Give any one difference between reconstitution of firm and dissolution of a firm.

Give any one point of distinction between dissolution of partnership and dissolution of partnership firm.

How are assets taken over by a partner be recorded in the partnership books on dissolution?

Mention the account where you transfer the amount of cash in hand at the time of dissolution of firm.

Pass the necessary Journal entries for the following transactions on the dissolution of the firm of P and Q after the various assets (other than cash) and outside liabilities have been transferred to Realisation Account :
(i) Bank Loan Rs. 12,000 was paid.
(ii) Stock worth Rs. 16,000 was taken over by partner Q.
(iii) Partner P paid a creditor Rs. 4,000.
(iv) An asset not appearing in the books of accounts realised Rs. 1,200.
(v) Expenses of realisation Rs. 2,000 were paid by partner Q.
(vi) Profit on realisation Rs. 36,000 was distributed between P and Q in 5 : 4 ratio.

Hanif and Jubed were partners in a firm sharing profits in the ratio of their capitals.  On 31st March, 2013 their Balance Sheet was as follows:

                  Balance sheet of Hanif and Jubed

                         as on 31st March, 2013

On the above date the firm was dissolved.

  (i) Debtors were realised at a discount of 5%. 50% of the stock was taken over by Hanif at 10% less than the book value.  Remaining stock was sold for Rs. 65,000.

  (ii) Furniture was taken over by Jubed for Rs. 1,35,000. Machinery was sold as scrap for Rs. 74,000.

  (iii) Creditors were paid in full.

  (iv) Expenses on realisation Rs. 8,000 were paid by Hanif.

Prepare Realisation Account.

Prakash, Kiran and Rishab are partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1.  Their Balance Sheet as on 31st March 2014 Stood as follows :

                                  Balance sheet

                            as on 31st March, 2014

On the above date, the firm was dissolved and the following transactions took place :

(i) The assets were sold off for the following amounts :

(ii) Kiran took over the Bills Receivable at Rs. 7,000 and the Bills Payable at book value.

(iii) There was an unrecorded asset of Rs. 4,000 which was sold for Rs. 1,800.

(iv) Prakash agreed to pay to his wife's loan.

(v) A contingent liability for a bill discounted at Rs. 8,000 was settled by Prakash.

(vi) Creditors were settled at a discount of 10% and goodwill realised Rs. 5,000.

(Vii) Realisation expenses were Rs. 2,100 which were met by Kiran.

You are required to :

  (a) Pass the necessary Journal Entries.

  (b) Prepare the Realisation Account on the dissolution of the firm.

  (c) Prepare the Capital Accounts of the Partners.

X, Y, and Z were Partner sharing profits and losses in the ratio of 2:2:1. On 1st April 2015, their balance sheet was as under

Balance sheet

as at 1st April 2015

The firm was dissolved on that date. The assets realised were

The creditor were settled for Rs.44,000. It was found, however, that there was a liability of Rs.12,000 for damages which had to be paid. Realisation expenses amounted to Rs.4,000.
Prepare realisation account.

Deepak, Kavita and kiran are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1.  They decided to dissolve the partnership and appointed Deepak to realise the assets and pay the liabilities.  He is to receive 5% commission on the amounts finally paid to other partners as capital.  He was also to bear all the expenses of realisation.  The Balance Sheet of the firm on the date of dissolution was as follows:

Deepak realised the assets as follows: Debtors Rs. 24,000, Furniture Rs. 25,000, Machinery Rs. 80,000; stock at 60% of its book value and investments at 75% of its value. Expenses of realisation amounted to Rs. 2,000.  Firm had to pay Rs.5,000 for outstanding salaries not provided for earlier.  Commission received in advance is returned to the customer Rs. 25,000 had to be paid for employees' provident fund.
Prepare the necessary accounts.