Dissolution of Partnership Firm

Previous Years' CBSE Board Questions

4.1 Dissolution of Partnership

MCQ

1. Which of the following does not result into reconstitution of a firm?
2. Dissolution of partnership firm.

Particulars Dr. Amount Cr. Amount

(R) (7)

1. To Bank A/ 90,500 (b) Realisation A/c Dr. 77,775 To Bank A/c 77,775
2. Creditor's A/c Dr. 77,775 To Bank A/c 77,775
3. No entry

1. Dissolution of partnership.
2. Change in profit-sharing-ratio of existing partners.
3. Death of partner. (2020) U

4.2 Dissolution of a Firm

(2021 C)

VSA (1 mark)

State any two situations when a partnership firm can be compulsorily dissolved. (Delhi 2019)

1. Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership Firm' on the basis of 'Economic relationship'. (Delhi 2016, Al 2016)
2. Distinguish between 'Dissolution of Partnership' and Dissolution of Partnership Firm' on the basis of 'Closure of books'. (Delhi 2014)
3. Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership firm' on the basis of court's intervention. (Al 2014) R

SAI (2 marks)

ó. Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership Firm' on the basis of:

<math>\omega</math> Termination of business.

1. Settlement of assets and liabilities. (Term-II, 2021-22)
2. Distinguish between Dissolution of Partnership' and 'Dissolution of Partnership Firm' on the basis of:
3. Closure of books
4. Termination of business (2020) An

4.4 Accounting Treatment

MCQ

1. Total assets of a partnership firm which was dissolved were ₹30.00.000 and its total liabilities were ₹6,00,00. Assets were realised at 80% and liabilities were settled at 5% less. If dissolution expenses were ₹30,000, the profit or loss on dissolution was:

1. Profit ₹ 18,00,000 (b) Loss ₹6,00,000

1. Profit ₹ 6,00,000 (d) Loss ₹ 18,00,000

(2023)

1. At the time of dissolution of a partnership firm, a creditor worth ₹90,500 took away stock ₹77,775

in full settlement. Which of the following will be the

accounting entry for the same?

SAI (2 marks)

At the time of dissolution of a partnership firm, the

book value of sundry assets transferred to Realisation

Account was ₹2,00,000. 50% of these sundry assets

were taken by partner A at 20% discount, 40% of

remaining assets were sold at a profit of 30% on cost.

5% of the balance was found obsolete and realised

nothing. The remaining assets were taken over by a

creditor in full settlement of his claim. Pass necessary

journal entries for the above. (Al 2019)

SA II (3/4 marks)

Pass the necessary journal entries for the following

transactions on the dissolution in case of of the

partnership firm of X and Y after various assets (other

than cash and bank) and the third party liabilities

have been transferred to Realisation Account:

1. Dissolution expenses were ₹4,000.
2. Machinery of the book value of ₹50,000 was sold in the market for ₹47,000 for which a commission of ₹500 was paid to the broker.
3. A creditor for ₹70,000 accepted stock valued at ₹ 90,000 and paid to the firm ₹ 20,000.
4. Loss on realization ₹40,000 was divided between the partners X and Y in the ratio 5:3. (2021 C)

Gauray, Saurabh and Vaibhay were partners in a firm

sharing profits and losses in the ratio of 2:2:1. They

decided to dissolve the firm on 31st March, 2018.

After transferring Sundry assets (other than cash

in hand and cash at Bank) and third party liabilities

to realisation account, the assets were realised and

liabilities were paid off as follows: (1) (ii): Land and building (book value ₹3,00,000)

was sold for ₹4,00,000 through a broker who

charged 2% commission.

1. The remaining creditors were paid ₹76,000 in full settlement of their claim and the remaining assets were taken over by Vaibhav for ₹ 17,000.
2. Bank loan of ₹3,00,000 was paid along with interest of ₹21,000,

Pass necessary journal entries for the above transactions in the books of the firm. (Delhi 2019)

1. L and M were partners in a firm sharing profits in the ratio of 2: 3. On 28-2-2016, the firms was dissolved. After transferring assets (other than cash) and outsiders' liabilities to Realisation Account you are given the following information:
2. A creditor for ₹1,40,000 accepted machinery valued at ₹ 1,80,000 and paid to the firm ₹ 40,000.
3. A second creditor for ₹30,000 accepted machinery valued at ₹28,000 in full settlement of his claim.
4. A third creditor amounting to ₹70,000 accepted ₹30,000 in cash and investments of the book value of ₹ 45,000 in full settlement of his claim.
5. Loss on dissolution was ₹4,000.

