DK Goel Accountancy Class 12 Solutions Chapter 5 Dissolution of a Partnership Firm which is outlined by expert Accountancy teachers from the latest version of DK Goel Accountancy Class 12 textbook solutions. We at CoolGyanS provide DK Goel Solutions to assist students to comprehend all the theories in particular. Learn more concepts in Accountancy, however, the concepts of Admission of a partner, Accounting Ratios and Cash Flow Statement (As per AS 3 Revised) is required.
DK Goel Solutions Class 12 Chapter 5 Part A
A, B and C were partners in a company sharing profits in the ratio 4:3:3. On 1-4-2015 they decided to dissolve the company. On that date, As capital was 1,25,000, Bs capital was 45,000 and Cs capital was 15,000(Dr.). The creditors amounted to 23,150 and cash in hand was 3,920. The assets realized 1,44,910 and the expenses of dissolution were 1,860. Prepare realization account and show your working clearly.
Solution:Balance Sheet as on 1st April 2015LiabilitiesAssetsCreditors23,150Cash in Hand3,920Capital Accounts:Cs Capital (Dr.)15,000A1,25,000Sundry Assets(Balancing Fig.)1,74,230B45,0001,70,0001,93,1501,93,150Dr.Realization AccountCr.ParticularParticularTo Sunder Assets1,74,230By Creditors23,150To Cash (Creditors paid)23,150By Cash (Assets realized)1,44,910To Cash (Expenses)1,860By Loss on Realization transferred to:As Capital A/c12,472Bs Capital A/c9,354Cs Capital A/c9,35431,1801,99,2401,99,240
Give the necessary journal entries in each of the following alternative cases:
(i) Realization expenses amounted to 500
(ii) Realization expenses paid by the company amounted to 500 and the partner has to bear the realization expenses
(iii) A one of the partners was to bear all the realization expenses for which he was given a commission of 2% of net cash realized from dissolution. Cash realized from assets was 25,000 and cash paid for liabilities amounted to 5,000
Solution:JournalDateParticularsL.FDr.()Cr.()(i)Realization A/cDr.500To Bank A/c
(Payment of realization expenses)500(ii)Partners Capital A/cDr.500To Bank A/c
(Payment of realization expenses by the firm on behalf of the partner)500(iii)Bank A/cDr.25,000To Realization A/c
(Amount realized on the sale of assets)25,000Realization A/cDr.5,000To Bank A/c
(Amount paid for liabilities)5,000Realization A/cDr.400To As Capital A/c
(Commission allowed to A @2% on 20,000 i.e 25,000 5,000)400
A and B share profits and losses in the ratio of 3:2. They have decided to dissolve the firm. Assets and external liabilities have been transferred to realization A/c. Pass the journal entries to affect the following.
(1) Bank Loan of 12,000 is paid off.
(2) A was to bear all expenses of realization for which he is given a commission of 400
(3) Deferred Advertisement Expenditure A/c appeared in the book at 28,000
(4) Stock worth 1,600 was taken over by B at 1,200
(5) An unrecorded computer realized 7,000
(6) There was an outstanding bill of repairs for 2,000, which was paid off.
Solution:JournalDateParticularsL.FDr.()Cr.()1Realization A/cDr.12,000To Bank A/c
(Bank loan discharged)12,0002Realization A/cDr.400To As Capital A/c
(Commission payable to A)4003As Capital A/c
Bs Capital A/cDr.
11,200To Deferred Advertisement Expenditure A/c
(Transfer of fictitious asset to partners capital accounts)28,0004Bs Capital A/cDr.1,200To Realization A/c
(Stock taken over by B)1,2005Bank A/cDr.7,000To Realization A/c
(Amount realized from unrecorded computers)7,0006Realization A/cDr.2,000To Bank A/c
(Payment of outstanding repairs)2,000
If the total assets are 5,00,000, total liabilities are 1,00,000, the amount realized on the sale of assets is 4,20,000 and realization expenses are 5,000, what will be the profit or loss on realization?
Profit and loss of realization can be calculated by preparing a realization account as follows.Realization AccountParticularParticularTo Assets
To Bank(Liabilities paid)
To Bank(expenses of realization)5,00,000
By Bank(Assets realized)1,00,000
4,20,000By Capital A/c
(Loss on realization)85,0006,05,0006,05,000
Must Read: Dissolution of Partnership Firm
Stay tuned to CoolGyanS for more DK Goel solutions, question papers, sample papers, syllabus and Commerce notifications.DK Goel Accountancy Solutions Class 12 Part A (Chapter wise)Chapter 1 Accounting for Partnership Firms FundamentalsChapter 2 Change in Profit Sharing Ratio Among the Existing PartnersChapter 3 Admission of a partnerChapter 4 Retirement or Death of a Partner