Question

The partners Rohit, Kunal and Sarthak decided to dissolve their firm. Pass necessary Journal entries for the following after various assets (other than Cash and Bank) and outside liability had been transferred to Realisation Account:

1. Kunal agreed to pay his wife’s loan of 60,000.
2. Total Creditors of the firm were ₹ 40,000. Creditors of ₹ 10,000 were given part of furniture of book value ₹ 8,000 out of the total furniture of book value ₹ 28,000 in settlement. Remaining Creditors allowed a discount of 10%.
3. Rohit had given a loan of ₹ 70,000 to the firm for which ₹ 68,000 were paid in settlement.
4. A machine which was not recorded in the books was taken by Kunal at ₹ 3,000, whereas its expected value was ₹ 5,000.
5. The firm had stock of ₹ 2,40,000, 25% of the stock was taken over by an unrecorded creditor of ₹ 70,000 in full settlement of his claim and the remaining stock was taken over by Rohit at 80% of cost.
6. Sarthak paid the realisation expenses of ₹ 16,000 and was to be paid ₹ 15,000, including expenses for completing the dissolution process.

Hints:

(b) (i) Dr. Bank A/c and Credit Realisation A/c by ₹ 20,000.

(ii) Dr. Realisation A/c and Cr. Bank A/c by ₹ 27,000.

(c) Dr Loan by Rohit A/c by ₹ 70,000 Cr; Bank A/c by ₹ 68,000 and Realisation A/c by ₹ 2,000.

(e) Dr. Rohit’s Capital A/c and Cr. Realisation A/c by ₹ 1,44,000.

(f) Dr. Realisation A/c and Cr. Sarthak’s Capital A/c by ₹ 15,000.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
(a)	Realisation A/c   ...Dr.		60,000	-
	To Kunal’s Capital A/c		-	60,000
	(Being Kunal’s wife’s loan assumed and taken over by partner Kunal)
(b)
(i)	Bank A/c   ...Dr.		20,000	-
	To Realisation A/c		-	20,000
	(Being the remaining furniture of book value of ₹ 20,000 realised at full value)
(ii)	Realisation A/c   ...Dr.		27,000	-
	To Bank A/c		-	27,000
	(Being the remaining creditors of ₹ 30,000 paid at a 10% discount)
(c)	Loan by Rohit A/c   ...Dr.		70,000	-
	To Bank A/c		-	68,000
	To Realisation A/c		-	2,000
	(Being partner Rohit’s loan is settled in full, and the gain is transferred to the Realisation Account.)
(d)	Kunal’s Capital A/c   ...Dr.		3,000	-
	To Realisation A/c		-	3,000
	(Being an unrecorded machine taken over by partner Kunal at the agreed value)
(e)	Rohit’s Capital A/c   ...Dr.		1,44,000	-
	To Realisation A/c		-	1,44,000
	(Being the remaining 75% of stock taken over by Rohit at 80% of its cost price)
(f)	Realisation A/c   ...Dr.		15,000	-
	To Sarthak’s Capital A/c		-	15,000
	(Being the fixed remuneration/expenses allowed to partner Sarthak for conducting dissolution)