Pass necessary journal entries for the above transactions in the books of the firm assuming that all payments were made by cheque. (Delhi 2016) [Ap]

1. Lal and Pal were partners in a firm sharing profits in the ratio of 3: 7. On 1.4.2015, their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to realisation account, you are given the following information:
2. A creditor of ₹3,60,000 accepted machinery valued at ₹5,00,000 and paid to the firm ₹ 1,40,000.
3. A second creditor for ₹50,000 accepted stock at ₹ 45,000 in full settlement of his claim.
4. A third creditor amounting to ₹90,000 accepted ₹45,000 in cash and investment worth ₹43,000 in full settlement of his claim.
5. Loss on dissolution was ₹15,000.

Pass necessary journal entries for the above transactions in the books of the firm assuming that all payments were made by cheque. (Al 2016)

LAI (5/6 marks)

Pass the necessary journal entries for the following transactions on the dissolution of the partnership firm of Tanay and Mehak after various assets (other than cash) and external liabilities have been transferred to Realisation Account:

1. Creditors of ₹60,000 accepted stock valued at ₹59,000 in full settlement of their claim.
2. Tanay agreed to pay off his wife's loan of ₹ 12,000.
3. The firm had a debit balance of ₹ 18,000 in the profit and loss account on the date of dissolution.
4. An unrecorded liability of ₹20,000 was paid by partner Mehak, at a discount of 10%.

(v). Tanay's loan of ₹4,000 was paid through a cheque.

(vi) Expenses on dissolution amounted to ₹11,000,

which were paid by Mehak. (2023)

T, U and V were partners in a firm sharing profits and

losses in the ratio of 2:1:2. Their firm was incurring

huge losses thus it had to be closed. After transferring

assets (other than cash in hand and bank) and third

party liabilities to Realisation Account the following

transactions took place:

1. T took away 50% of the stock at book value less 10% for ₹ 90,000 and the remaining stock was sold for ₹ 40,000.
2. Creditors of ₹ 78,000 took over machinery of ₹80,000 in full settlement of their claim.
3. ₹ 5,000 debtors previously written-off were recovered.
4. Mrs. V's loan of ₹ 72,000 was paid by the firm.
5. Loss on dissolution was ₹ 80,000.

Pass necessary journal entries for the above

transactions in the books of T, U and V.

(Term-II, 2021-22)

Give the necessary journal entries for the following

transactions on dissolution of the firm of Sonu and

Monu on 31st March, 2021, after transfer of various

assets (other than cash and bank balance) and the

third party liabilities to Reaslisation Account.

They shared profits and losses in the ratio of 2:1.

1. Sonu agreed to take over the firm's goodwill (not recorded in the books of the firm) at a valuation of ₹ 40,000.
2. Bills payable of ₹30,000 falling due on 30th April, 2021 were discharged at ₹29,550.
3. Stock worth ₹8,00,000 was taken over by partner, Sonu at 10% discount.
4. Creditors of ₹ 2,00,000 accepted machinery valued at ₹ 2,20,000 in full settlement of their claim.
5. Expenses of realisation ₹10,000 were paid by partner, Sonu. (Term-II, 2021-22) Ap

Naina, Uday and Tara were partners in a firm sharing

profits and losses in the ratio of 5:3:2. The firm

was dissolved on 31-3-2019. After transfer of assets

(other than cash) and external liabilities to Realisation

Account, the following transactions took place:

1. A typewriter completely written off from the books was sold for ₹4,000.
2. Loan of ₹30,000 advanced by Uday to the firm was paid back.
3. Tara was to get remuneration of ₹42,000 for completing the dissolution process and for bearing realisation expenses. Actual realisation expenses amounted to ₹51,000 and were paid by the firm.
4. Creditors of ₹23.000 took over all the investments at ₹ 12,000. Remaining amount was paid to them in cash.
5. Uday agreed to pay loan of Mrs. Uday ₹45,000.