Give journal entries for the following transactions:
1. To record the Realisation of various assets and liabilities,
2. A Firm has a Stock of Rs 1,60,000. Aziz, a partner took over 50% of the Stock at a discount of 20%,
3. Remaining Stock was sold at a profit of 30% on cost,
4. Land and Buildging (book value Rs 1,60,000) sold for Rs 3,00,000 through a broker who charged 2%, commission on the deal,
5. Plant and Machinery (book value Rs 60,000) was handed over to a Creditor at an agreed valuation of 10% less than the book value,
6. Investment whose face value was Rs 4,000 was realised at 50%.
Solution
Journal Entries
| Particulars | L.F. |
Amount (Rs.) |
Amount (Rs.) | |
| 1 (a) | For Transfer of Assets : Realisation A/c Dr. To Assets A/c (Individually) (Assets transferred to Realisation Account) |
- | - | |
| (b) | For Transfer of Liabilities : Liabilities A/c (Individually) Dr. To Realisation A/c (Liabilities transferred to Realisation Account) |
- | - | |
| (c) | For sale of Asset Cash/Bank A/c Dr. To Realisation A/c (Assets sold) |
- | - | |
| (d) |
For liabilitiy paid |
- | - | |
| 2) | Aziz’s Capital A/c Dr. To Realisation A/c (Aziz, a partner took over 50% of stock at 20% discount, the value of the total stock was Rs 1,60,000) [1,60,000 × (50/100) × (80/100) = Rs 64,000] |
64,000 | 64,000 | |
| 3) | Bank A/c Dr. To Realisation A/c (Stock worth Rs 80,000 sold at a profit of 30% on cost) [80,000 × (130/100 = Rs 1,04,000)] |
104,000 | 104,000 | |
| 4) | Bank A/c Dr. To Realisation A/c (Land and Building sold for Rs 3,00,000 and 2% commission paid to the broker) |
294,000 | 294,000 | |
| 5) | No entry (Plant and Machinery Rs 60,000 handed over to the creditors at a discount of 10%. No entry is required as both the asset and liability are already transferred to the Realisation Account) |
- | - | |
| 6) | Bank A/c Dr. To Realisation A/c (Investments worth Rs 4,000 were realised at 50%) |
2,000 | 2,000 |
NOTE: In this chapter, it has been assumed that all receiving and payments are made through bank.
