Dissolution of Partnership Test

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Dissolution of Partnership Test - 6

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Question 1
1 / -0

Amount realized from the sale of assets will be transferred to ______ Account _____ side

A
Cash, Credit

B
Partners Capital, Debit

C
Cash, Debit

D
Realisation, Debit

Solution

Amount realized from the sale of assets at the time of dissolution will be transferred to the cash account debit side.since sale of assets will increase cash.
Journal Entry : cash A/c Dr.
To Realisation Account
Question 2
1 / -0

Realisation expenses of ₹8,000 were to be borne and paid by Mr X (a partner). Give entry.

A

Realization A/c Dr 8000
To X‘s Capital account 8000

B

Bank A/c Dr 8000
To X‘s Capital account 8000

C

Realization A/c Dr 4000
To X‘s Capital account 4000

D
No Entry is to be recorded

Solution

There is no need to record this entry because all the expenses of realization will be borne and paid by the partner. When a partner is ready to pay and borne the realization expenses, in such a case we do not record it in the books of accounts.It becomes the personal expense of partner.
Question 3
1 / -0

After which account it is assumed that dissolution of firm stand closed?

A
Memorandum Balance Sheet

B
Realisation A/c

C
Cash A/c

D
Partners Capital A/c

Solution

At the time of the dissolution of a partnership firm, all accounts will be closed and at the end, cash or bank account is prepared. Both sides of as cash account will be equal automatically without adding any balancing figure at the end.
Question 4
1 / -0

Realisation expenses of Rs.6,000 were to be borne by a partner Ram. However these expenses were paid by Mohan. Give entry.

A
Mohan’s Capital A/c Dr. 6000
To Ram’s Capital A/c 6000

B
Realization A/c Dr. 6000
To Ram’s Capital A/c 6000

C
Ram’s Capital A/c Dr. 6000
To Mohan’s Capital A/c 6000

D
No Entry

Solution

the partner who, the expenses debited and the one who pays it is credited. Ram’s Capital account is debited because realization expenses to be borne by Ram.
Question 5
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. As unrecorded Entries to effect of Deferred Advertisement Expenditure A/c appeared in the book at ` 28,000 written off. What should be journal entry

A

A's Capital A/c Dr. 18000
B's Capital A/c Dr 10000
To Deferred Advertisement Expenditure A/c28000

B

B's Capital A/c Dr. 20000
A's Capital A/c Dr 8000
To Deferred Advertisement Expenditure A/c 28000

C

A's Capital A/c Dr. 20000
Capital A/c Dr 8000
To Deferred Advertisement Expenditure A/c 28000

D

A's Capital A/c Dr. 2000
B's Capital A/c Dr 8000
To Deferred Advertisement Expenditure A/c 28000

Solution

At the time of dissolution, all fictitious assets and accumulated losses should be debited to the partners’ capital accounts. this loss will be distributed among partners.
Question 6
1 / -0

If a partner has given any loan to the firm, his loan will be paid ____ payment of all the outside liabilities : but _____making any payment to partners on account of capital

A
at the time of, Before

B
Before, After

C
After, Before

D
After, at the time of

Solution

At the time of disolution of a partnership firm, all outsiders liabilities will be paid first, after that loan of the partner will be paid and then final payment is made to the partners on account of their capitals.
Question 7
1 / -0

Deferred Revenue expenditure given in B/S will be:

A
Debit to Realisation A/c

B
Debit to Partners’ capital/current A/c

C
Credit to Realisation A/c

D
Credit to partners’ capital A/c

Solution

All accumulated profits and losses and fictitious assets (if any) given in the balance sheet, will be debited to the old partners in their old profit sharing ratio at the time of dissolution of partnership firm.
Question 8
1 / -0

Partners’ Capital Account is which type of account

A
Personal Account

B
Real Account

C
Both Personal Account and Nominal Account

D
Nominal Account

Solution

Partners’ Capital Account is a Personal Account. Any account which is directly concerned with the natural persons, will be personal account. There are three types of personal account:
1.Natural Persons Personal Account
2.Artificial Persons Personal Account
3.Representative Personal Account
Question 9
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
₹17750

C
₹20000

D
₹20125

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 10
1 / -0

Z one partner was paid remuneration (including expenses) of ₹9,000 to carry out dissolution of the firm. Actual realization expenses were ₹11,500. How will you record this?

