Class 12 Accountancy - Chapter Dissolution of a Partnership Firm NCERT Solutions | On dissolution, how will you deal with p
On dissolution, how will you deal with partner’s loan if it appears on the
(a) assets side of the balance sheet, (b) liabilities side of balance sheet.
(a) When loan amount is shown in the assets side of the balance sheet, it
indicate that the loan has been granted by the firm to the partner. In that case, at the time of dissolution the amount of loan will be transferred to the concerned
partner’s capital account. The following Journal Entry will be passed:
Partners Capital A/c. Dr.
To Partners Loan A/c
(Being partners loan amount is transferred to partners capital account)
(b) When the amount of loan appears in the liabilities side of the balance sheet, it indicate that the respective partner or partners have given loan to the firm. In this case, partner’s loan will be paid off after paying all the external liabilities first.
Here, it is worth mentioning that the partner’s loan will not be transferred to the
realisation account, in fact, it will be paid in cash. The following accounting entry will be passed in this regard:
Partners Loan A/c. Dr.
To Cash/Bank A/c
(Being loan taken from partner is paid in cash)
More Questions From Class 12 Accountancy - Chapter Dissolution of a Partnership Firm
- Q:-
State the difference between dissolution of partnership and dissolution of partnership firm.
- Q:-
State the accounting treatment at the time of dissolution of a firm for:
i. Unrecorded assets ii. Unrecorded liabilities - Q:-
How deficiency of crditors is paid off at the time of dissolution of firm.
- Q:-
What is a Realisation Account?
- Q:-
Reproduce the format of Realisation Account.
- Q:-
State the order of settlement of accounts on dissolution.
- Q:-
On what account realisation account differs from revaluation account.
- Q:-
Distinguish between firm’s debts and partner’s private debts.
- Q:-
Explain the process dissolution of partnership firm?
Popular Questions of Class 12 Accountancy
- Q:-
Mohan and Shyam are partners in a firm. State whether the claim is valid if the partnership agreement is silent in the following matters:
(i) Mohan is an active partner. He wants a salary of Rs. 10,000 per year;
(ii) Shyam had advanced a loan to the firm. He claims interest @ 10% per annum;
(iii) Mohan has contributed Rs. 20,000 and Shyam Rs. 50,000 as capital. Mohan wants equal share in profits.
(iv) Shyam wants interest on capital to be credited @ 6% per annum. - Q:-
Identify various matters that need adjustments at the time of admission of a new partner.
- Q:-
What are the different ways in which a partner can retire from the firm?
- Q:-
State whether the following statements are true or false:
(i) Valid partnership can be formulated even without a written agreement between the partners;
(ii) Each partner carrying on the business is the principal as well as the agent for all the other partners;
(iii) Maximum number of partners can be 50;
(iv) Methods of settlement of dispute among the partners can’t be part of the partnership deed;
(v) If the deed is silent, interest at the rate of 6% p.a. would be charged on the drawings made by the partner;
(vi) Interest on partner’s loan is to be given @ 12% p.a. if the deed is silent about the rate. - Q:-
Why it is necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?
- Q:-
Write the various matters that need adjustments at the time of retirement of partner/partners.
- Q:-
What is sacrificing ratio? Why is it calculated?
- Q:-
On what occasions sacrificing ratio is used?
- Q:-
If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?
- Q:-
Why there is need for the revaluation of assets and liabilities on the admission of a partner?
Recently Viewed Questions of Class 12 Accountancy
- Q:-
Raju and Jai commenced business in partnership on April 1, 2017. No partnership agreement was made whether oral or written. They contributed Rs. 4,00,000 and Rs. 1,00,000 respectively as capitals. In addtion, Raju advanced Rs. 2,00,000 as loan to the firm on October 1, 2017. Raju met with an accident on July 1, 2017 and could not attend the business up to september 30, 2017. The profit for the year ended March 31, 2018 amounted to Rs, 50,600. Disputes have arisen between them on sharing the profits of the firm.
Raju Claims:
(i) He should be given interest at 10% p.a. on capital and so also on loan.
(ii) Profit should be distributed in the proportion of capitals.Jai Claims:
(i) Net profit should be shared equally.
(ii) He should be allowed remuneration of Rs, 1,000 p.a. during the period of Raju’s illness.
(iii) Interest on capital and loan should be given @ 6% p.a.
State the correct position on each issue as per the provisions of the Partnership Act. 1932. - Q:-
Why it is necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?
- Q:-
What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?
- Q:-
Mohan and Shyam are partners in a firm. State whether the claim is valid if the partnership agreement is silent in the following matters:
(i) Mohan is an active partner. He wants a salary of Rs. 10,000 per year;
(ii) Shyam had advanced a loan to the firm. He claims interest @ 10% per annum;
(iii) Mohan has contributed Rs. 20,000 and Shyam Rs. 50,000 as capital. Mohan wants equal share in profits.
(iv) Shyam wants interest on capital to be credited @ 6% per annum. - Q:-
What are the different ways in which a partner can retire from the firm?
- Q:-
Priya and Kajal are partners in a firm, sharing profits and losses in the ratio of 5:3. The balance in their fixed capital accounts, on April 1, 2016 were: Priya, Rs. 6,00,000 and Kajal, Rs. 8,00,000. The profit of the firm for the year ended March 31, 2017 was Rs, 1,26,000. Calculate their shares of profits: (a) when there is no agreement in respect of interest on capital, and (b) when there is an agreement that the interest on capital will be allowed @ 12% p.a.
- Q:-
Why is Profit and Loss Adjustment Account prepared? Explain.
- Q:-
Why it is considered desirable to make the partnership agreement in writing.
- Q:-
What is Capital Fund? How is it calculated?
- Q:-
On what occasions sacrificing ratio is used?
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