A creditor to whom Rs. 10,000 was due accepts office equipment worth Rs. 8,000 and is paid Rs. 2,000 in cash, the entry shall be made for the payment of _________ only.

Rs. 10,000

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Rs. 2,000

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Rs. 8,000

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Rs. 18,000

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Solution

The correct option is C Rs. 2,000
Journal entry needs to be recorded, for settlement with the creditor through transfer of assets when a creditor accepts an asset in full and final settlement of his account. The entry is made for cash payment only, if the creditor accepts an asset only as part payment of his/her dues. For example, a creditor to whom Rs. 10,000 was due accepts office equipment worth Rs. 8,000 and is paid Rs. 2,000 in cash, the entry is made for the payment of Rs. 2,000 only.

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Similar questions

Record necessary journal entries in the following cases

(a) Creditors worth Rs. 85,000 accepted Rs. 40,000 as cash and investment worth Rs. 43,000, in full settlement of their claim.

(b) Creditors were Rs. 16,000. They accepted Machinery valued at Rs. 18,000 in settlement of their claim.

Q. Record necessary Journal entries in the following cases:
(a) Creditors worth Rs. 85,000 accepted Rs. 40,000 as cash and investment worth Rs. 43,000, in full settlement of their claim.
(b) creditors were Rs. 16,000. They accepted Machinery valued at Rs. 18,000 in settlement of their claim.
(c) Creditors were Rs. 90,000. They accepted building valued at Rs. 1,20,000 and paid cash to the firm Rs. 30,000.

Bobbie opened a consulting firm and copleted these trannsactions during November, 2005

(a) Invested Rs 4,00,000 cash and office equipment with Rs 1, 50,000 in a business called Bobbie Consulting.

(b) Purchased land and a small building . The land was worth Rs. 1, 50,000 and the building worth Rs 3,50,000. The purchase price was price was paid with Rs 2,00,000 cash and a long term note payable for Rs 8,00,000.

(d) Bobbie transferred title of motor car to the business. The motor car was worth Rs 90,000.

(e) Purchased for Rs 30,000 additional office equipment on credit.

(f) Paid Rs 7,500 salary to the office manager.

(g) Provide services to a client and collected Rs 30,000.

(h) Paid Rs 4,000 for the month's utilities.

(i) Paid supplier created in transaction (c).

(j) Purchase new office equipment by paying Rs 93,000 cash and trading in old equipment with a recorded cost of Rs 7,000.

(k) Completed services of a client for Rs 26,000. This amount is to be paid within 30 days.

(l) Received Rs 19,000 payment from the client created in transaction (k).

(m) Bobbie withdrew Rs 20,000 from the business.

Analyse the above stated transactions and open the following T- accounts

Cash, client, office supplies, motor car, building, land , long term payables, capital , withdrawals, salary, expense and utilies expense.

Bobby opened a consulting firm and completed these transactions during November, 2005:

(a)	Invested Rs 4,00,000 cash and office equipment with Rs 1,50,000 in a business called Bobbie Consulting.
(b)	Purchased land and a small office building. The land was worth Rs 1,50,000 and the building worth Rs 3,50,000. The purchase price was paid with Rs 2,00,000 cash and a long term note payable for Rs 8,00,000.
(c)	Purchased office supplies on credit for Rs 12,000.
(d)	Bobbie transferred title of motor car to the business. The motor car was worth Rs 90,000.
(e)	Purchased for Rs 30,000 additional office equipment on credit.
(f)	Paid Rs 75,00 salary to the office manager.
(g)	Provided services to a client and collected Rs 30,000
(h)	Paid Rs 4,000 for the month’s utilities.
(i)	Paid supplier created in transaction (c).
(j)	Purchase new office equipment by paying Rs 93,000 cash and trading in old equipment with a recorded cost of Rs 7,000.
(k)	Completed services of a client for Rs 26,000. This amount is to be paid within 30 days.
(l)	Received Rs 19,000 payment from the client created in transaction (k).
(m)	Bobby withdrew Rs 20,000 from the business.

Analyse the above stated transactions and open the following T-accounts:

Cash, client, office supplies, motor car, building, land, long term payables, capital, withdrawals, salary, expense and utilities expense.

P and Q were partners in a firm. Pass journal entries for the following transactions on dissolution of the firm after various assets and external liabilities have been transferred to Realisation A/c :

(i) X, an unrecorded creditor of Rs. 10,000 was paid by partner P at a discount of 20%.

(ii) Y, an unrecorded creditor of Rs. 25,000, took over Computer at Rs. 30,000. Balance was paid by him in cash.

(iii) Computer of Rs. 25,000 and a Vehicle of Rs. 10,000 were appearing in the Balance Sheet but no other additional information was given regarding these items.

(iv) A creditor to whom Rs. 10,000 were to be paid accepted an unrecorded asset of Rs. 15,000 in full settlement of his claim.

(v) An unrecorded asset of Rs. 35,000 was given to an unrecorded creditor of Rs. 50,000 in settlement of his claim of Rs. 30,000 and the balance was paid to him in cash.

(vi) P's loan was appearing on the liabilities side of the Balance Sheet at Rs. 50,000. He accepted an unrecorded asset of Rs. 40,000 at Rs. 35,000 and the balance was paid to him in Cash.

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