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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Aman and Harsh (equal partners) decided to dissolve their firm. Pass the necessary Journal entries for the following after various assets (other than Cash and Bank) and third-party liabilities have been transferred to the Realisation Account: (a) There was furniture worth ₹50,000. Aman took over 50% of the furniture at a 10% discount, and the remaining furniture was sold at a 30% profit on book value. (b) The Profit and Loss Account showed a credit balance of ₹15,000 on the date of dissolution. (c) Harsh’s loan of ₹6,000 was discharged at ₹6,200. (d) The firm paid realisation expenses of ₹5,000 on behalf of Harsh, who was to bear these expenses. (e) There was a bill for ₹1,200 under discount, received from Soham, who proved insolvent; a first and final dividend of 25% was received from his estate. (f) Creditors to whom the firm owed ₹6,000 accepted stock of ₹5,000 at a discount of 5%, and the balance in cash.
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| (a) | ||||
| Aman’s Capital A/c Dr. | 22,500 | |||
| Bank A/c Dr. | 32,500 | |||
| To Realisation A/c | 55,000 | |||
| (Aman took over 50% of the furniture, ₹25,000, at 10% discount = ₹22,500; the rest sold at 30% profit = ₹32,500) | ||||
| (b) | ||||
| Profit and Loss A/c Dr. | 15,000 | |||
| To Aman’s Capital A/c | 7,500 | |||
| To Harsh’s Capital A/c | 7,500 | |||
| (Accumulated profit distributed equally) | ||||
| (c) | ||||
| Harsh’s Loan A/c Dr. | 6,000 | |||
| Realisation A/c Dr. | 200 | |||
| To Bank A/c | 6,200 | |||
| (Harsh’s loan discharged at a premium of ₹200) | ||||
| (d) | ||||
| Harsh’s Capital A/c Dr. | 5,000 | |||
| To Bank A/c | 5,000 | |||
| (Expenses that Harsh had agreed to bear personally, paid by the firm and recovered from him) | ||||
| (e) | ||||
| Bank A/c Dr. | 300 | |||
| To Realisation A/c | 300 | |||
| (25% dividend received from Soham’s estate) | ||||
| Realisation A/c Dr. | 1,200 | |||
| To Bank A/c | 1,200 | |||
| (Full amount of the dishonoured, discounted bill paid to the bank) | ||||
| (f) | ||||
| Realisation A/c Dr. | 1,250 | |||
| To Bank A/c | 1,250 | |||
| (Balance of Creditors’ claim – ₹6,000 less stock accepted at 5% discount on ₹5,000, i.e. ₹4,750 – paid in cash) | ||||
| Closing entry — loss on dissolution | ||||
| Aman’s Capital A/c Dr. | 4,000 | |||
| Harsh’s Capital A/c Dr. | 4,000 | |||
| To Realisation A/c | 8,000 | |||
| (Loss on dissolution transferred to Partners’ Capital Accounts equally) | ||||
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 7 Q.14 - Dissolution of a Partnership Firm", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 7 - Dissolution of a Partnership Firm.
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