Question

Record necessary journal entries in the following cases:
[a] Creditors worth Rs 85,000 accepted Rs 40,000 as cash and Investment worth Rs 43,000, in full settlement of their claim.
[b] Creditors were Rs 16,000. They accepted Machinery valued at Rs 18,000 in settlement of their claim.
[c] Creditors were Rs 90,000. They accepted Buildings valued Rs 1,20,000 and paid cash to the firm Rs 30,000.

Answer 1

                                         Journal Entries

	Particulars	L.F.	Amount (Rs.)	Amount (Rs.)
a.	Realisation A/c                   Dr.       To Cash A/c (Creditors worth Rs 85,000 accepted 40,000 as cash and investment worth Rs 43,000 in their full settlement)		40,000	40,000
b.	No Entry (Creditors Rs 16,000 accepted Machinery Rs 18,000 in the full settlement. No entry is required since both asset and liability are already transferred to the Realisation Account)		-	-
c.	Cash A/c                          Dr.     To Realisation A/c (Creditors worth Rs 90,000 accepted buildings worth Rs 1,20,000 and returned Rs 30,000 as cash after settlement of claim to the firm)		30,000	30,000