Question

Pass the necessary journal entries for the following transaction of the dissolution of the firm of James and Haider who were sharing profits and losses in the ratio of 2 : 1.

The various assets (other than cash) and outside liabilities have been transferred to Realisation Account:

(i) James agreed to pay off his brother’s loan Rs 10,000

(ii) Debtors realized Rs 12,000

(iii) Haider took over all investment at Rs 12,000

(iv) Sundry creditors Rs 20,000 were paid at 5% discount

(v) Realisation expenses amounted to Rs 2,000

(vi) Loss on realization was Rs 10,200.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
(i)	Realisation A/c	Dr.		10,000
	To James’s Capital A/c				10,000
	(James agreed to pay his brother’s loan)
(ii)	Bank A/c	Dr.		12,000
	To Realisation A/c				12,000
	(Debtors realized)
(iii)	Haider’s Capital A/c	Dr.		12,000
	To Realisation A/c				12,000
	(Haider took over investment)
(iv)	Realisation A/c	Dr.		19,000
	To Bank A/c				19,000
	(Sundry creditors Rs 20,000 paid at a discount of Rs 1,000)
(v)	Realisation A/c	Dr.		2,000
	To Bank A/c				2,000
	(Realisaiton expenses paid)
(vi)	James’s Capital A/c	Dr.		6,800
	Haider’s Capital A/c	Dr.		3,400
	To Realisation A/c				10,200
	(Loss on Realisation transferred to Partners’ Capital Accounts)