Question

Pass necessary Journal entries for the following transactions on the dissolution of a firm after various assets (other than cash) and outside liabilities have been transferred to Realisation Account:

1. Realisation expenses of the firm amounting to ₹ 2,600 were paid by partner Aman.
2. A creditor of ₹ 4,500 took over stock valued at ₹ 5,200 in full settlement.
3. An unrecorded asset realised ₹ 3,500.
4. Remaining creditors amounting to ₹ 20,000 were paid at a discount of 5%.
5. Remaining stock of ₹ 30,000 was taken over by Bimal, a partner, at a discount of 20%.
6. Investment whose face value was ₹ 10,000 was realised at 40%.

Hints:

1. Dr. Realisation A/c and Cr. Aman’s Capital A/c by ₹ 2,600.
2. No Entry.
3. Dr. Cash/Bank A/c and Cr. Realisation A/c by ₹ 3,500.
4. Dr. Realisation A/c and Cr. Cash/Bank A/c by ₹ 19,000.
5. Dr. Bimal’s Capital A/c and Cr. Realisation A/c by ₹ 24,000.
6. Dr. Cash/Bank A/c and Cr. Realisation A/c by ₹ 4,000.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
(i)	Realisation A/c   ...Dr.		2,600	-
	To Aman’s Capital A/c		-	2,600
	(Being the realisation expenses of the firm paid by partner Aman)
(ii)	No Entry		-	-
(iii)	Bank/Cash A/c   ...Dr.		3,500	-
	To Realisation A/c		-	3,500
	(Being cash received from the sale of an unrecorded asset)
(iv)	Realisation A/c   ...Dr.		19,000	-
	To Bank/Cash A/c		-	19,000
	(Being remaining creditors paid at a 5% discount: 20,000 − 1,000)
(v)	Bimal’s Capital A/c   ...Dr.		24,000	-
	To Realisation A/c		-	24,000
	(Being remaining stock taken over by partner Bimal at a 20% discount: 30,000 − 6,000)
(vi)	Bank/Cash A/c   ...Dr.		4,000	-
	To Realisation A/c		-	4,000
	(Being investments realised at 40% of their face value)