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Chapter 8 Dissolution of a Partnership Firm 8.37
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The Creditors were settled for ` 22,000. It was found, however, that there was a liability of ` 6,000 for
damages which had to be paid. Realisation expenses amounted to ` 2,000.
Prepare Realisation Account, Partners’ Capital Accounts and Bank Account to close the books of the firm.
[Ans.: Loss on Realisation—` 5,600; Cash paid to A—` 31,760; B—` 25,760; C—` 12,880.]
11. J, S and R were in partnership sharing profits and losses in the ratio of 3 : 2 : 1. Their Balance Sheet as at
31st March, 2018 was:
Liabilities ` Assets `
Capital A/cs: Building 10,000
J 12,000 Plant 22,000
S 8,600 Stock 12,200
R 10,400 31,000 Debtors 5,000
Reserve Fund 3,000 Accrued Interest 1,000
Employees’ Provident Fund 3,000 Cash 2,800
Depreciation Reserve 5,000
Creditors 11,000
53,000 53,000
It was agreed to dissolve the firm and the terms of the dissolution were:
(a) J took Building at book value and agreed to pay Creditors.
(b) Accrued Interest was not collected whereas there was a contingent liability of ` 600 which was met.
(c) Other assets realised Plant—` 25,000; Stock—` 11,200; Debtors—` 4,600.
(d) Realisation expenses ` 600.
Prepare Realisation Account, Partners’ Capital Accounts and Cash Account.
[Ans.: Gain (Profit) on Realisation—` 4,400; Final Payments to Partners: J—` 16,700; S—` 11,067; R—` 11,633.]
12. Amal and Bimal were partners in a firm sharing profits in the ratio of 4 : 1. They decided to dissolve the
firm on 1st March, 2018. From the information given below, complete Realisation Account, Partners’ Capital
Accounts and Bank Account:
In the Books of Amal and Bimal
Dr. REALISATION ACCOUNT Cr.
Particulars ` Particulars `
To Assets: By Provision for Doubtful Debts A/c 2,000
Stock 10,000 By Creditors A/c 76,000
Debtors 40,000 By Amal’s Capital A/c (Stock) ?
Fixed Assets 80,000 1,30,000 By Bank A/c:
To Bank A/c (Creditors) ? Debtors 37,600
To Gain (Profit) transferred to: Fixed Assets 1,22,000 1,59,600
Amal’s Capital A/c ?
Bimal’s Capital A/c 7,920
2,45,600 2,45,600

Dr. PARTNERS’ CAPITAL ACCOUNTS Cr.
Particulars Amal Bimal Particulars Amal Bimal
` ` ` `
To Bank A/c (Realisation Expenses) 2,000 By Balance b/d 20,000 60,000
To Advertisement Expenditure A/c ? 200 By Reserve A/c 16,000 ?
To Realisation A/c (Stock) 8,000 By Realisation A/c 31,680 ?
To Bank A/c ? ?
67,680 71,920 67,680 71,920