Question

Pass necessary journal entries for the following transactions on the dissolution of the partnership firm of Preeti, Varsha and Kamala after the various assets (other than cash) and third party liabilities have been transferred to Realisation Account:

1. Preeti took over the debtors of book value of ₹ 90,000 at a discount of 20%.
2. Kamala took over her husband’s loan of ₹ 4,00,000.
3. There were 100 shares of ₹ 10 each in Star Ltd. acquired at a cost of ₹ 2,00,000 which had written off completely from the books. These shares were valued at ₹ 2,400 each and divided among the partners in their profit sharing ratio.
4. Sundry creditors amounting to ₹ 5,00,000 were settled a discount of 10%.
5. Land and Building of the book value of ₹ 40,00,000 was sold for ₹ 60,00,000 through a broker who charged 5% commission.
6. Varsha paid the dissolution expenses of ₹ 45,000 on behalf of the firm.

Answer 1

Journal
Date	Particulars	L.F.	Amount (₹)	Amount (₹)
(i)	Preeti’s Capital A/c    ...Dr.		72,000	-
	To Realisation A/c		-	72,000
	(Being debtors took over by Preeti)
(ii)	Realisation A/c    ...Dr.		4,00,000	-
	To Kamla’s Capital A/c		-	4,00,000
	(Being Kamala took over her husband’s loan)
(iii)	Preeti’s Capital A/c    ...Dr.		80,000	-
	Varsha’s Capital A/c    ...Dr.		80,000	-
	Kamla’s Capital A/c    ...Dr.		80,000	-
	To Realisation A/c		-	2,40,000
	(Being 100% shares at the rate of ₹ 2400 distributed among partners)
(iv)	Realisation A/c    ...Dr.		4,50,000	-
	To Bank А/с		-	4,50,000
	(Being Creditors were paid at 10% Discount)
(v)	Bank A/с    ...Dr.		57,00,000	-
	To Realisation A/c		-	57,00,000
	(Being Land and Building realised net of 5% Commission)
(vi)	Realisation A/c    ...Dr.		45,000	-
	To Varsha’s Capital A/с		-	45,000
	(Being Dissolution expenses paid of Varsha)