Question

Angad, Raman and Harshit were partners in a firm. They decided to dissolve their firm. Pass necessary journal entries for the following after various assets (other than cash and bank) and the third party liabilities have been transferred to Realisation Account:

1. There was a stock of ₹ 90,000. Raman took over 50% of the stock at 10% discount and remaining stock was sold at 40% profit on book value.
2. Profit and Loss A/c was showing a debit balance of ₹ 15,000 which was distributed among the partners.
3. A machinery which was not recorded in the books was sold for ₹ 2,000.
4. Angad was paid only ₹ 5,000 (in full settlement) for his loan to the firm which amounted to ₹ 5,500.
5. Realisation expenses amounting to ₹ 5,000 paid by Harshit.
6. There were 100 shares of ₹ 10 each in DCM Ltd. acquired at a cost of ₹ 1,200 which had been written off completely from the books. These shares are valued at ₹ 9 each and divided among the partners in their profit sharing ratio.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
(i) (a)	Raman’s Capital A/c    ...Dr.		40,500	-
	To Realisation A/c		-	40,500
	(Being Raman took over 50% stock @ 10% discount)
(i) (b)	Bank A/c    ...Dr.		63,000	-
	To Realisation A/c		-	63,000
	(Being 50% stock sold for cash @ 40% Profit)
(ii)	Angad’s Capital A/c    ...Dr.		5,000	-
	Raman’s Capital A/c    ...Dr.		5,000	-
	Harshit’s Capital A/c    ...Dr.		5,000	-
	To Profit & Loss A/c		-	15,000
	(Being Profit & Loss debit balance debited to Partners 1 : 1 : 1)
(iii)	Bank A/c    ...Dr.		2,000	-
	To Realisation A/c		-	2,000
	(Being Unrecorded Machinery was sold)
(iv)	Angad’s loan A/c    ...Dr.		5,500	-
	To Realisation A/c		-	500
	To Bank A/c		-	5,000
	(Being Angad loan settled)
(v)	Realisation A/c    ...Dr.		5,000	-
	To Harshit’s Capital A/c		-	5,000
	(Being Realisation expenses paid by Harshit)
(vi)	Angad’s Capital A/c    ...Dr.		300	-
	Raman’s Capital A/c    ...Dr.		300	-
	Harshit’s Capital A/c    ...Dr.		300	-
	To Realisation A/c		-	900
	(Being 100 shares in DCM Ltd. @ ₹ 9 per share taken over by partners in 1 : 1 : 1)