Based on the following, answer the questions: Meena and Tina are partners in a firm and sharing profit at 3:2. They decided to dissolve their firm on March 31, 2017, when their Balance Sheet was as follows: The assets and liabilities were disposed of as follows: (a) Machinery was given to creditors in full settlement of their account, and stock was given to bills payable in full settlement. (b) Investments were taken over by Tina at book value. Sundry debtors of book value ₹50,000 were taken over by Meena at 10% less, and remaining debtors realized ₹51,000. (c) Realisation expenses amounted to ₹2,000.Balance Sheet of Meena and Tina as at March 31, 2017
Liabilities Amount (₹) Assets Amount (₹) Capital: Machinery 70,000 Meena 90,000 Investments 50,000 Tina 80,000 Stock 22,000 Sundry Creditors 60,000 Sundry Debtors 1,03,000 Bills Payable 20,000 Cash at Bank 5,000 Total 2,50,000 Total 2,50,000
The amount paid/received to/from Meena and Tina on account of final settlement is:
Paid to Meena ₹32,400; paid to Tina ₹21,600
Final settlement involves adjusting the capital balances of partners based on profit-sharing ratios. Here, Meena receives ₹32,400 and Tina is paid ₹21,600.
Important Questions from Dissolution of a Partnership Firm
In case of dissolution of partnership firm, all assets, except cash/bank and fictitious assets, are transferred to debit side of:
Match List I with List II:
List – I List – II A. Dissolution Agreement I. When a partner becomes insane B. Dissolution by Court II. By the completion of venture C. Compulsory dissolution III. In accordance with contract between partners D. On happening of certain contingencies IV. Event making it impossible for partners to carry on business Choose the correct answer from the options given below:
Record journal entry for the following on dissolution of a firm:
Firm has a stock of ₹2,40,000. Arun, a partner, took over 50% of the stock at a discount of 15%.
The dissolution of a partnership firm takes place in the following order:
(A) Outsiders’ liabilities are paid out.
(B) Partner’s capital account is settled.
(C) All assets and outside liabilities are transferred to the realization account.
(D) Partner’s loan is repaid in proportion.
(E) Assets are sold and realized.
Choose the correct answer from the options given below:
At the time of dissolution of a partnership firm, the following accounting adjustments are considered:
(A) Partner’s current A/c is transferred to the respective partner’s loan A/c.
(B) Accumulated losses are transferred to the partner’s capital A/c in profit-sharing ratio.
(C) All assets except cash and fictitious assets are transferred to the debit side of Realisation A/c.
(D) Partners’ loans are transferred to Realisation A/c.
(E) All external liabilities are transferred to the credit side of Realisation A/c.
Choose the correct answer from the options given below:
