Class 12 Accountancy Chapter 4 NCERT Solutions: Dissolution of Partnership Firm

The Dissolution of Partnership Firm chapter explains the accounting treatment followed when a partnership firm is wound up. Questions may involve transferring assets and liabilities to the Realisation Account, recording the sale of assets, paying liabilities, adjusting realisation expenses, and settling the partners' accounts.

The Class 12 Accountancy Chapter 4 NCERT Solutions below provide step-by-step solutions to selected important numerical questions. If you are revising other Accountancy chapters as well, you can also refer to the Class 12 Accountancy resources available on PW.

Important Numericals: Dissolution of Partnership Firm Class 12 NCERT Solutions

The following solutions cover important numerical questions from the chapter. Try each question yourself before checking the solution to understand where your calculation or accounting treatment differs.

Question 1

Journalise the following transactions regarding Realisation expenses:

1. Realisation expenses amounted to Rs. 2,500.

2. Realisation expenses of Rs. 3,000 were paid by Ashok, one of the partners.

3. Realisation expenses of Rs. 2,300 were borne personally by Tarun.

4. Amit, a partner, was appointed to realise the assets at a cost of Rs. 4,000. The actual amount of realisation was Rs. 3,000.

Solution:

(a) Realisation expenses paid by the firm:

(b) Expenses paid by Ashok:

(c) Expenses borne personally by Tarun:

No entry is passed because Tarun bears the expenses personally.

(d) Amit is entitled to Rs. 4,000 for realising the assets:

Answer: Realisation expenses paid by the firm are debited to Realisation A/c, while expenses paid by a partner on behalf of the firm are credited to that partner's Capital A/c.

Question 2

The book value of assets other than cash and bank transferred to Realisation Account is Rs. 1,00,000. Atul takes over 50% of the assets at a discount of 20%. Of the remaining assets, 40% are sold at a profit of 30% on cost. Five per cent of the balance becomes obsolete and realises nothing. The remaining assets are handed over to a creditor in full settlement.

Solution:

Assets transferred to Realisation Account:

= Rs. 1,00,000

Assets taken over by Atul:

= Rs. 1,00,000 × 50%
= Rs. 50,000

Value taken over after 20% discount:

= Rs. 50,000 × 80%
= Rs. 40,000

Remaining assets:

= Rs. 1,00,000 − Rs. 50,000
= Rs. 50,000

40% of remaining assets sold:

= Rs. 50,000 × 40%
= Rs. 20,000

Sale value at 30% profit:

= Rs. 20,000 × 130%
= Rs. 26,000

No entry is required for the obsolete assets or the assets handed over to the creditor because these assets have already been transferred to the Realisation Account.

Journal Entries:

Answer: Atul takes over assets worth Rs. 40,000, while the remaining realised assets generate Rs. 26,000 in cash.

Question 3

Record the journal entries for the following unrecorded assets:

1. Old furniture written off from the books is sold for Rs. 3,000.

2. A customer whose debt of Rs. 1,000 had previously been written off as bad pays 60%.

3. Goodwill not recorded in the books is taken over by Paras at Rs. 30,000.

4. An unrecorded typewriter estimated at Rs. 400 is taken over by Priya at 25% less than the estimated value.

5. 100 shares of Rs. 10 each, valued at Rs. 6 per share, are divided between the partners in their profit-sharing ratio.

Solution:

(1) Old furniture sold:

= Rs. 3,000

(2) Bad debt recovered:

= Rs. 1,000 × 60%
= Rs. 600

(3) Goodwill taken over by Paras:

(4) Typewriter taken over by Priya:

= Rs. 400 × 75%
= Rs. 300

(5) Shares taken over:

= 100 × Rs. 6
= Rs. 600

The amount is divided between the partners according to their profit-sharing ratio.

Question 4

Arti and Karim are partners. On dissolution:

• Arti takes over stock worth Rs. 80,000 for Rs. 68,000.

• An unrecorded bike worth Rs. 40,000 is taken over by Karim.

• The firm pays Rs. 40,000 as employee compensation.

• Creditors of Rs. 36,000 are settled at a discount of 15%.

• Loss on Realisation is Rs. 42,000, shared by Arti and Karim in the ratio 3:4.

Pass the necessary journal entries.

Solution:

Stock taken over by Arti:

= Rs. 68,000

Creditors paid:

= Rs. 36,000 × 85%
= Rs. 30,600

Loss on Realisation:

Arti's share:

= Rs. 42,000 × 3/7
= Rs. 18,000

Karim's share:

= Rs. 42,000 × 4/7
= Rs. 24,000

Journal Entries:

Question 5

Rose and Lily share profits in the ratio 2:3. Their firm is dissolved. Assets, other than Bills Receivable, realise Rs. 4,84,000. Bills Receivable are taken over by Rose. Creditors accept Rs. 38,000, realisation expenses are Rs. 2,400, and an unrecorded motorcycle is sold for Rs. 10,000. Prepare the Realisation Account, Partners' Capital Accounts, Loan Account and Cash Account.

