Question

The following is the Balance Sheet of X and Y as at 30th June, 2022.

Liabilities	Amount (₹)	Assets		Amount (₹)
Sundry Creditors	20,000	Goodwill		10,000
Bills Payable	20,000	Buildings		25,000
Bank Overdraft	8,000	Plant		25,000
Outstanding Expenses	2,000	Investments		15,300
X’s brother’s Loan	20,000	Stock		8,700
Y’s Loan	10,000	Debtors	17,000	15,000
Investment Fluctuation Fund	2,800	Less: Provision	2,000
Employees’ Provident Fund	1,200	Bills Receivable		10,000
General Reserve	2,000	Cash & Bank		13,000
X’s Capital	20,000	Profit and Loss A/c (Dr. Balance)		4,000
Y’s Capital	20,000
	1,26,000			1,26,000

The firm was dissolved on 30th June, 2022 and the following arrangements were decided upon:

1. X agreed to pay off his brother’s loan;
2. Debtors realised ₹ 12,000;
3. Y took over all the investments at ₹ 12,000.
4. Other assets realised as follows:
   Plant - ₹ 20,000, Building - ₹ 50,000, Goodwill - ₹ 6,000
5. Sundry Creditors and bills payable were settled at 5% discount, Y accepted Stock at ₹ 8,000 and X took over Bills Receivable at 20% discount.
6. Realisation Expenses amounted to ₹ 2,000.

You are required to pass Journal Entries.

Answer 1

Journal Entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2018
June 30	Realisation A/c    ...Dr.		1,11,000	-
	To Goodwill A/c		-	10,000
	To Buildings A/c		-	25,000
	To Plant A/c		-	25,000
	To Investments A/c		-	15,300
	To Stock A/c		-	8,700
	To Debtors A/c		-	17,000
	To Bills Receivable A/c		-	10,000
	(Being Transfer of various assets except cash and P & L A/c to Realisation A/c, at book values)
June 30	Provision for bad debts A/c    ...Dr.		2,000	-
	Sundry Creditors A/c    ...Dr.		20,000	-
	Bills Payable A/c    ...Dr.		20,000	-
	Bank Overdraft A/c     ...Dr.		8,000	-
	Outstanding Expenses A/c    ...Dr.		2,000	-
	X’s brother’s Loan A/c    ...Dr.		20,000	-
	Investment Fluctuation Fund A/c    ...Dr.		2,800	-
	Employees’ Provident Fund A/c    ...Dr.		1,200	-
	To Realisation A/c		-	76,000
	(Being Outside liabilities and provision transferred to Realisation A/c, at book values)
June 30	X’s Capital A/c    ...Dr.		2,000	-
	Y’s Capital A/c    ...Dr.		2,000	-
	To Profit and Loss A/c		-	4,000
	(Being Dr. balance of Profit & Loss A/c debited to partners Capital A/c)
June 30	General Reserve A/c       ...Dr.		2,000	-
	To X’s Capital A/c		-	1,000
	To Y’s Capital A/c		-	1,000
	(Being General Reserve credited to partners Capital A/cs)
June 30	Realisation A/c    ...Dr.		20,000	-
	To X’s Capital A/c		-	20,000
	(Being X’s brother’s loan taken over by X)
June 30	Bank A/c    ...Dr.		12,000	-
	To Realisation A/c		-	12,000
	(Being Debtors realised)
June 30	Y’s Capital A/c    ...Dr.		12,000	-
	To Realisation A/c		-	12,000
	(Being invetments taken over by Y)
June 30	Bank A/c    ...Dr.		76,000	-
	To Realisation A/c		-	76,000
	(Being Amount realised on sale of Assets)
June 30	Realisation A/c    ...Dr.		38,000	-
	To Bank A/c		-	38,000
	(Being Sundry creditors and Bills Payable paid at 5% discount)
June 30	Realisation A/c    ...Dr.		8,000	-
	To Bank A/c		-	8,000
	(Being Bank Overdraft paid off)
June 30	X’s Capital A/c    ...Dr.		8,000	-
	Y’s Capital A/c    ...Dr.		8,000	-
	To Realisation A/c		-	16,000
	(Being Stock taken over by Y and Bills receivable taken over by X at 20% discount)
June 30	Realisation A/c    ...Dr.		3,200	-
	To Bank A/c		-	3,200
	(Being payment of Outstanding Expenses and Employees’ Provident Fund)
June 30	Realisation A/c    ...Dr.		2,000	-
	To Bank A/c		-	2,000
	(Being Payment of Realisation expenses)
June 30	Y’s Loan A/c    ...Dr.		10,000	-
	To Bank A/c		-	10,000
	(Being payment of Y’s Loan)
June 30	Realisation A/c    ...Dr.		9,800	-
	To X’s Capital A/c		-	4,900
	To Y’s Capital A/c		-	4,900
	(Being Profit on realisation transferred to partners capital A/cs)
June 30	X’s Capital A/c    ...Dr.		35,900	-
	Y’s Capital A/c    ...Dr.		3,900	-
	To Bank A/c		-	39,800
	(Being Final Payment made to partners)