Question

Pass journal entries in the following cases?

1. Expenses of realisation ₹ 600 to be borne by the firm and are paid by Harsh, a partner.
2. Mohan, one of the partners of the firm, was asked to carry out the dissolution of the firm for which he was allowed a salary of 20,000. Expenses for dissolution were ₹ 5,000.
3. Motor car of book value ₹ 50,000 taken by a creditor for ₹ 40,000 in settlement.

[Hint: (c) Entry will not be passed for asset taken by creditor.]

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
(a)	Realisation A/c   ...Dr.		600	-
	To Harsh’s Capital A/c		-	600
	(Being realisation expenses borne by the firm and paid by partner Harsh)
(b)(i)	Realisation A/c   ...Dr.		20,000	-
	To Mohan’s Capital A/c		-	20,000
	(Being salary/remuneration allowed to partner Mohan for dissolution work)
(ii)	Realisation A/c   ...Dr.		5,000	-
	To Bank/Cash A/c		-	5,000
	(Being actual dissolution expenses paid by the firm)
(c)	No Journal Entry (Since a creditor took over a firm’s asset in settlement of dues)