Question

Pass the necessary journal entries for the following transactions on the dissolution of the partnership firm of Arjun and Kunal after various assets (other than cash) and external liabilities have been transferred to the Realisation Account:

1. Arjun was appointed to look after dissolution work for which he was allowed a remuneration of ₹ 10,000. He agreed to bear the dissolution expenses. Actual dissolution expenses paid by Arjun were ₹ 9,500.
2. A creditor to whom the firm owed ₹ 9,000 accepted stock of ₹ 3,000 at a discount of 10%, and the balance was paid to him in cash.
3. Kunal had given a loan of ₹ 20,000 to the firm. He was paid ₹ 19,000 in full settlement of his loan.
4. A piece of furniture, which was not recorded in the books was taken over by Arjun at ₹ 27,000 whereas its expected value was ₹ 30,000.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
(i)	Realisation A/c   ...Dr.		10,000	-
	To Arjun’s Capital A/c		-	10,000
	(Being remuneration allowed to Arjun for dissolution work)
(ii)	Realisation A/c   ...Dr.		6,300	-
	To Bank/Cash A/c		-	6,300
	(Being balanced paid to the creditor in cash after adjusting the stock of ₹ 2,700)
(iii)	Kunal’s Loan A/c ...Dr.		20,000	-
	To Bank A/c		-	19,000
	To Realisation A/c		-	1,000
	(Being Kunal’s loan settled and gain transferred to Realisation account)
(iv)	Arjun’s Capital A/c   ...Dr.		27,000	-
	To Realisation A/c		-	27,000
	(Being unrecorded furniture taken over by Arjun at an agreed value)