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Dear Teachers,

​

These slides have been prepared based on the NCERT syllabus to support you in teaching Plus One and Plus Two Accountancy and Computerised Accounting.

​

Please review and verify the content before using it in your classrooms. If you find any errors or have feedback, please let me know.

​

Mujeeb Rahiman C

HSST Commerce

GHSS Pattikkad

Malappuram Dt.

​

✉️ mujeebchemmala@gmail.com

9995983075 �

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Chapter - 4

Dissolution of Partnership Firm

Realisation Account

Partners’ Capital Account

Cash / Bank Account

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Realisation Account

When the firm is dissolved, its books of account are to be closed and the profit or loss arising on realisation of its assets and discharge of liabilities is to be computed.

Realisation Account is a nominal account and the object of such an account is to find out profit or loss of realisation of assets and payment of liabilities.

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All assets (other than cash in hand, bank balance and fictitious assets, if any), and all external liabilities are transferred to this account. It also records the sale of assets, and payment of liabilities and realisation expenses.

The balance in this account is termed as profit or loss on realisation which is transferred to partners’ capital accounts in their profit sharing ratio.

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Amount

Liabilities

Amount

Assets

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

XXXXX

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Less Provision for doubtful debts

XXX

XXX

Profit & Loss Account

XXX

A’s Current Account

XXX

Cash in Hand

XXX

Cash at Bank

XXX

B’s Loan A/c

XXX

B’s Current Account

XXX

C’s Current Account

XXX

General Reserve

XXX

Profit & Loss Account

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

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Amount

Liabilities

Amount

Assets

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

XXXXX

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Less Provision for doubtful debts

XXX

XXX

Profit & Loss Account

XXX

A’s Current Account

XXX

Cash in Hand

XXX

Cash at Bank

XXX

B’s Loan A/c

XXX

B’s Current Account

XXX

C’s Current Account

XXX

General Reserve

XXX

Profit & Loss Account

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

1. For transfer of Assets

Realisation A/c Dr.

To Assets A/c (individually)

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Amount

Liabilities

Amount

Assets

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

XXXXX

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

Less Provision for doubtful debts

XXX

XXX

Profit & Loss Account

XXX

A’s Current Account

XXX

Cash in Hand

XXX

Cash at Bank

XXX

B’s Loan A/c

XXX

B’s Current Account

XXX

C’s Current Account

XXX

General Reserve

XXX

Profit & Loss Account

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

Outstanding Salary

XXX

2. For transfer of provision for doubtful debts

Provision for doubtful debts A/c Dr.

To Realisation A/c

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Amount

Liabilities

Amount

Assets

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

XXXXX

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

Profit & Loss Account

XXX

A’s Current Account

XXX

Cash in Hand

XXX

Cash at Bank

XXX

B’s Loan A/c

XXX

B’s Current Account

XXX

C’s Current Account

XXX

General Reserve

XXX

Profit & Loss Account

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

Outstanding Salary

XXX

3. For transfer of Profit & Loss A/c (debit balance)

Partners’ Capital A/c Dr. (individually)

To Profit & Loss A/c

For transfer of Fictitious Asset

Partners’ Capital A/c Dr. (individually)

To Fictitious Asset A/c

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Amount

Liabilities

Amount

Assets

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

XXXXX

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

A’s Current Account

XXX

Cash in Hand

XXX

Cash at Bank

XXX

B’s Loan A/c

XXX

B’s Current Account

XXX

C’s Current Account

XXX

General Reserve

XXX

Profit & Loss Account

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

Outstanding Salary

XXX

4. For transfer of Current A/c debit balance

Partner’s Capital A/c Dr.

To Partner’s Current A/c

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Amount

Liabilities

Amount

Assets

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

XXXXX

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

Cash in Hand

XXX

Cash at Bank

XXX

B’s Loan A/c

XXX

B’s Current Account

XXX

C’s Current Account

XXX

General Reserve

XXX

Profit & Loss Account

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

Outstanding Salary

XXX

5. Cash in hand

If preparing Cash A/c

Taken as opening balance of Cash Account

If preparing Bank A/c

Bank A/c Dr.

