Question

T, U and V were partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2. Their firm was incurring huge losses thus it had to be closed. After transferring assets (other than cash in hand and bank) and third party liabilities to Realization Account the following transactions took place:

1. T took away 50% of the stock at book value less 10% for ₹ 90,000, and the remaining stock was sold for ₹ 40,000.
2. Creditors of ₹ 85,000 took over machinery of ₹ 1,00,000 in full settlement of their claim which was purchased on 1st January 2021 and was depreciated at 20% p.a. on written down value method.
3. ₹ 5,000 debtors previously written off were recovered.
4. Mrs. V's loan of ₹ 72,000 was paid by the firm.
5. T' was to get a remuneration of ₹ 10,000 for completing the dissolution process. Expenses incurred by him were ₹ 4,000.

Pass necessary journal entries for the above transactions in the book of T, U and V.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
31-03-2023	T’s Capital A/c Dr.		90,000	—
	Bank A/c Dr.		40,000	—
	To Realisation A/c		—	1,30,000
	(Being 50% stock taken over by T for ₹ 90,000 and remaining stock sold for ₹ 40,000)
31-03-2023	No Entry		—	—
	(Being machinery given to creditors in full settlement of their claim)
31-03-2023	Bank A/c Dr.		5,000	—
	To Realisation A/c		—	5,000
	(Being bad debts previously written off recovered)
31-03-2023	Realisation A/c Dr.		72,000	—
	To Bank A/c		—	72,000
	(Being Mrs. V’s loan paid by the firm)
31-03-2023	Realisation A/c Dr.		14,000	—
	To T’s Capital A/c		—	14,000
	(Being remuneration of ₹ 10,000 and expenses of ₹ 4,000 incurred by T credited to his Capital Account)