Solution:

The major realisation items are:

• Assets transferred to Realisation Account = Rs. 4,00,000 approximately

• Assets realised in cash = Rs. 4,94,000, including the unrecorded motorcycle.

• Creditors settled = Rs. 38,000

• Realisation expenses = Rs. 2,400

• Bills Receivable taken over by Rose = Rs. 33,000

• Profit on Realisation = Rs. 15,600

Profit is distributed in the ratio 2:3:

Rose:

= Rs. 15,600 × 2/5
= Rs. 6,240

Lily:

= Rs. 15,600 × 3/5
= Rs. 9,360

The amount due to Lily as a loan is settled separately after the external liabilities are dealt with.

Answer:

• Profit on Realisation = Rs. 15,600

• Rose's share of profit = Rs. 6,240

• Lily's share of profit = Rs. 9,360

• Lily's Loan Account = Rs. 32,000

Question 6

Shilpa, Meena and Nanda share profits in the ratio 3:2:1. On dissolution, Shilpa takes over stock valued at Rs. 41,660 for Rs. 35,000 and agrees to discharge the bank loan. The remaining stock is sold for Rs. 14,000, land is sold for Rs. 1,10,000, and debtors are realised at the specified amounts. Realisation expenses are Rs. 1,200. An unrecorded typewriter worth Rs. 6,000 is taken over by a creditor.

Prepare the Realisation Account.

Solution:

The important entries in the Realisation Account are:

Assets transferred:

• Land = Rs. 81,000

• Stock = Rs. 56,760

• Debtors = Rs. 18,600

Liabilities transferred:

• Bank Loan = Rs. 20,000

• Creditors = Rs. 37,000

• Provision for Doubtful Debts = Rs. 1,200

Realisation proceeds:

• Stock = Rs. 14,000

• Debtors = Rs. 12,300

• Land = Rs. 1,10,000

• Unrecorded typewriter = Rs. 6,000

After recording the realisation expenses and other adjustments, the profit on Realisation is Rs. 20,940.

Distributed in the ratio 3:2:1:

• Shilpa = Rs. 10,470

• Meena = Rs. 6,980

• Nanda = Rs. 3,490

Answer: Profit on Realisation = Rs. 20,940, distributed among Shilpa, Meena and Nanda in the ratio 3:2:1.

Question 7

Surjit and Rahi share profits in the ratio 3:2. The firm is dissolved with creditors of Rs. 38,000, a partner's loan, reserve, and several assets. Surjit takes over investments at Rs. 8,000 and agrees to pay Mrs. Surjit's loan. Other assets are realised at the specified amounts, creditors accept Rs. 37,000, and realisation expenses are Rs. 1,600.

Prepare the Realisation Account, Partners' Capital Accounts and Bank Account.

Solution:

The major adjustments are:

• Investments taken over by Surjit = Rs. 8,000

• Mrs. Surjit's loan paid by Surjit = Rs. 10,000

• Creditors settled = Rs. 37,000

• Realisation expenses = Rs. 1,600

• Total loss on Realisation = Rs. 6,600

Loss distribution:

Surjit:

= Rs. 6,600 × 3/5
= Rs. 3,960

Rahi:

= Rs. 6,600 × 2/5
= Rs. 2,640

Reserve distribution:

Surjit:

= Rs. 15,000 × 3/5
= Rs. 9,000

Rahi:

= Rs. 15,000 × 2/5
= Rs. 6,000

Final capital balances:

• Surjit's Capital = Rs. 12,540

• Rahi's Capital = Rs. 8,360

Rahi's separate loan of Rs. 5,000 is settled through the Bank Account.

Question 8

Rita, Geeta and Ashish share profits and losses in the ratio 3:2:1. Their firm is dissolved. Rita is appointed to realise the assets and receives 5% commission on the assets realised, excluding cash. Debtors, stock and plant are realised for specified amounts, investments are realised at 85% of book value, realisation expenses are Rs. 4,100, outstanding salary is Rs. 7,200, and a contingent liability is settled for Rs. 9,800.

Prepare the Realisation Account, Partners' Capital Accounts and Cash Account.

Solution:

Investment realised:

= Rs. 69,000 × 85%
= Rs. 58,650

Total assets realised excluding cash:

= Rs. 30,000 + Rs. 26,000 + Rs. 42,750 + Rs. 58,650
= Rs. 1,57,400

Rita's commission:

= Rs. 1,57,400 × 5%
= Rs. 7,870

The outstanding salary and contingent liability are also recorded through the Realisation Account.

