Accounting Entries To Close The Books Of Accounts - Realisation/Disposal Stage

A. If the Assets are sold for cash:

Cash / Bank A/c          ...Dr.

       To Realisation A/c

(Being assets sold for cash)

B. If the Assets are taken over by any partner:

Partner’s Capital / Current A/c        ...Dr.

         To Realisation A/c

(Being assets taken over by the partner)

C. For Payment of Liabilities:

1. For Payment to outsiders' liabilities (Third party):

Realisation A/c        ...Dr.

      To Cash/Bank A/c

(Being third party Liabilities paid)

2. If any partner discharges any liabilities of the firm:

Realisation A/c          ...Dr.

        To Partners Capital / Current A/c

(Being Liability taken over by a partner)

D. For Payment of Realisation Expenses:

1. Realisation Expenses is borne by the firm:

Realisation A/c         ...Dr.

      To Cash / Bank A/c

(Being Realisation expenses paid by the firm)

2. Realisation Expenses is borne by any Partner:

Realisation A/c          ...Dr.

        To Concerned Capital / Current A/c

(Being Realisation expenses paid by partner)

E. If commission is given to any Partner for realising assets:

Realisation A/c        ...Dr.

        To Partner’s Capital / Current A/c

(Being commission paid for realising the assets)

F. If Any Contingent Liability is paid (i.e. liability not included in the Balance Sheet):

Realisation A/c           ...Dr.

       To Cash / Bank A/c

(Being contingent Liability paid)

G. For Payment of Partner’s Loan:

Partner’s Loan A/c         ...Dr.

      To Cash / Bank A/c

(Being repayment of Partner’s loan)