Question

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

1. Creditors worth ₹ 46,000 accepted ₹ 9,000 cash and furniture of ₹ 32,000 in full settlement of their claim.
2. The firm had stock of ₹ 20,000. Ajit took over 40% of the stock at a discount of 10% while the remaining stock was sold for ₹ 18,000.
3. Vibha was appointed to look after dissolution work for which she was allowed a remuneration of ₹ 16,000. Vibha agreed to bear the dissolution expenses. Actual dissolution expenses of ₹ 15,000 were paid by Vibha.
4. Ajit’s loan of ₹ 45,000 was settled at ₹ 42,000.
5. A machine which was not recorded in the books was taken over by Vibha at ₹ 23,000, whereas its expected value was ₹ 28,000.
6. The firm had a debit balance of ₹ 20,000 in the Profit and Loss Account on the date of dissolution.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
i.	No entry
ii.	Ajit’s Capital A/c   ...Dr.		7,200	−
	Bank A/с   ...Dr.		18,000	−
	To Realisation A/c		−	25,200
	(Being 40% stock taken over by Ajit at 10% discount, and the remaining sold for ₹ 18,000.)
iii.	Realisation A/c   ...Dr.		16,000	−
	To Vibha’s Capital A/c		−	16,000
	(Being the remuneration to partner credited to her capital account.)
iv.	Ajit’s Loan A/c   ...Dr.		45,000	−
	To Bank A/c		−	42,000
	To Realisation A/c		−	3,000
	(Being Ajit’s loan repaid)
v.	Vibha’s Capital A/c   ...Dr.		23,000	−
	To Realisation A/с		−	23,000
	(Being an unrecorded machine taken over by Vibha.)
vi.	Vibha’s Capital A/c   ...Dr.		10,000	−
	Ajit’s Capital A/c   ...Dr.		10,000	−
	To Profit and Loss A/c		−	20,000
	(Being loss debited to partners’ capital account in their profit sharing ratio.)