Cash A/c

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Amount

Liabilities

Amount

Assets

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

XXXXX

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

Cash at Bank

XXX

B’s Loan A/c

XXX

B’s Current Account

XXX

C’s Current Account

XXX

General Reserve

XXX

Profit & Loss Account

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

Outstanding Salary

XXX

6. Cash at Bank

If preparing Bank A/c

Taken as opening balance of Bank Account

If preparing Cash A/c

Cash A/c Dr.

To Bank A/c

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Amount

Liabilities

Amount

Assets

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

B’s Loan A/c

XXX

B’s Current Account

XXX

C’s Current Account

XXX

General Reserve

XXX

Profit & Loss Account

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

Outstanding Salary

XXX

7. For transfer of Liabilities

Liabilities A/c (individually) Dr.

To Realisation A/c

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Amount

Liabilities

Amount

Assets

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

B’s Loan A/c

XXX

B’s Current Account

XXX

C’s Current Account

XXX

General Reserve

XXX

Profit & Loss Account

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

8. For payment of Partner’s Loan

Partner’s Loan A/c Dr.

To Bank A/c

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Amount

Liabilities

Amount

Assets

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

B’s Current Account

XXX

C’s Current Account

XXX

General Reserve

XXX

Profit & Loss Account

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

9. For transfer of Current Account credit balance

Partner’s Current A/c Dr.

To Partner’s Capital A/c

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Amount

Liabilities

Amount

Assets

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

General Reserve

XXX

Profit & Loss Account

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

10. For transfer General Reserve and Profit & Loss A/c

General Reserve A/c Dr.

Profit & Loss A/c Dr.

To Partner’s Capital A/c (Individually)

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Amount

Liabilities

Amount

Assets

XXXXX

Balance Sheet of A, B and C as on March 31, 2020

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

11. Partners’ Capital Account balances

Taken as opening balance of Capital Accounts

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Amount

Liabilities

Amount

Assets

Balance Sheet of A, B and C as on March 31, 2020

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Amount

Particulars

Amount

Particulars

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Prepaid Rent

XXX

1. For transfer of Assets

Realisation A/c Dr.

To Assets A/c (individually)

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Amount

Particulars

Amount

Particulars

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

Prepaid Rent

XXX

2. For transfer of provision for doubtful debts

Provision for doubtful debts A/c Dr.

To Realisation A/c

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Amount

Particulars

Amount

Particulars

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

7. For transfer of Liabilities

Liabilities A/c (individually) Dr.

To Realisation A/c

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Amount

Particulars

Amount

Particulars

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

Cash / Bank (Sale of Assets)

XXX

12. For sale of Assets

Cash / Bank A/c Dr.

To Realisation A/c

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Amount

Particulars

Amount

Particulars

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

Cash / Bank (Sale of Assets)

XXX

Cash / Bank (Unrecorded Assets)

XXX

13. For sale of Unrecorded Assets

Cash / Bank A/c Dr.

To Realisation A/c

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Amount

Particulars

Amount

Particulars

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

Cash / Bank (Sale of Assets)

XXX

Cash / Bank (Unrecorded Assets)

XXX

B’s Capital A/c(Assets taken over)

XXX

14. For an Asset taken over by a partner

Partner’s Capital A/c Dr.

To Realisation A/c

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Amount

Particulars

Amount

Particulars

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

Cash / Bank (Payment of Liabilities)

XXX

Cash / Bank (Sale of Assets)

XXX

Cash / Bank (Unrecorded Assets)

XXX

B’s Capital A/c(Assets taken over)

XXX

15. For payment of Liabilities

Realisation A/c Dr.

To Cash / Bank A/c

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Amount

Particulars

Amount

Particulars

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

Cash / Bank (Payment of Liabilities)

XXX

Cash / Bank (Unrecorded Liabilities)

XXX

Cash / Bank (Sale of Assets)

XXX

Cash / Bank (Unrecorded Assets)

XXX

B’s Capital A/c(Assets taken over)

XXX

15. For payment of Unrecorded Liabilities

Realisation A/c Dr.

