 7000 7000

C

Bank A/c Dr. To Realisation A/c 7000 7000

D

Bank A/c Dr. To Capital A/c 700 700

Solution

Unrecorded assets are directly realised i e sold off so it is recorded on credit side of realisation account
Question 2
1 / -0

A and B share profits and losses in the ration of 5:2. They have decided to dissolve the firm. Assets and external liabilities have been transferred to Realisation A/c. An unrecorded Stock worth ` 1,600 was taken over by B at ` 1,200. What should be journal entry?

A

B's Capital A/c Dr. To Realisation A/c 1600 1600

B

B's Capital A/c Dr. To Realisation A/c 400 400

C

B's Capital A/c Dr. To Realisation A/c 200 200

D

B's Capital A/c Dr. To Realisation A/c 1200 1200

Solution

If any unrecorded asset is taken over by the partner (any partner), it should be not be recorded at its actual value, instead, it should be recorded at the price at which asset is taken over. In this case B’s Capital Account should be debited and realization account should be credited by ₹1,200 and not by ₹1,600.
Question 3
1 / -0

Manik and Naman share the profits equally. They decided to dissolve their firm. Their liabilities were: Manik’s Capital ₹25,000; Naman’s Capital ₹30,000; Creditors ₹12,500; Bills payable ₹7,500; Assets of the firm realized ₹1, 00,000. Balance of cash/bank was nil in balance sheet. Find out profit on realisation.

A
₹7500

B
₹30000

C
₹30000

D
₹25000

Solution

Total of Liabilities side = Capitals 55,000 + 12,500 creditors + Bills Payable 7,500 = 75,000 It means total of assets side is also 75,000 (because both sides are always equal) There is no balance of cash or bank account, hence full amount of assets is transferred to the realization account ₹75,000 but realized amount is 1,00,000 (after payment of creditors and Bills payable). Realization profit will be 25,000.
Question 4
1 / -0

Nilay and Poppy were partners sharing profits equally. Their firm was dissolved. Nilay agreed to take over 50% of the stock at 10% less on its book value and the remaining stock was sold at a gain of 15%. Balance sheet show stock amounted ` 35000. By what amount Bank A/c (stockrealised) should be shown on credit side of realization account?

A
₹15500

B
₹20125

C
₹17750

D
₹20000

Solution

Actual stock transferred to the debit side of realization account ₹35,000.
Stock taken over by partner 50% of 35,000 = 17,500 – 10% = 15,750
Remaining stock = 35,000 – 17,500 = 17,500
Realised value of stock = 17,500 + 15% = 20,125
Question 5
1 / -0

Following is the Balance sheet of K and S who share profits and losses equally as on 31st march 2010. The firm was dissolved .Debtors realized ` 31,500 (with interest) and ` 1200 was recovered for bad debts written off last year. Balance sheet shows debtors amounted ` 25000 By what amount Bank A/c (Debtors realised) should be shown on credit side of the realization account?

A
36000

B
32500

C
31500

D
36200

Solution

Debtors realized ₹31,500 will be shown in the credit side of revaluation account. Do not include the amount of bad debts recovered in the amount of debtors realized .