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Model Test Papers M.179

15. Manhad and Anhad were partners sharing profits and losses equally. The partners
decided to dissolve the firm. Their Balance Sheet as at 31st March, 2018 was as under:
Liabilities ` Assets `
Sundry Creditors 2,00,000 Goodwill 1,00,000
Bills Payable 2,00,000 Building 2,50,000
Bank Overdraft 80,000 Plant 2,22,000
Outstanding Expenses 20,000 Investments 1,53,000
Anahat’s Loan (Manhad’s Sister) 2,00,000 Stock 87,000
Anhad’s Loan 1,00,000 Debtors 1,70,000
Employees’ Provident Fund 12,000 Less: Provision for Doubtful Debts 20,000 1,50,000
General Reserve 20,000 Bills Receivable 1,00,000
Capital A/cs: Cash at Bank 1,30,000
Manhad 2,00,000 Profit and Loss A/c 20,000
Anhad 2,00,000 4,00,000 Advertisement Suspense A/c 20,000
12,32,000 12,32,000

The firm was dissolved on the following terms:
(i) Manhad agreed to pay Anahat’s loan.
(ii) Debtors of ` 50,000 proved bad.
(iii) Other assets realised as follows:
Plant ` 2,00,000; Building 100% more, Goodwill 60%.
(iv) Sundry creditors and bills payable were settled at 5% discount.
(v) Anhad accepted Stock at ` 80,000 and all Investments at ` 1,20,000 and Manhad
took over Bills Receivable at 20% discount.
(vi) Realisation Expenses amounted to ` 20,000.
Prepare the Realisation Account, Partners’ Capital Accounts and Bank Account.
Or
Pass necessary Journal entries on the dissolution of a firm in the following cases:
(a) Dharam, a partner, was appointed to look after the process of dissolution at a
remuneration of ` 12,000 and he had to bear the dissolution expenses. Dissolution
expenses ` 11,000 were paid by Dharam.
(b) Jay, a partner, was appointed to look after the process of dissolution and was
allowed a remuneration of ` 15,000. Jay agreed to bear dissolution expenses. Actual
dissolution expenses ` 16,000 were paid by Vijay, another partner on behalf of Jay.
(c) Deepa, a partner, was to look after the process of dissolution and for this work she
was allowed a remuneration of ` 7,000. Deepa agreed to bear dissolution expenses.
Actual dissolution expenses ` 6,000 were paid from the firm’s bank account.
(d) Dev, a partner, agreed to do the work of dissolution for ` 7,500. He took away stock
of the same amount as his commission. The stock had already been transferred to
Realisation Account.
(e) Jeev, a partner, agreed to do the work of dissolution for which he was allowed
a commission of ` 10,000. He agreed to bear the dissolution expenses. Actual
dissolution expenses paid by Jeev were ` 12,000. These expenses were paid by
Jeev by drawing cash from the firm.
(f) A debtor of ` 8,000 already transferred to Realisation Account agreed to pay the
realisation expenses of ` 7,800 in full settlement of his account. (6)