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R and L were partners in a firm sharing profits in the ratio of 13:7. On 4-3-2016 their firm was dissolved. After transferring assets (other than cash) and outsiders liabilities to the realization account, you are given the following information - CBSE (Arts) Class 12 - Accountancy

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Question

R and L were partners in a firm sharing profits in the ratio of 13:7. On 4-3-2016 their firm was dissolved. After transferring assets (other than cash) and outsiders liabilities to the realization account, you are given the following information :

(a) Subh, a creditor for Rs 4,90,000 accepted building at Rs 6,50,000 and paid the balance to the firm by a cheque.

(b) Sudha, a second creditor for Rs 1, 80,000 accepted machinery of the book value of Rs 1,80,000 at Rs 1,76,000 in full settlement of his claim.

(c) Sudhir, a third creditor for Rs 2,00,000 accepted investments of Rs 1,20,000 and a bank draft of Rs 79,000 in full settlement of his claim.

(d) Loss on dissolution was Rs 30,000. Pass necessary journal entries for the above transactions in the books of the firm

Solution

                                                                                   Journal

Date Particulars L.F.

Dr.

Rs

Cr.

Rs

(a)

 

 

 

(b)

(c)

 

 

(d)

 

 

 

Bank A/c                                                        Dr

            To Realisation A/c

(Being Subh accepted building valued at Rs 6,50,000 and
paid the balance to the firm)

No entry

Realisation A/c                                            Dr

               To Bank A/c

(Being Sudhir accepted investments at Rs 1,20,000 and Rs 79,000 through bank draft in full settlement of his claim)

R’s Capital A/c                           Dr

L’s Capital A/c                           Dr

             To Realisation’s A/c

(Being loss on dissolution transferred to partners capital accounts)

 

1,60,000

 

 

 

 

79,000

 

 

19,500

10,500

 

 

 

1,60,000

 

 

 

 

79,000

 

 

 

30,000

 

Note : No entry will be made when asset is taken over by the creditor

  Is there an error in this question or solution?

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Solution R and L were partners in a firm sharing profits in the ratio of 13:7. On 4-3-2016 their firm was dissolved. After transferring assets (other than cash) and outsiders liabilities to the realization account, you are given the following information Concept: Dissolution of a Partnership Firm.
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