1.

X, Y and Z sharing profits and losses in the ratio of 2:2:1 agreed upon dissolution of their
partnership on 31.12.2017 on which date their balance sheet was as under:

Liabilities Amt Assets Amt

Capitals: 70,000 Fixed Assets 50,000

X 40,000

Y 30,000

Reserve Fund 10,000 Joint Life Policy Fund (at surrender 10,000
value)

Joint Life Policy Fund 10,000 Debtors 10,000 9500

Less: Provision (500)

Creditors 19,000 18,500 Stock at invoice price 10,000 8000

Less: Provision for discount (500) Less: Price loading (2000)

Salary Outstanding 2000 Investments 8000 7500

Less: Fluctuation fund (500)

Current A/c : Z 2000

Bank 23,500

1,10,500 1,10,500

Investments were taken over by X at Rs. 6,000, creditors of Rs. 10,000 were taken over by Y who has
agreed to settle account with them at Rs. 9,900. Remaining creditors were paid Rs. 7,500. Joint Life
Policy was surrendered and fixed assets realized Rs. 70,000, Stock and Debtors realised Rs. 7,000
and Rs. 9,000 respectively. One customer, whose account was written off as bad, now paid Rs. 800
which is not included in Rs. 9,000 mentioned above. There was an unrecorded asset estimated at Rs.
3,000, half of which was handed over to an unrecorded liability of Rs. 5,000 in settlement of claim of Rs.
2,500 and the remaining half was sold in the market which realised Rs. 1,300.

Y took over the responsibility of completing the dissolution and he is granted a salary of Rs. 400 per
month. Actual expenses amounted to Rs. 1100. Dissolution was completed and final payments were
made on 30th April, 2018.

You are required to prepare the Realisation Account, Capital Accounts and Bank Account.
 2. Ash, Blue and Green were partners sharing profits and losses as 2 : 2 : 1 . They dissolved their
firm when their Balance Sheet stood as follows :

Liabilities Amt Assets Amt

Capitals: 67,000 Cash at Bank 5000

Ash 41,000

Blue 26,000

General Reserve 15,000 Sundry Assets 97,000

Creditors 33,000 Green’s Capital 8000

Profit & Loss A/c (Dr.) 5000

1,15,000 1,15,000

Sundry assets realized Rs. 90,000 and the creditors were discharged at a discount of Rs. 2000. The
expenses of dissolution amounted to Rs. 2000. Green was declared insolvent and a final dividend of 50%
was realized from his private estate. Show the necessary accounts applying the Garner vs. Murray rule.

3. A,B,C are equal partners whose balance sheet as on December 31,2020 is as follows:

Liabilities Amt Assets Amt

Sundry Creditors 5000 Cash 50

A’s Loan 1000 Stock 800

Capital A/c: 1300 Debtors 1000

A : 800

B : 500

Machinery 2000
 Furniture 800

Land & Buildings 2000

B’s Capital 650

7300 7300

Due to lack of liquidity and weak financial position of the partners the firm is dissolved. A and C are not
able to contribute anything and a sum of Rs. 200 is received from B. All of them are declared insolvent.
The assets realised : Stock Rs. 500; Machinery Rs.1,000; Furniture Rs.200; Land & Buildings Rs. 800 and
Debtors Rs. 550 only. Realisation expenses amounted to Rs. 50. You are required to close the firm's
books.

4. Sachin, Rahul and Laxman were partners in a firm. They shared profits and losses equally .
Following is their balance sheet as on 31.03.2018.

Liabilities Amt Assets Amt

Capital A/c: 82,000 Land & Buildings 30,000

Sachin – 47,000

Laxman – 35,000

Sachin’s Loan 20,000 Plant & Machinery 35,000

Creditors 65,000 Furniture 5000

Stock 5000

Debtors 5000

Profit & Loss A/c 37,000

Capital A/c : Rahul 50,000

Due to weak financial condition, the partners decided to dissolve the firm. The assets realized as follows:

Land & Buildings – 26,000, Plant & Machinery - 30,000, Furniture – 3000, Stock – 3000 and Debtors –
2000. Expenses of realization amounted to Rs. 3500. Further information regarding partners are stated
below:

Private Estates Private Liabilities

Sachin 33,000 35,000

Rahul 27,000 36,000

Laxman 27,000 25,000

Prepare the necessary ledger accounts to close the books of the firm.

5. M/s XYZ is a partnership firm that is getting dissolved. The following information is extracted from
its records:

X Y Z

Balance of Capital Accounts 40,000 36,000 20,000

Profit sharing ratio 5 3 2

You are required to:

• Determine the Absolute Surplus

• Show the settlement of partners' capital accounts under Surplus Capital method

6. Rimi, Simi and Rakhi were partners in a firm. They shared profits and losses in the ratio of 5:3:2 .
Following is their balance sheet as on 31.03.2018.

Liabilities Amt Assets Amt

Sundry Creditors 40,000 Furniture 8000

Rimi’s Loan 16,000 Stock 52,000

Capital: 60,000 Cash at bank 4000

Rimi – 30,000

Simi – 24,000

Rakhi - 6000

1,28,000 1,28,000

The firm was dissolved on 1st April 2018 and the assets realized were as follows:

2018 Stock (Rs.) Debtors (Rs.) Furniture (Rs.) Expenses (Rs.)

April 30 12,000 10,000 3,000 1,000

June 30 12,000 10,000 -------- 1,600

July 31 16,000 30,000 4,000 3,000

August 31 10,000 4,000 ------- 1,000

Cash received was paid to the rightful claimants at the end of each month. Prepare the statement showing
the distribution of cash.

7. X, Y and Z are partners in a firm sharing profits and losses in the ratio of 4:3:3. The firm was
dissolved on 31.12.17 when its balance sheet showed the following position:
Liabilities Amt Assets Amt
Capital Accounts: Cash in Hand 2000
A 20,000
B 12,000
C 8000
40,000
Reserve Fund 8000 Bank 3000
Contingency Reserve 4000 Other Assets 65,000

A’s Loan 5000

70,000 70,000
The Partnership was dissolved and the assets are realized as follows:

1st Realisation – Rs. 12,000

2nd Realisation – Rs. 30,000

3rd Realisation – Rs. 15,000

Realisation expenses were estimated at Rs. 3000 but actual expenses was Rs. 2500 and paid on 3rd
realisation. C took stock worth Rs. 700 at the time of 2nd realization.

Prepare a statement showing how the distribution should be made by following ‘Surplus Capital
Method’.