Question

Achal and Vichal were partners in a firm sharing profits in the ratio of 3 : 5. On 31st March, 2019, their Balance Sheet was as follows:

Liabilities				Amount (₹)	Assets			Amount (₹)
Capital A/cs:					Land and Building			4,00,000
Achal		3,00,000			Machinery			3,00,000
Vichal		5,00,000		8,00,000	Debtors			2,22,000
Creditors				1,79,000	Cash at Bank			78,000
Employees' Provident Fund				21,000
				10,00,000				10,00,000

The firm was dissolved on 1st April, 2019 and the Assets and Liabilities were settled as follows:
(a) Land and Building realised ₹ 4,30,000.
(b) Debtors realised ₹ 2,25,000 (with interest) and ₹ 1,000 were recovered for Bad Debts written off last year.
(c) There was an Unrecorded Investment which was sold for ₹ 25,000.
(d) Vichal took over Machinery at ₹ 2,80,000 for cash.
(e) 50% of the Creditors were paid ₹ 4,000 less in full settlement and the remaining Creditors were paid full amount.
Pass necessary Journal entries for dissolution of the firm.

Answer 1

Journal

Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2019 Apr.1	Realisation A/c	Dr.		9,22,000
	To Land & Building A/c				4,00,000
	To Machinery A/c				3,00,000
	To Debtors A/c				2,22,000
	(Being assets transferred)
Apr.1	Creditors A/c	Dr.		1,79,000
	Employees’ Provident Fund A/c	Dr.		21,000
	To Realisation A/c				2,00,000
	(Being liabilities transferred)
Apr.1	Bank A/c	Dr.		4,30,000
	To Realisation A/c				4,30,000
	(Being Land & Building realised)
Apr.1	Bank A/c (2,25,000 + 1,000)	Dr.		2,26,000
	To Realisation A/c				2,26,000
	(Being Debtors realised along-with Bad-debts recovered)
Apr.1	Bank A/c	Dr.		25,000
	To Realisation A/c				25,000
	(Being Unrecorded Investments sold)
Apr.1	Bank A/c	Dr.		2,80,000
	To Realisation A/c				2,80,000
	(Being Machinery took over by Vichal for Cash)
Apr.1	Realisation A/c	Dr.		1,96,000
	To Bank A/c (85,500 + 89,500 + 21,000)				1,96,000
	(Being 50% Creditors of Rs 89,500 were paid at a discount of Rs 4,000 and remaining 50% were settled in full and EPF)
Apr.1	Realisation A/c	Dr.		43,000
	To Achal’s Capital A/c				16,125
	To Vichal’s Capital A/c				26,875
	(Being profits on realisation transferred)
Apr.1	Achal’s Capital A/c	Dr.		3,16,125
	Vichal’s Capital A/c	Dr.		5,26,875
	To Bank A/c				8,43,000
	(Being Partners paid off)