Question

X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1 respectively. The firm was dissolved on 1st March, 2013. After transferring assets (other than cash) and third party liabilities to the 'Realisation Account' you are provided with the following information:
(a) There was a balance of ₹ 18,000 in the firm's Profit and Loss Account.
(b) There was an unrecorded bike of ₹ 50,000 which was taken over by X.
(c) Creditors of ₹ 5,000 were paid ₹ 4,000 in full settlement  of accounts.
Pass necessary Journal entries for the above at the time of dissolution of firm.

Answer 1

Journal

Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
1.	Profit and Loss A/c*	Dr.		18,000
	To X’s Capital A/c				9,000
	To Y’s Capital A/c				6,000
	To Z’s Capital A/c				3,000
	(Balance in P&L A/c divided among Partners in the ratio of 3:2:1)
2.	X’s Capital A/c	Dr.		50,000
	To Realisation A/c				50,000
	(An unrecorded asset taken over by X)
3.	Realisation A/c	Dr.		4,000
	To Bank A/c				4,000
	(Creditors were paid Rs 4,000 in full settlement
	of their claim of Rs 5,000)

*Balance in Profit and Loss A/c always mean positive balance i.e. credit balance.