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Lal and Pal Were Partners in a Firm Sharing Profits in the Ratio of 3: 7. on 1.4.2015 Their Firm Was Dissolved. After Transferring Assets (Other than Cash) and Outsider'S Liabilities to Realisation Account, You Are Given the Following Information: (A) a Creditor of Rs.3,60,000 Accepted Machinery Valued at Rs.5,00,000 and Paid to the Firm Rs.1,40,000. - Accountancy

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Lal and Pal were partners in a firm sharing profits in the ratio of 3: 7. On 1.4.2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to realisation account, you are given the following information:

(a) A creditor of Rs.3,60,000 accepted machinery valued at Rs.5,00,000 and paid to the firm Rs.1,40,000.

(b) A Second creditor for Rs.50,000 accepted stock at Rs.45,000 in full settlement of his claim.

(c) A third creditor amounting to Rs.90,000 accepted Rs.45,000 in cash and investments worth Rs.43,000 in full settlement of his claim.

(d) Loss on dissolution was Rs.15,000.

Pass necessary journal entries for the above transactions in the books of firm assuming that all payments were made by cheque.

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Solution

                                                                                           In the books of ……

                                                                                               Journal

Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)

(a)

 

 

 

(b)

 

(c)

 

 

 

(d)

 

 

 

 

Bank A/c                                                                                                                                                  Dr

          To Realisation A/c

(Being a creditor of Rs.3,60,000 accepted machinery valued at Rs.5,00,000 and paid Rs.1,40,000 to the firm)

 

No entry

 

Realisation A/c                                                                                                                                          Dr

        To Bank A/c

(Being a third creditor of Rs.90,000 accepted Rs.45,000 in cash and investments worth Rs.43,000 in full settlement of his claim)

 

Lal’s Capital A/c                                                                                                                                         Dr

Pal’s Capital A/c                                                                                                                                         Dr

            To Realisation A/c

(Being loss on dissolution transferred to partners capital accounts)

 

1,40,000

 

 

 

 

 

 

45,000

 

 

 

4,500

10,500

 

 

 

1,40,000

 

 

 

 

 

 

45,000

 

 

 

 

15,000

 

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

Concept: Dissolution of Partnership Firm
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