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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Pradeep and Paresh, partners sharing profits equally, decided to dissolve their firm on 1st April, 2025. Pradeep was deputed to realise the assets and pay off the liabilities and was paid ₹10,000 as commission for his services. The Balance Sheet as at 31st March, 2025 showed Sundry Creditors ₹1,29,400, Mrs. Pradeep’s Loan ₹40,000, Paresh’s Loan ₹24,000, Investment Fluctuation Reserve ₹8,000, Capitals – Pradeep ₹1,21,000, Paresh ₹1,21,000; Building ₹3,00,000, Investment ₹30,000, Debtors ₹71,400 less Provision for Doubtful Debts ₹4,000, Bank ₹16,000, Profit & Loss A/c (Dr.) ₹20,000, Goodwill ₹10,000. Terms: (a) Pradeep agreed to pay off his wife’s loan. (b) Investment was given to Paresh for ₹27,000. (c) Building realised ₹3,50,000. (d) Creditors, due to be paid after two months, were paid immediately at a 10% p.a. discount. (e) Realisation expenses were ₹2,500. Prepare the Realisation Account.
REALISATION ACCOUNT
| Particulars | ₹ | Particulars | ₹ |
|---|---|---|---|
| To Building A/c | 3,00,000 | By Sundry Creditors A/c | 1,29,400 |
| To Investment A/c | 30,000 | By Mrs. Pradeep’s Loan A/c | 40,000 |
| To Debtors A/c | 71,400 | By Investment Fluctuation Reserve A/c | 8,000 |
| To Goodwill A/c | 10,000 | By Provision for Doubtful Debts A/c | 4,000 |
| To Pradeep’s Capital A/c (Mrs. Pradeep’s Loan taken over) | 40,000 | By Paresh’s Capital A/c (Investment taken over) | 27,000 |
| To Pradeep’s Capital A/c (Commission) | 10,000 | By Bank A/c (Building realised) | 3,50,000 |
| To Bank A/c (Creditors paid, net of discount) | 1,27,243 | By Bank A/c (Debtors realised, in full) | 71,400 |
| To Bank A/c (Expenses) | 2,500 | ||
| By Gain transferred to: | |||
| Pradeep’s Capital A/c 19,329 | |||
| Paresh’s Capital A/c 19,328 | 38,657 | ||
| Total | 6,29,800 | Total | 6,29,800 |
Working Note: Discount on Creditors for 2 months’ early payment @10% p.a. = 1,29,400 × 10/100 × 2/12 = ₹2,157; amount paid = 1,29,400 – 2,157 = ₹1,27,243. Debtors were fully realised at their book value of ₹71,400. Gain of ₹38,657 shared equally, as no other ratio is specified: Pradeep ₹19,329; Paresh ₹19,328. Paresh’s Loan of ₹24,000, being a partner’s loan, is settled separately and does not pass through the Realisation Account.
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.21 - 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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