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Chapter: Dissolution of Partnership Firm· Book-Keeping & Accountancy

Lal, Bal and Pal were partners sharing profits and losses in the ratio of 2 : 2 : 1. The following is the Balance Sheet as on 31st March, 2020.Balance Sheet as on 31st March, 2020LiabilitiesAmount (₹)AssetsAmount (₹)Capital Accounts:Machinery50,000La…

Q.3 Lal, Bal and Pal were partners sharing profits and losses in the ratio of 2 : 2 : 1. The following is the Balance Sheet as on 31st March, 2020.

Balance Sheet as on 31st March, 2020

LiabilitiesAmount (₹)AssetsAmount (₹)
Capital Accounts:Machinery50,000
Lal60,000Investment24,000
Bal20,000Debtors 55,000
(–) R.D.D. 3,000		52,000
Pal20,000Stock20,000
General reserve6,000Profit and Loss A/c18,000
Creditors48,000Bank4,000
Bills payable14,000
1,68,0001,68,000

On the above date the partners decided to dissolve the firm.

  1. Assets were realised as under: Machinery ₹ 45,000; Stock ₹ 18,000; Investment ₹ 21,000; Debtors ₹ 45,000.
  2. Dissolution expenses were ₹ 3,000.
  3. Goodwill of the firm realised ₹ 24,000.

Prepare: (a) Realisation Account (b) Partners’ Capital Account (c) Bank Account

OR

Journalise the following transactions in the books of Mr. Arvind.

  • (A) Bank informed that Sam’s acceptance for ₹ 30,000 sent to bank for collection has been honoured and bank charges debited ₹ 200.
  • (B) Arun informed Arvind that Neena’s acceptance for ₹ 25,000 endorsed to Arun has been dishonoured. Noting charges paid by Arun amounted to ₹ 400.
  • (C) Bank informed that Jay’s acceptance of ₹ 35,000 which was discounted with bank was dishonoured, bank paid noting charges ₹ 500.
  • (D) Arvind sold goods to Sagar for ₹ 20,000 on credit and drew a bill for two months on Sagar for the same amount.
  • (E) Neeta retired her acceptance to Arvind of ₹ 16,500 by paying cash ₹ 16,000.
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Answer: Realisation profit ₹ 4,000 (Lal ₹ 1,600, Bal ₹ 1,600, Pal ₹ 800); final payments Lal ₹ 56,800, Bal ₹ 16,800, Pal ₹ 18,400; Bank Account total ₹ 1,57,000.

Creditors and bills payable are taken as paid in full at book value, as nothing else is stated.

(a) Realisation Account

Dr. ParticularsAmount (₹)Cr. ParticularsAmount (₹)
To Machinery A/c50,000By R.D.D. A/c3,000
To Investment A/c24,000By Creditors A/c48,000
To Debtors A/c55,000By Bills Payable A/c14,000
To Stock A/c20,000By Bank A/c (assets realised):
Machinery 45,000
Stock 18,000
Investment 21,000
Debtors 45,000		1,29,000
To Bank A/c (creditors paid)48,000By Bank A/c (goodwill realised)24,000
To Bank A/c (bills payable paid)14,000
To Bank A/c (dissolution expenses)3,000
To Profit transferred to:
Lal's Capital A/c 1,600
Bal's Capital A/c 1,600
Pal's Capital A/c 800		4,000
2,18,0002,18,000

(b) Partners’ Capital Account

Dr. ParticularsLalBalPalCr. ParticularsLalBalPal
To Profit and Loss A/c (2 : 2 : 1)7,2007,2003,600By Balance b/d60,00020,00020,000
To Bank A/c (final payment)56,80016,80018,400By General Reserve A/c2,4002,4001,200
By Realisation A/c (profit)1,6001,600800
64,00024,00022,00064,00024,00022,000

(c) Bank Account

Dr. ParticularsAmount (₹)Cr. ParticularsAmount (₹)
To Balance b/d4,000By Realisation A/c (creditors)48,000
To Realisation A/c (assets realised)1,29,000By Realisation A/c (bills payable)14,000
To Realisation A/c (goodwill)24,000By Realisation A/c (expenses)3,000
By Lal's Capital A/c56,800
By Bal's Capital A/c16,800
By Pal's Capital A/c18,400
1,57,0001,57,000

The debit balance of Profit and Loss Account (accumulated loss) is debited and the general reserve credited to partners in 2 : 2 : 1. After the final payments the Bank Account closes automatically.

OR: Journal entries in the books of Mr. Arvind

ParticularsDebit (₹)Credit (₹)
(A) Bank A/c ............ Dr.
Bank Charges A/c ............ Dr.
To Bills Sent for Collection A/c
(Being Sam's acceptance sent for collection honoured; bank charges debited)		29,800
200

30,000
(B) Neena's A/c ............ Dr.
To Arun's A/c
(Being Neena's acceptance endorsed to Arun dishonoured; bill amount 25,000 + noting charges 400)		25,400
25,400
(C) Jay's A/c ............ Dr.
To Bank A/c
(Being Jay's discounted acceptance dishonoured; bill amount 35,000 + noting charges 500 paid by bank)		35,500
35,500
(D) (i) Sagar's A/c ............ Dr.
To Sales A/c
(Being goods sold to Sagar on credit)		20,000
20,000
(ii) Bills Receivable A/c ............ Dr.
To Sagar's A/c
(Being Sagar's acceptance received for 2 months)		20,000
20,000
(E) Cash A/c ............ Dr.
Rebate on Bills A/c ............ Dr.
To Bills Receivable A/c
(Being Neeta's acceptance retired before due date at a rebate of 500)		16,000
500

16,500

In (B) and (C) the noting charges are recovered from the drawee, so the drawee's account is debited with the bill amount plus noting charges.

Doubtly AI · 29 Oct 2026 AI-generated · not yet verified Report
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