Question

Pass necessary journal entries for the following transactions on the dissolution of the partnership firm of Mansha and Rajiv after various assets (other than cash) and external liabilities have been transferred to the Realisation Account:

1. Mansha’s loan of ₹ 18,000 was settled by giving her an unrecorded furniture of ₹ 20,000.
2. The machinery of the book value of ₹ 80,000 was sold at a loss of 10%.
3. A creditor of ₹ 40,000 ассеpted cash of ₹ 21,000 and stock of the book value of 25,000 in full settlement of his claim.
4. Bank loan of ₹ 1,00,000 was paid along with interest of ₹ 10,000.
5. Investment, of the face value was ₹ 52,000 were sold in the open market for ₹ 63,000 for which a commission of ₹ 2,000 were sold in the open market for ₹ 63,000 for which a commission of ₹ 2,000 was paid to the broker.
6. Profit and Loss Account balance of ₹ 30,000 appeared on the asset side of the balance sheet.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
i.	Mansha’s Loan A/c   Dr.		18,000	−
	Bank A/с   ...Dr.		2,000	−
	To Realisation A/c		−	20,000
	(Being Mansha’s loan settled by giving unrecoded forfeiture)
ii.	Bank A/c   ...Dr.		72,000	−
	To Realisation A/c		−	72,000
	(Being Machinery realised @ 10% loss)
iii.	Realisation A/c   ...Dr.		21,000	−
	To Bank A/c		−	21,000
	(Being payment made to creditors)
iv.	Realisation A/c   ...Dr.		1,10,000	−
	To Bank A/c		−	1,10,000
	(Being a bank loan paid with interest)
v.	Bank A/c  ...Dr.		63,000	−
	To Realisation A/c		−	63,000
	(Being investments realised)
vi.	Realisation A/c   ...Dr.		2,000	−
	To Bank A/c		−	2,000
	(Being commission paid)
vii.	Mansha’s Capital A/c   ...Dr.		15,000	−
	Rajiv’s Capital A/c   ...Dr.		15,000	−
	To Profit and Loss A/c		−	30,000
	(Being loss debited to partners’ capital Account in their profit-sharing ratio)