Question

Pass the necessary journal entries for the following transactions on dissolution of the firm of Tushar and Paras after the transfer of all assets (Other than cash) and external liabilities to Realisation Account:

1. An unrecorded furniture worth ₹ 28,000 is taken over by Tushar at a discount of 10%.
2. An unrecorded liability of ₹ 18,000 is settled and paid by Paras at a discount of 10%.
3. A machine having a book value of ₹ 30,000 is given to Nitish, a firm’s creditor of ₹ 44,000, at an agreed valuation of 80% towards full and final settlement of his dues.
4. A furniture having a book value of ₹ 30,000 is given to Ashish, a firm’s creditor of ₹ 44,000, at a discount of 20% towards partial payment of his dues.
5. Sachin, a creditor to whom ₹ 20,000 were due, took over computer having a book value of ₹ 30,000 at 80%. Balance was paid by him in cash.
6. Tushar pays the realisation expenses of ₹ 25,000 on behalf of the firm.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
(a)	Tushar’s Capital A/c ...Dr.		25,200	-
	To Realisation A/c		-	25,200
	(Being unrecorded furniture taken over by Tushar at a 10% discount: (28,000 − 2,800)
(b)	Realisation A/c ...Dr.		16,200	-
	To Paras’s Capital A/c		-	16,200
	(Being an unrecorded liability settled and paid by Paras at a 10% discount:
(c)	No Entry
(d)	Realisation A/c ...Dr.		20,000	-
	To Bank/Cash A/c		-	20,000
	(Being the cash balance paid to creditor Ashish to settle his remaining dues after asset adjustment)
(e)	Bank/Cash A/c ...Dr		4,000	-
	To Realisation A/c		-	4,000
	(Being excess cash received from creditor Sachin after he took over a computer exceeding his dues)
(f)	Realisation A/c ...Dr.		25,000	-
	To Tushar’s Capital A/c		-	25,000
	(Being realisation expenses paid by partner Tushar on behalf of the firm)