After considering the realisation proceeds, liabilities and expenses:

Loss on Realisation = Rs. 1,15,970

Distribution in the ratio 3:2:1:

• Rita = Rs. 57,985

• Geeta = Rs. 38,657

• Ashish = Rs. 19,328

Answer:

• Rita's commission = Rs. 7,870

• Loss on Realisation = Rs. 1,15,970

• Rita's share of loss = Rs. 57,985

• Geeta's share of loss = Rs. 38,657

• Ashish's share of loss = Rs. 19,328

Question 9

Anup and Sumit are equal partners. Their firm is dissolved. The assets are realised as follows:

• Leasehold land: Rs. 72,000

• Furniture: Rs. 22,500

• Stock: Rs. 40,500

• Plant: Rs. 48,000

• Debtors: Rs. 10,500

Creditors are paid Rs. 25,500 in full settlement and realisation expenses amount to Rs. 2,500.

Prepare the Realisation Account, Bank Account and Partners' Capital Accounts.

Solution:

Total assets realised:

= Rs. 72,000 + Rs. 22,500 + Rs. 40,500 + Rs. 48,000 + Rs. 10,500
= Rs. 1,93,500

Realisation expenses:

= Rs. 2,500

Creditors paid:

= Rs. 25,500

The profit on Realisation is:

= Rs. 6,500

Since Anup and Sumit are equal partners:

Anup's share:

= Rs. 6,500 ÷ 2
= Rs. 3,250

Sumit's share:

= Rs. 6,500 ÷ 2
= Rs. 3,250

Reserve Fund of Rs. 10,000 is also distributed equally:

• Anup = Rs. 5,000

• Sumit = Rs. 5,000

Final capital amount payable:

• Anup = Rs. 68,250

• Sumit = Rs. 68,250

Question 10

Ashu and Harish share profits and losses in the ratio 3:2. On dissolution, Ashu takes over the building for Rs. 95,000 and Harish takes over machinery and furniture for Rs. 80,000. Ashu agrees to pay the creditors, while Harish agrees to meet the bank overdraft. Stock and investments are taken over by both partners in their profit-sharing ratio. Debtors realise Rs. 46,000 and realisation expenses are Rs. 3,000.

Prepare the necessary ledger accounts.

Solution:

Assets taken over:

• Ashu: Building = Rs. 95,000

• Harish: Machinery + Furniture = Rs. 80,000

The remaining stock and investments are taken over according to the profit-sharing ratio.

Liabilities taken over:

• Ashu: Creditors = Rs. 88,000

• Harish: Bank overdraft = Rs. 50,000

Debtors realised:

= Rs. 46,000

Realisation expenses:

= Rs. 3,000

Profit on Realisation:

= Rs. 6,000

Distribution in the ratio 3:2:

• Ashu = Rs. 3,600

• Harish = Rs. 2,400

Answer:

• Profit on Realisation = Rs. 6,000

• Ashu's share = Rs. 3,600

• Harish's share = Rs. 2,400

Question 11

Sanjay, Tarun and Vineet share profits in the ratio 3:2:1. On dissolution, Sanjay is appointed to realise the assets and receives 6% commission on assets realised, excluding cash. The assets are realised at different values and realisation expenses amount to Rs. 4,500.

Prepare the Realisation Account, Partners' Capital Accounts and Cash Account.

Solution:

Important realisation proceeds are:

• Plant = Rs. 72,000

• Debtors = Rs. 54,000

• Furniture = Rs. 18,000

• Stock = Rs. 54,000

• Investments = Rs. 76,000

• Bills Receivable = Rs. 31,000

Total assets realised:

= Rs. 3,05,000

Sanjay's commission:

= Rs. 3,05,000 × 6%
= Rs. 18,300

After considering the assets, liabilities, commission and realisation expenses:

Loss on Realisation = Rs. 61,300

Distribution in the ratio 3:2:1:

• Sanjay = Rs. 30,650

• Tarun = Rs. 20,433

• Vineet = Rs. 10,217

Answer:

• Sanjay's commission = Rs. 18,300

• Loss on Realisation = Rs. 61,300

• Sanjay's share of loss = Rs. 30,650

• Tarun's share of loss = Rs. 20,433

• Vineet's share of loss = Rs. 10,217

Question 12

Gupta and Sharma are partners. Their firm is dissolved with sundry creditors, partners' loans, reserve fund, provision for doubtful debts and other assets. Debtors, stock, bills receivable and machinery are realised at specified amounts. Gupta takes over the investment at Rs. 36,000 and agrees to pay Mrs. Gupta's loan. Creditors are paid at a 3% discount and realisation expenses are Rs. 1,200.

Journalise the dissolution entries and prepare the Realisation Account, Bank Account and Partners' Capital Accounts.

