Question

The book value of assets (other than cash and bank) transferred to Realisation Account is Rs 1,00,000. 50% of the assets are taken over by a partner Atul, at a discount of 20%; 40% of the remaining assets are sold at a profit of 30% on cost; 5% of the balance being obsolete, realised nothing and remaining assets are handed over to a Creditor, in full settlement of his claim.
You are required to record the journal entries for Realisation of assets.

Answer 1

                                      Journal Entries

Particulars	L.F.	Amount (Rs.)	Amount (Rs.)
Realisation A/c                         Dr.       To Sundry Assets A/c (Assets other than cash and bank transferred to Realisation Account)		100,000	100,000
Atul’s Capital A/c                     Dr.     To Realisation A/c (Atul took over 50% of assets worth Rs 1,00,000 at 20% discount) [1,00,000 × (50/100) × (80/100)]		40,000	40,000
Bank A/c                                 Dr.     To Realisation A/c (Assets worth Rs 20,000, i.e. 40% of assets of Rs 50,000 are sold at a profit of 30%) [50,000 × (40/100) × (130/100)]		26,000	26,000
No entry is made for obsolescence of the assets and the assets given to the creditors in the full settlement as these are already transferred to the Realisation Account and adjusted)		-	-