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.

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

Liabilities	Amt(Rs)	Assets		Amt(Rs)
Capital A/cs		Cash at bank		48,8000
X        60,000		Debtors                                   32,000
Y        48,000		(-) Provision for Dubtful Debts       800		31,200
Z        24,000	1,32,000	Stock		24,000
Reserve	20,000	Furniture		8,000
Creditors	48,000	Building		88,000
	2,00,000			2,00,000

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

Particulars	Amt(Rs)
Debtors	28,000
Stock	20,000
Furniture	4,000
Building	1,00,000

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.

 

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

Liabilities		Rs.	Assets		Rs.
Creditors		25,000	Cash at Bank		2,000
Bills Payable		10,000	Debtors	20,000
General Reserve		27,000	Less ; Provision for Bad Debts	(2,000)	18,000
Workmen's Compensation Fund		3,000	Stock		25,200
Mrs. Prakash's Loan		5,000	Investments		20,000
Capital A/cs :			Bills Receivable		8,000
Prakash	60,000		Machinery		60,000
Kiran	40,000	1,00,000	Goodwill		6,000
			Profit & Loss A/c		19,800
			Rishab's Capital A/c		11,000
		1,70,000			1,70,000

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.

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:

Liabilites		Rs.	Assets	Rs.
Creditors		60,000	Debtors	32,000
Employees' Provident Fund		20,000	Investments	15,000
Commission received in Advance		10,000	Furniture	35,000
Bank Overdraft		23,000	Machinery	1,00,000
Capital A/cs			Stock	36,000
Deepak	60,000		Prepaid Expenses	3,000
Kavita	50,000		Profit & Loss A/c	22,000
Kiran	20,000	1,30,000
		2.43.000		2.43.000

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.

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

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

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

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