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M.412 An Aid to Accountancy—CBSE XII

15. S and P were partners in a firm sharing profits in the ratio of 1 : 4. On 31st March,
2018, the court ordered for the dissolution of the firm since P was found of misconduct
and for the consistent breach of the partnership agreement. On the date of dissolution,
the Balance Sheet of the firm was as follows:
BALANCE SHEET OF S AND P
as at 31st March, 2018
Liabilities ` Assets `
Capital A/cs: Land and Building 4,00,000
S 1,00,000 Machinery 1,50,000
P 4,00,000 5,00,000 Investments 2,00,000
Investments Fluctuation Reserve 50,000 Debtors 2,00,000
Sundry Creditors 3,00,000 Cash 50,000
P’s Loan 1,50,000
10,00,000 10,00,000
Assets and Liabilities were settled as follows:
(i) Land and Building was taken over by Land Development Authority paying ` 6,00,000.
(ii) Investments were taken over by ‘P’ for cash payment of ` 1,60,000.
(iii) Sundry Creditors accepted Machinery and Debtors in full settlement of their claim.
Pass necessary Journal entries for dissolution of the firm.
Or
X, Y and Z were partners sharing profits in the ratio of 2 : 2 : 1. The Balance Sheet as
at 31st March, 2018, when they dissolved the firm, was as follows:
Liabilities ` Assets `
Capital A/cs: Other Sundry Assets 1,17,000
X 1,27,500 Furniture 11,000
Y 1,10,000 Debtors 1,24,200
Z 17,000 2,54,500 Less: Provision for Doubtful Debts 1,200 1,23,000
Loan 11,500 Stock 17,800
Creditors 16,000 Cash 13,200
2,82,000 2,82,000

It was agreed that:
(i) Z to take furniture at ` 8,000 and debtors amounted to ` 1,20,000 at ` 1,17,200.
He is to pay creditors of ` 16,000.
(ii) X is to take all stocks for ` 17,000 and some of the Other Sundry Assets at ` 72,000
(being 10% less than the book value).
(iii) Y to take remaining Other Sundry Assets at 80% of the book value and assume
the responsibility to discharge loan together with accrued interest of ` 2,300.
(iv) Expenses of realisation were ` 2,700. Remaining debtors were sold to a debt
collecting agency at 50% of the value.
Prepare necessary accounts to close the books of the firm. (6)