Dissolution of firm

Question 1

Steps

Answer 1

1. Dismandling of Balance sheet
2. Disposal of Assets and Liabilities
3. Takeover of Assets and Liabilities
4. Transfer of realization profit /Loss
5. Settlement of Capital

Question 2

Exception of Assets in Dismantling of Balance sheet

Answer 2

Cash and bank - Cash and bank a/c
Ad suspense , P and l dr , Accumulated Loss - Capital a/c
Current a/c - current a/c
Loan to partner - Capital a/c

Question 3

Exception to liabilities

Answer 3

Capital a/c - capital a/c
Reserves - capital a/c
partners loan - Separate Loan a/c
Bank OD - Cash and Bank a/c

Question 3

Dismantling of balance sheet , Journal entry

Answer 3

Assets -
realisation a/c dr
To Assets a/c
Liabilities -
Liabilities a/c dr
To Realisation a/c

Question 4

Disposal Journal Entries

Answer 4

Cash/bank a/c Dr
to Realisation a/c => Assets
Realisation a/c Dr
To Cash/Bank => Liabilities

Question 5

Takeover of Assets and Liabilties

Answer 5

Assets
Capital a/c Dr
To realisation a/c
Liabilities
Realisation a/c dr
to Capital

Question 5

Realisation Expenses, Agreed by the Firm and Paid by the Firm

Answer 5

Realisation Dr
To Bank

Question 6

Realisation Expenses , Agreed by the Firm and Paid by the partner

Answer 6

Realisation Dr
To capital

Question 7

Realisation Expenses , Agreed by Partner , Paid by the Firm

Answer 7

Realisation Dr
To bank

Capital Dr
To Realisation

Question 8

Realisation Expenses , Agreed by the Partner , Paid by the Partner

Answer 8

No entry