Question

Pass necessary journal entries in the following cases on the dissolution of a partnership firm of partners X, Y, A and B:

1. Realization expenses of ₹ 5,000 were to borne by X, a partner. However, it was paid by Y.
2. Investments costing ₹ 25,000 (comprising ₹ 1,000 shares), had been written off from the books completely. These shares are valued at ₹ 20 each and were divided amongst the partners.
3. Y's loan of ₹ 50,000 settled at ₹ 48,000.
4. Machinery (book value ₹ 6,00,000) was given to a creditor at a discount of 20%.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	X’s Capital A/c Dr.		5,000	—
	To Y’s Capital A/c		—	5,000
	(Being realisation expenses borne by X but paid by Y)
	X’s Capital A/c Dr.		5,000	—
	Y’s Capital A/c Dr.		5,000	—
	A’s Capital A/c Dr.		5,000	—
	B’s Capital A/c Dr.		5,000	—
	To Realisation A/c		—	20,000
	(Being unrecorded investments of ₹ 20,000 divided equally among the four partners)
	Y’s Loan A/c Dr.		50,000	—
	To Bank A/c		—	48,000
	To Realisation A/c		—	2,000
	(Being Y’s loan of ₹ 50,000 settled for ₹ 48,000)
	No Entry		—	—
	(Being machinery given to a creditor in settlement; no separate entry is passed)