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Prem and Suresh were partners in a firm sharing profits in the ratio of 7: 8. On 1.4.2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to realisation account, you given the following information - Accountancy

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Prem and Suresh were partners in a firm sharing profits in the ratio of 7: 8. On 1.4.2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to realisation account, you given the following information :

(a) Raman, a creditor of  Rs 4, 00,000 accepted land valued at Rs 7,00,000 and paid Rs 3,00,000 to the firm.

(b) Gopal, a second creditor for Rs 1,05,000 accepted  Rs 90,000 in cash and investments of  Rs 14,000 in full settlement of his account.

(c) Hari, a third creditor amounting to Rs 75,000 accepted stock of the book value of Rs 60,000 for Rs 45,000 and the balance was paid to him by cheque.

(d) Loss on dissolution was Rs 45,000.

Pass necessary journal entries for the above transactions in the books of the firm.

 

 

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Solution

In the books of ……
Journal

Date

 

Particulars

 

L.F.

 

Dr.

Rs

Cr.

Rs

(a)

 

 

 

Bank A/c                                                                                        Dr

               To Realisation A/c

(Being a creditor of Rs 4,00,000 accepted machinery valued
at Rs 7,00,000 and paid Rs 3,00,000 to the firm)

 

                    3,00,000

 

 

 

                 3,00,000

(b)

 

 

 

Realisation A/c

                To Cash A/c

(Being Gopal, a second creditor of Rs 1,05,000 accepted Rs 90,000 in cash and investment of Rs 14,000 in full settlement)

 

                       90,000

 

 

                    90,000

(c)

 

 

 

Realisation A/c                                                                              Dr

               To Bank A/c

(Being Hari, a third creditor of Rs 75,000 accepted Stock of book value of Rs 60,000 for Rs 45,000 and balance paid by cheque)

 

                       30,000

 

 

                    30,000

(d)

 

 

 

Prem’s Capital A/c                                                                         Dr

Suresh’s Capital A/c                                                                      Dr

                To Realisation A/c

(Being loss on dissolution transferred to partners capital accounts)

 

                      21,000

                      24,000

 

 

                    45,000
Concept: Dissolution of Partnership Firm
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