Solution:

Assets transferred to Realisation Account:

= Rs. 2,35,500

Liabilities and provisions transferred:

= Rs. 92,000

Assets realised in cash:

= Rs. 52,000 + Rs. 42,000 + Rs. 16,000 + Rs. 49,000 + Rs. 27,000
= Rs. 1,86,000

Investment taken over by Gupta:

= Rs. 36,000

Mrs. Gupta's loan taken over by Gupta:

= Rs. 20,000

Creditors paid after 3% discount:

= Rs. 38,000 × 97%
= Rs. 36,860

Realisation expenses:

= Rs. 1,200

The relevant journal entries include:

Question 13

Ashok, Babu and Chetan share profits in the ratio 1/2 : 1/3 : 1/6. Their firm is dissolved. Babu takes over machinery for Rs. 45,000, Ashok takes over investments for Rs. 40,000, and Chetan takes over freehold property for Rs. 55,000. The remaining assets are realised, creditors are settled at a 7% discount, an unrecorded computer is sold for Rs. 9,000, and realisation expenses are Rs. 3,000.

Prepare the Realisation Account, Partners' Capital Accounts and Bank Account.

Solution:

Profit-sharing ratio:

= 1/2 : 1/3 : 1/6
= 3:2:1

Assets taken over:

• Ashok: Investment = Rs. 40,000

• Babu: Machinery = Rs. 45,000

• Chetan: Freehold Property = Rs. 55,000

Creditors settled at 7% discount:

= Rs. 20,000 × 93%
= Rs. 18,600

Bills Payable:

= Rs. 25,500

Other realisation proceeds:

• Debtors = Rs. 56,500

• Stock = Rs. 36,500

• Unrecorded computer = Rs. 9,000

Realisation expenses:

= Rs. 3,000

Profit on Realisation:

= Rs. 2,400

Distribution in the ratio 3:2:1:

• Ashok = Rs. 1,200

• Babu = Rs. 800

• Chetan = Rs. 400

Answer:

• Profit on Realisation = Rs. 2,400

• Ashok's share = Rs. 1,200

• Babu's share = Rs. 800

• Chetan's share = Rs. 400

Question 14

Tanu and Manu share profits and losses in the ratio 5:3. Their firm is dissolved. Tanu agrees to pay the bank loan and takes over the sundry debtors. Creditors accept stock and pay Rs. 10,000 to the firm. Manu takes over machinery for Rs. 40,000 and agrees to pay bills payable at a discount of 5%. Tanu takes over the motor car for Rs. 60,000. Investments realise Rs. 76,000, fixtures realise Rs. 4,000, and dissolution expenses amount to Rs. 2,200.

Prepare the Realisation Account, Bank Account and Partners' Capital Accounts.

Solution:

Profit-sharing ratio:

= 5:3

Assets taken over:

• Tanu: Sundry Debtors

• Tanu: Motor Car = Rs. 60,000

• Manu: Machinery = Rs. 40,000

Bills Payable settled by Manu at 5% discount:

= Rs. 32,000 × 95%
= Rs. 30,400

Other realisation proceeds:

• Investments = Rs. 76,000

• Fixtures = Rs. 4,000

• Cash received from creditors after settlement = Rs. 10,000

Dissolution expenses:

= Rs. 2,200

The Realisation Account is prepared by transferring the relevant assets and liabilities, recording the amounts realised or settled, and then transferring the resulting profit or loss to Tanu's and Manu's Capital Accounts in the ratio 5:3.

Answer: The final partners' capital balances are determined after adjusting the Realisation profit/loss, reserve fund, assets taken over, liabilities discharged and the respective amounts settled through Bank.

Dissolution of Partnership Firm Class 12 NCERT Solutions PDF

If you want to revise the chapter in one place, you can refer to the Dissolution of Partnership Firm Class 12 NCERT Solutions PDF along with the NCERT textbook. The NCERT source for the chapter is available through the official textbook portal.

How to Use Class 12 Accountancy Chapter 4 NCERT Solutions for Revision?

Solving the questions yourself before checking the solutions can make your revision more useful.

• Attempt Before Checking: Try each numerical on your own before referring to the solution.

• Check the Adjustments: Pay attention to how goodwill, revaluation, reserves, and other adjustments are treated.

• Understand the Working Notes: Do not skip the calculations used to arrive at the final amount.

• Review Your Mistakes: Compare your working with the solution and identify where your approach differed.

• Practise Similar Questions: After understanding a solution, attempt another question based on the same concept.

Practising important numericals can help you understand how different adjustments are combined in Death of a Partner questions.

Use the Class 12 Accountancy Chapter 4 NCERT Solutions to check your calculations, understand the working steps, and revise the chapter before your exams.