Question

Sun and Kiran are partners sharing profits and losses equally. They decided to dissolve their firm. Assets and Liabilities have been transferred to Realisation Account. Pass necessary Journal entries for the following:

1. All partners are agreed that the process of realisation at the time dissolution will be accomplished by Sun for which he will be paid ₹ 10,000 along with the amount of expense which amounted to 2% of total value realised from the Assets on dissolution. Some assets were sold for Cash at a cumulative Value of ₹ 12,00,000 and the remaining were taken over by creditors at a valuation of ₹ 3,00,000.
2. Deferred Advertisement Expenditure A/c appeared in the books at ₹ 28,000.
3. Out of the Stock of ₹ 1,20,000; Kiran (a partner) took over 1/3 of the stock at a discount of 25% and 50% of remaining stock was took over by a Creditor of ₹ 30,000 in full settlement of his claim. Balance amount of stock realized at ₹ 25,000.
4. An outstanding bill for repairs and renewal of ₹ 3,000 was settled through an unrecorded asset which was valued at ₹ 10,000. Balance being settled in Cash.

Answer 1

Date	Particulars	LF	Dr. (₹)	Cr. (₹)
a)	Realisation A/c    ...Dr		40,000
	To Sun’s Capital A/c			40,000
	(Being Remuneration and expenses payable to Sun)
b)	Sun’s Capital A/c     ...Dr		14,000
	Kiran’s Capital A/c   ...Dr		14,000
	To Deferred Advertisement Suspense A/c			28,000
	(Being Advertisement Suspense A/c has been debited in partner’s capital account in their profit sharing ratio)
c) (1)	Kiran’s Capital A/c    ...Dr		30,000
	To Realisation A/c			30,000
	(Being 1/3 of Stock has been taken over by Kiran at 25% discount)
c)(2)	No Entry
c)(3)	Bank A/c     ...Dr		25,000
	To Realisation A/c			25,000
	(Being Stock Realised)
d)	Cash/Bank A/c   ...Dr		7,000
	To Realisation A/c			7,000
	(Being amount realised from unrecorded assets after payment of outstanding bill)