Dissolution of Partnership Test

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Dissolution of Partnership Test - 19

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Question 1
1 / -0

Total creditors of the firm (already transferred to Realisation Account) were ₹30,000. Out of this, creditors waived their claim of ₹5,000 while the rest agreed to allow discount @ 10% of their respective claim.

A

Bank A/c Dr. 22,500
To Realization A/c 22,500

B

Realization A/c Dr. 22,500
To Bank A/c 22,500

C

Bank A/c Dr. 25,000
To Realization A/c 25000

D

Realization A/c Dr. 25,000
To Bank A/c 25,000

Solution

Calculation of the amount paid to the creditors in full settlement:

Total amount due to the creditors = 30,000

Amount waived by the creditors = 5,000

Amount due after deducting the amount waived by creditors = 30,000 – 5,000 = 25,000

Final Payment = 25,000 – 10% Discount = 22,500
Question 2
1 / -0

Asset taken over by partner will be shown in:

A
Credit side of Cash A/c

B
Credit side of Realization A/c

C
Debit side of Cash A/c

D
Debit side of Realization A/c

Solution

Any asset taken by a partner will be shown in the credit side of realization account and in partner’s capital account.
Question 3
1 / -0

All the assets of the firm are _____ and all outsiders’ liabilities and partners’ loan and partners capitals are ___ at the time of dissolution of firm.

A
Realised , Paid

B
Acquired , Paid

C
Paid , Disposed Off

D
Disposed Off , Acquired

Solution

At the time of dissolution of a partnership firm, all assets available in the business will be realized (sold) and all liabilities will be paid off.
Question 4
1 / -0

Realisation Account is differ from Revaluation Account as

A
Prepared only once during the life of a firm

B
prepared at three times during the life of a firm

C
prepared at a number of times during the life of a firm

D
Prepared only twice during the life of a firm

Solution

Realization Account is prepared only once in the life time of the firm i.e. at the time of dissolution. Revaluation account is prepared at the time of reconstitution of partnership firm i.e. change in existing profit sharing ratio, admission of a partner, retirement of a partner, death of a partner etc.
Question 5
1 / -0

One Creditor worth ₹4,500 took over stock valued at Rs.5,200 in full satisfaction of his claim.

A

Creditors A/c Dr. 4,500
To Realization A/c 4,500

B
No Entry is required

C

Creditors A/c Dr. 5,400
To Assets A/c 5,400

D

Creditors A/c Dr. 4,500
To Bank A/c 4,500

Solution

If any asset is taken over by the external liabilities for the full settlement of their due amount, in such a case no need to record any journal entry.
Question 6
1 / -0

In which circumstances partners’ can dissolve the firm without interference of the court?

A
When business of the firm cannot be carried on except at a loss

B
When a partner has become of unsound mind

C
When a partner is found guilty of breath of contract frequently

D
Mutual Agreement

Solution

when all the partners agree to close down the business, partners can dissolve the firm without interference of the court that is mutual agreement.
Question 7
1 / -0

Pooja (one partner) agreed to pay off her husband’s loan Rs.14,000. What journal entry should take place for the same?

A

Pooja’s Capital A/c Dr. 14000
To Realization Account 14000

B

Realization A/c Dr. 14000
To Bank A/c 14000

C

Realization A/c Dr. 14000
To Pooja’s Capital A/c 14000
.

D

Realization A/c Dr. 14000
To Loan A/c 14000

Solution

When liability is paid off it is debited in the realization account and since partner is paying it partner is credited.
Question 8
1 / -0

Dissolution by court will take place only when ____________

A
Death of a partner

B
Partnership term is expired

C
On completion of venture

D
A partner becomes a person of unsound mind

Solution

Dissolution by Court: At the suit of a partner, the court may order a partnership firm to be dissolved when a partner becomes insane.
Question 9
1 / -0

Realisation Account is:

A
Personal Account

B
P/L Adjustment A/c

C
Nominal Account

D
Real Account

Solution

Nature of realization account is of Nominal account. All incomes are credited and all losses are debited.
Question 10
1 / -0

What journal entry will take place when amount of liability is less than the amount of workmen compensation reserve?

