Dissolution of a partner firm-Important Questions

IMPORTANT QUESTIONS

CHAPTER 7: Dissolution of a Partnership Firm

1. Write the difference between firm’s debts and private debts?
2. What journal entries would be passed in the books of A and B sharing profits and losses in the ratio of 5 : 2, for the following transactions on the dissolution of a firm, after various assets (other than cash) and third party liabilities would have been transferred to realization account:-
   
   1. Realization expenses amounted to Rs. 200. B one of the partners has to bear these expenses.
   2. B one of the partners agreed to take over the creditors of Rs. 3,000 for 2,000.
   3. A, one of the partners has given loan to the firm of Rs. 1,000. It was paid back to him at the time of dissolution.
   4. Profit and loss account balance of Rs. 5,600 appeared on the assets side of the balance sheet.
   5. Deferred revenue advertising expenditure appeared at Rs. 2,800
   6. An unrecorded investment of Rs. 700.
3. Write the difference between dissolution of firm and dissolution of partnership.
4. What can be the reasons for dissolution of partnership firm?
5. The following is the balance sheet of X, Y and Z as on 31-12-2017.
   

   Liabilities	Amount	Assets	Amount
   Creditors Bills payable Reserve fund Capitals:    X    Y    Z	15,000 1,800 6,000 22,000 12,000 10,000	Cash Debtors Investment Stock Furniture Buildings Goodwill	6,500 8,600 10,000 13,700 5,100 12,900 10,000
   	66,800		66,800

   It was decided to dissolve the partnership firm on the following terms:-
   
   1. X took over the goodwill at Rs.12000 and furniture at Rs. 4,500.
   2. Y took over creditor’s at book value.
   3. Z took over bills payable at book value.
   4. The other assets realized as under:-
      Debtors:   8000
      Investments:   8950
      Stock:   15600
      Buildings:   15750
   5. Realization expenses amounted to Rs. 600. Prepare:-
      
      1. Realization Account
      2. Partner’s capital Account
      3. Cash Account
6. X and Y were partners sharing profits in the ratio of 3 : 2. Give journal entries under the following:-
   
   1. Workmen compensation reserve was Rs. 70,000 and liability for it was Rs. 40,000.
   2. Workmen compensation reserve was Rs. 65,000 and liability was Rs. 70,000.
   3. Workmen compensation reserve was 60,000 and liability was 60,000.
   4. Workmen compensation reserve was zero and liability was Rs. 20,000.
   5. Workmen compensation Reserve in the balance sheet was Rs. 75,000 and there is no liability towards workmen compensation.