Question

Gaurav, Saurabh, and Vaibhav were partners in firm sharing profits and losses in the ratio of 2 : 2 : 1. They decided to dissolve the firm on 31^st March 2018. After transferring Sundry assets (other than cash in hand and cash at Bank) and third-party liabilities to realisation account, the assets were realized and liabilities were paid off as follows:

1. A machinery with a book value of ₹ 6,00,000 was taken over by Gaurav at 50% and stock worth ₹ 5,000 was taken over by a creditor of ₹ 9,000 in full settlement of his claim.
2. Land and building (book value ₹ 3,00,000) were sold for ₹ 4,00,000 through a broker who charged 2% commission.
3. The remaining creditors were paid ₹ 76,000 in full settlement of their claim and the remaining assets were taken over by Vaibhav for ₹ 17,000.
4. Bank loan of ₹ 3,00,000 was paid along with interest of ₹ 21,000.

Pass necessary journal entries for the above transactions in the books of the firm.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
(i)	Gaurav’s Capital A/c    ...Dr.		3,00,000	-
	To Realisation A/c		-	3,00,000
	(Being machinery taken over at 50% book value)
	Note: There will be no journal entry for mutual exchange between the firm and creditors against stock
(ii) (a)	Bank A/c    ...Dr.		4,00,000	-
	To Realisation A/c		-	4,00,000
	(Being Land & Building sold)
(ii) (b)	Realisation A/c    ...Dr.		8,000	-
	To Bank A/c		-	8,000
	(Being brokerage commission paid on sale of Land and Building @ 2% of sale consideration)
(iii) (a)	Realisation A/c    ...Dr.		76,000	-
	To Bank A/c		-	76,000
	(Being remaining creditors were paid off in full settlement)
(iii) (b)	Vaibhav’s Capital A/c    ...Dr.		17,000	-
	To Realisation A/c		-	17,000
	(Being remaining assets were taken over by Vaibhav)
(iv)	Realisation A/c    ...Dr.		3,21,000	-
	To Bank A/c		-	3,21,000
	(Being bank loan paid along with interest there upon)