A

Workmen Compensation Reserve A/c Dr.
To Bank A/c
To Partner’s Capital A/c

B

Workmen Compensation Reserve A/c Dr.
To Realization A/c
To Partner’s Capital A/c

C

Realization A/c Dr.
To Partners Capital A/c
To Workmen Compensation Reserve

D

Realisation A/c Dr.
To Workmen Compensation Reserve

Solution

Following journal entry will take place:

Workmen Compensation Reserve A/c Dr.

To Realisation A/c

To Partner’s Capital A/c

Note: Amount equal to the liability should be transferred to the Realization Account and the balance amount is credited to the capital accounts of the partners in their profit sharing ratio.

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Dissolution of Partnership Test - 19

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Dissolution of Partnership Test - 19

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Question 1

Bank A/c Dr. 22,500 To Realization A/c 22,500

Realization A/c Dr. 22,500 To Bank A/c 22,500

Bank A/c Dr. 25,000 To Realization A/c 25000

Realization A/c Dr. 25,000 To Bank A/c 25,000

Solution

Question 2

Credit side of Cash A/c

Credit side of Realization A/c

Debit side of Cash A/c

Debit side of Realization A/c

Solution

Question 3

Realised , Paid

Acquired , Paid

Paid , Disposed Off

Disposed Off , Acquired

Solution

Question 4

Prepared only once during the life of a firm

prepared at three times during the life of a firm

prepared at a number of times during the life of a firm

Prepared only twice during the life of a firm

Solution

Question 5

Creditors A/c Dr. 4,500 To Realization A/c 4,500

No Entry is required

Creditors A/c Dr. 5,400 To Assets A/c 5,400

Creditors A/c Dr. 4,500 To Bank A/c 4,500

Solution

Question 6

When business of the firm cannot be carried on except at a loss

When a partner has become of unsound mind

When a partner is found guilty of breath of contract frequently

Mutual Agreement

Solution

Question 7

Pooja’s Capital A/c Dr. 14000 To Realization Account 14000

Realization A/c Dr. 14000 To Bank A/c 14000

Realization A/c Dr. 14000 To Pooja’s Capital A/c 14000 .

Realization A/c Dr. 14000 To Loan A/c 14000

Solution

Question 8

Death of a partner

Partnership term is expired

On completion of venture

A partner becomes a person of unsound mind

Solution

Question 9

Personal Account

P/L Adjustment A/c

Nominal Account

Real Account

Solution

Question 10

Workmen Compensation Reserve A/c Dr. To Bank A/c To Partner’s Capital A/c

Workmen Compensation Reserve A/c Dr. To Realization A/c To Partner’s Capital A/c

Realization A/c Dr. To Partners Capital A/c To Workmen Compensation Reserve

Realisation A/c Dr. To Workmen Compensation Reserve

Solution

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Bank A/c Dr. 22,500
To Realization A/c 22,500

Realization A/c Dr. 22,500
To Bank A/c 22,500

Bank A/c Dr. 25,000
To Realization A/c 25000

Realization A/c Dr. 25,000
To Bank A/c 25,000

Creditors A/c Dr. 4,500
To Realization A/c 4,500

Creditors A/c Dr. 5,400
To Assets A/c 5,400

Creditors A/c Dr. 4,500
To Bank A/c 4,500

Pooja’s Capital A/c Dr. 14000
To Realization Account 14000

Realization A/c Dr. 14000
To Bank A/c 14000

Realization A/c Dr. 14000
To Pooja’s Capital A/c 14000
.

Realization A/c Dr. 14000
To Loan A/c 14000

Workmen Compensation Reserve A/c Dr.
To Bank A/c
To Partner’s Capital A/c

Workmen Compensation Reserve A/c Dr.
To Realization A/c
To Partner’s Capital A/c

Realization A/c Dr.
To Partners Capital A/c
To Workmen Compensation Reserve

Realisation A/c Dr.
To Workmen Compensation Reserve