To Cash / Bank A/c

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Amount

Particulars

Amount

Particulars

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

Cash / Bank (Payment of Liabilities)

XXX

Cash / Bank (Unrecorded Liabilities)

XXX

C’s Capital A/c(Liabilities assumed)

XXX

Cash / Bank (Sale of Assets)

XXX

Cash / Bank (Unrecorded Assets)

XXX

B’s Capital A/c(Assets taken over)

XXX

16. For a Liability which a partner takes responsibility to discharge

Realisation A/c Dr.

To Partner’s Capital A/c

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Amount

Particulars

Amount

Particulars

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

Cash / Bank (Payment of Liabilities)

XXX

Cash / Bank (Unrecorded Liabilities)

XXX

C’s Capital A/c(Liabilities assumed)

XXX

Cash / Bank (Realisation expenses)

XXX

Cash / Bank (Sale of Assets)

XXX

Cash / Bank (Unrecorded Assets)

XXX

B’s Capital A/c(Assets taken over)

XXX

17. For payment of realisation expenses

If paid by the firm

Realisation A/c Dr.

To Cash / Bank A/c

If paid by a partner

Realisation A/c Dr.

To Partner’s Capital A/c

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Amount

Particulars

Amount

Particulars

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

Cash / Bank (Payment of Liabilities)

XXX

Cash / Bank (Unrecorded Liabilities)

XXX

C’s Capital A/c(Liabilities assumed)

XXX

Cash / Bank (Realisation expenses)

XXX

Cash / Bank (Sale of Assets)

XXX

Cash / Bank (Unrecorded Assets)

XXX

B’s Capital A/c(Assets taken over)

XXX

When a partner has agreed to undertake the dissolution work for an agreed remuneration

If paid by the firm

Partner’s Capital A/c Dr.

To Cash / Bank A/c

If paid by the partner

No Entry is required

For agreed remuneration to such Partner

Realisation A/c Dr.

To Partner’s Capital A/c

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Amount

Particulars

Amount

Particulars

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

XXXXX

XXXXX

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

Cash / Bank (Payment of Liabilities)

XXX

Cash / Bank (Unrecorded Liabilities)

XXX

C’s Capital A/c(Liabilities assumed)

XXX

Cash / Bank (Realisation expenses)

XXX

Cash / Bank (Sale of Assets)

XXX

Cash / Bank (Unrecorded Assets)

XXX

B’s Capital A/c(Assets taken over)

XXX

(Profit transferred)

18. For transfer of Profit on realisation

Realisation A/c Dr.

To Partners’ Capital A/c (individually)

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Amount

Particulars

Amount

Particulars

Sundry Creditors

XXX

Bills Payable

XXX

Mrs. A’s Loan A/c

XXX

XXXXX

XXXXX

Realisation Account

Land & Building

XXX

Furniture

XXX

Stock

XXX

Bills Receivable

XXX

Sundry Debtors

XXX

Provision for doubtful debts

XXX

Prepaid Rent

XXX

Outstanding Salary

XXX

Cash / Bank (Payment of Liabilities)

XXX

Cash / Bank (Unrecorded Liabilities)

XXX

C’s Capital A/c(Liabilities assumed)

XXX

Cash / Bank (Realisation expenses)

XXX

Cash / Bank (Sale of Assets)

XXX

Cash / Bank (Unrecorded Assets)

XXX

B’s Capital A/c(Assets taken over)

XXX

A’s Capital Account

B’s Capital Account

C’s Capital Account

XXX

XXX

XXX

XXX

(Loss transferred)

19. For transfer of Loss on realisation

Partners’ Capital A/c Dr. (individually)

To Realisation A/c

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20. For payment of loan due to partners

Partners’ Loan A/c Dr.

To Cash / B

21. For Settlement of Partner’s Capital A/c

If Capital A/c shows credit balance

Partners’ Capital A/c Dr.

To Cash / Bank A/c

If Capital A/c shows debit balance

Cash / Bank A/c Dr.

To Partner’s Capital A/c

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Mujeeb Rahiman C

HSST Commerce

GHSS Pattikkad

Malappuram Dt.