Question

X and Y are partners. They decided to dissolve their firm. Pass necessary entries assuming that various assets and external liabilities have been transferred to Realisation Account:

1. X's loan was appearing on the liabilities side of Balance Sheet at ₹ 40,000. He accepted an unrecorded asset of ₹ 60,000 in full settlement of his account.
2. Raman, a Creditor to whom ₹ 25,000 were due to be paid, accepted an unrecorded computer of ₹ 18,000 at a discount of 10% and the balance was paid to him in Cash.
3. Sudhir, an unrecorded creditor of ₹ 40,000 accepted an unrecorded vehicle of ₹ 20,000 at ₹ 25,000 and the balance was paid to him in Cash.
4. Furniture of ₹ 20,000 and goodwill of ₹ 30,000 were appearing in the Balance Sheet but no other information was provided regarding these two items.

Note: Intangible Asset i.e., Goodwill realised no value.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	X’s Loan A/c Dr.		40,000	—
	To Realisation A/c		—	40,000
	(Being X’s loan settled by giving an unrecorded asset)
	Realisation A/c Dr.		8,800	—
	To Bank A/c		—	8,800
	(Being balance amount paid to Raman after giving unrecorded computer)
	Realisation A/c Dr.		15,000	—
	To Bank A/c		—	15,000
	(Being balance amount paid to unrecorded creditor Sudhir after giving unrecorded vehicle)
	Bank A/c Dr.		20,000	—
	To Realisation A/c		—	20,000
	(Being furniture realised at book value)

Working Note:

Value of computer = ₹ 18,000 − 10% = ₹ 16,200

Cash paid = ₹ 25,000 − ₹ 16,200 = ₹ 8,800

Cash paid to Sudhir = ₹ 40,000 − ₹ 25,000 = ₹ 15,000

Goodwill is assumed to realise nil value, so no entry is passed for it.