A
Realisation A/c Dr. 2500
To Z’s Capital A/c 2500

B
Realisation A/c Dr. 9000
To Z’s Capital A/c 9000

C
Realisation A/c Dr. 11500
To Z’s Capital A/c 11500

D
No Entry

Solution

Partner is getting Rs.9,000 remuneration but expenses paid by him Rs.11,500. He is paying Rs.2,500 from his pocket. In simple words, excess 2,500 will be paid and borne by the partner so it should not be recorded. We record only 9,000 which is paid by the firm.
Question 11
1 / -0

One partner, Ramesh is ready to pay the Bills Payable ₹8,000 at the time of dissolution. Actual value of Bills payable was ₹10,000. Give entry.

A
Realization A/c Dr. 8000
To Ramesh’s Capital A/c 8000

B
Realization A/c Dr. 2000
To Ramesh’s Capital A/c 2000

C
Realization A/c Dr. 10000
To Ramesh’s Capital A/c 2000

D
No Entry

Solution

Entry will recorded for the amount 8,000 only and not for the 10,000. since bills payable is liability being paid of realisation is debit and ramesh is credited.
Question 12
1 / -0

Creditor’s paid 42000 in full settlement of ₹ 45000. what should be the journal entry

A
RelisationA/cDr. 45000
To Bank A/c 45000

B
RelisationA/cDr. 42000
To Bank A/c 42000

C
RelisationA/cDr. 3000
To Bank A/c 3000

D
RelisationA/cDr. 50000
To Bank A/c 50000

Solution

When liabilities are paid bank account should be credited with the actual amount paid i.e. 42,000 and not with the total amount of liability i.e. 45,000.
Question 13
1 / -0

Goodwill given in the Balance Sheet will be shown in:

A
Debit side of Realisation A/c

B
Credit side of Partners capital A/c

C
Debit side of Partners capital A/c

D
Will not be shown in any account

Solution

Goodwill existing in the balance sheet of the firm will be transferred to the realization account debit side and realized value (if any) will be shown in the credit side of realization account. If realized value of goodwill is not given, it should be taken as nil.
Question 14
1 / -0

Unrecorded Asset taken over by the partner will not be shown in:

A
Cash A/c

B
Both B and Realisation A/c

C
Relisation A/c

D
Partners Capital A/c

Solution

the partner. If unrecorded asset is taken over by a partner, it will take place in realization account as well as in concerned partner’s capital account but not in cash account.
Question 15
1 / -0

If a partner takeover an assets such partner s account is ___

A
Credited

B
Debited

C
Both debit and credit

D
No Effect

Solution

Any asset taken over by the partner at the time of dissolution of a partnership firm, will be recorded in the debit side of his capital account as it reduces the capital of partner.
Question 16
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
₹20000

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 17
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
36200

B
31500

C
36000

D
32500

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 .
Question 18
1 / -0

What should be the journal entry when A takes over loan payable to Mrs. A ₹20000

A
RelisationA/cDr. 58000
To BankA/c 58000

B
RealisationA/cDr. 20000
To A’s CapitalA/c 20000

C
Bank A/Cdr. 58000
To A’s CapitalA/c 58000

D
LoanA/cDr. 58000
To A’s capital/c 58000

Solution

When a liability is taken over by a partner, in such a case do not use cash/bank account for the settlement of that liability.
Question 19
1 / -0

Vinod (one partner) agreed to take a creditor of ₹50,000 for 45,000. How would you record this transaction?

A
Realization A/c Dr. 50000
To Vinod’s Capital A/c 50000

B
Realization A/c Dr. 5000
To Vinod’s Capital A/c 5000

C
Realization A/c Dr. 45000
To Vinod’s Capital A/c 45000

D
No entry

Solution

Actual value of creditors (payable) is ₹50,000 but partner is agreed to settle this liability at ₹45,000. Hence, his capital account should be credited by ₹45,000 only.
Question 20
1 / -0

Current Accounts of the partners will be closed by ______

A
Transferring in Capital Account

B
Transferring in Cash Account

C
Transferring in Realisation Account

D
Both Transferring in Capital Account and Transferring in Realisation Account

Solution

When capitals of the partners are fixed, in such a case all the items (at the time of dissolution) will be transferred to the current accounts of the partners. After all adjustments current accounts will be closed by transferring the respective capital accounts of the partners.

