Question

Give journal entries for the following transactions:
1. To record the Realisation of various assets and liabilities,
2. A Firm has a Stock of Rs 1,60,000. Aziz, a partner took over 50% of the Stock at a discount of 20%,
3. Remaining Stock was sold at a profit of 30% on cost,
4. Land and Buildging (book value Rs 1,60,000) sold for Rs 3,00,000 through a broker who charged 2%, commission on the deal,
5. Plant and Machinery (book value Rs 60,000) was handed over to a Creditor at an agreed valuation of 10% less than the book value,
6. Investment whose face value was Rs 4,000 was realised at 50%.

Answer 1

                Journal Entries

	Particulars	L.F.	Amount (Rs.)	Amount (Rs.)
1 (a)	For Transfer of Assets : Realisation A/c                Dr.     To Assets A/c (Individually) (Assets transferred to Realisation Account)		-	-
(b)	For Transfer of Liabilities : Liabilities A/c (Individually)   Dr.       To Realisation A/c (Liabilities transferred to Realisation Account)		-	-
(c)	For sale of Asset Cash/Bank A/c            Dr.       To Realisation A/c (Assets sold)		-	-
(d)	For liabilitiy paid Realisation A/c             Dr.       To Cash/Bank A/c (Liabilities paid)		-	-
2)	Aziz’s Capital A/c         Dr.       To Realisation A/c (Aziz, a partner took over 50% of stock at 20% discount, the value of the total stock  was Rs 1,60,000) [1,60,000 × (50/100) × (80/100) = Rs 64,000]		64,000	64,000
3)	Bank A/c                      Dr.     To Realisation A/c (Stock worth Rs 80,000  sold at a profit of 30% on cost) [80,000 × (130/100 = Rs 1,04,000)]		104,000	104,000
4)	Bank A/c                       Dr.   To Realisation A/c (Land and Building sold for Rs 3,00,000 and 2% commission paid to the broker)		294,000	294,000
5)	No entry (Plant and Machinery Rs 60,000 handed over to the creditors at a discount of 10%.  No entry is required as both the asset and liability are already transferred to the Realisation Account)		-	-
6)	Bank A/c                       Dr.      To Realisation A/c (Investments worth Rs 4,000 were realised at 50%)		2,000	2,000

NOTE: In this chapter, it has been assumed that all receiving and payments are made through bank.