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Dissolution of Partnership Test - 6

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Dissolution of Partnership Test - 6

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Question 1

Cash, Credit

Partners Capital, Debit

Cash, Debit

Realisation, Debit

Solution

Question 2

Realization A/c Dr 8000 To X‘s Capital account 8000

Bank A/c Dr 8000 To X‘s Capital account 8000

Realization A/c Dr 4000 To X‘s Capital account 4000

No Entry is to be recorded

Solution

Question 3

Memorandum Balance Sheet

Realisation A/c

Cash A/c

Partners Capital A/c

Solution

Question 4

Mohan’s Capital A/c Dr. 6000To Ram’s Capital A/c 6000

Realization A/c Dr. 6000To Ram’s Capital A/c 6000

Ram’s Capital A/c Dr. 6000To Mohan’s Capital A/c 6000

No Entry

Solution

Question 5

A's Capital A/c Dr. 18000 B's Capital A/c Dr 10000 To Deferred Advertisement Expenditure A/c28000

B's Capital A/c Dr. 20000 A's Capital A/c Dr 8000 To Deferred Advertisement Expenditure A/c 28000

A's Capital A/c Dr. 20000 Capital A/c Dr 8000 To Deferred Advertisement Expenditure A/c 28000

A's Capital A/c Dr. 2000 B's Capital A/c Dr 8000 To Deferred Advertisement Expenditure A/c 28000

Solution

Question 6

at the time of, Before

Before, After

After, Before

After, at the time of

Solution

Question 7

Debit to Realisation A/c

Debit to Partners’ capital/current A/c

Credit to Realisation A/c

Credit to partners’ capital A/c

Solution

Question 8

Personal Account

Real Account

Both Personal Account and Nominal Account

Nominal Account

Solution

Question 9

₹15500

₹17750

₹20000

₹20125

Solution

Question 10

Realisation A/c Dr. 2500To Z’s Capital A/c 2500

Realisation A/c Dr. 9000To Z’s Capital A/c 9000

Realisation A/c Dr. 11500To Z’s Capital A/c 11500

No Entry

Solution

Question 11

Realization A/c Dr. 8000To Ramesh’s Capital A/c 8000

Realization A/c Dr. 2000To Ramesh’s Capital A/c 2000

Realization A/c Dr. 10000To Ramesh’s Capital A/c 2000

No Entry

Solution

Question 12

RelisationA/cDr. 45000To Bank A/c 45000

RelisationA/cDr. 42000To Bank A/c 42000

RelisationA/cDr. 3000To Bank A/c 3000

RelisationA/cDr. 50000To Bank A/c 50000

Solution

Realization A/c Dr 8000
To X‘s Capital account 8000

Bank A/c Dr 8000
To X‘s Capital account 8000

Realization A/c Dr 4000
To X‘s Capital account 4000

Mohan’s Capital A/c Dr. 6000
To Ram’s Capital A/c 6000

Realization A/c Dr. 6000
To Ram’s Capital A/c 6000

Ram’s Capital A/c Dr. 6000
To Mohan’s Capital A/c 6000

A's Capital A/c Dr. 18000
B's Capital A/c Dr 10000
To Deferred Advertisement Expenditure A/c28000

B's Capital A/c Dr. 20000
A's Capital A/c Dr 8000
To Deferred Advertisement Expenditure A/c 28000

A's Capital A/c Dr. 20000
Capital A/c Dr 8000
To Deferred Advertisement Expenditure A/c 28000

A's Capital A/c Dr. 2000
B's Capital A/c Dr 8000
To Deferred Advertisement Expenditure A/c 28000

Realisation A/c Dr. 2500
To Z’s Capital A/c 2500

Realisation A/c Dr. 9000
To Z’s Capital A/c 9000

Realisation A/c Dr. 11500
To Z’s Capital A/c 11500

Realization A/c Dr. 8000
To Ramesh’s Capital A/c 8000

Realization A/c Dr. 2000
To Ramesh’s Capital A/c 2000

Realization A/c Dr. 10000
To Ramesh’s Capital A/c 2000

RelisationA/cDr. 45000
To Bank A/c 45000

RelisationA/cDr. 42000
To Bank A/c 42000

RelisationA/cDr. 3000
To Bank A/c 3000

RelisationA/cDr. 50000
To Bank A/c 50000

RelisationA/cDr. 58000
To BankA/c 58000

RealisationA/cDr. 20000
To A’s CapitalA/c 20000

Bank A/Cdr. 58000
To A’s CapitalA/c 58000

LoanA/cDr. 58000
To A’s capital/c 58000

Realization A/c Dr. 50000
To Vinod’s Capital A/c 50000

Realization A/c Dr. 5000
To Vinod’s Capital A/c 5000

Realization A/c Dr. 45000
To Vinod’s Capital A/c 45000