Question

Aman and Harsh were partners in a firm. They decided to dissolve their firm. Pass necessary journal entries for the following after various assets (other than Cash and Bank) and third party liabilities have been transferred to Realisation A/c.

(a) There was furniture worth Rs. 50,000. Aman took over 50% of the furniture at 10% discount and the remaining furniture was sold at 30% profit on book value.

(b) Profit and Loss Account was showing a credit balance of Rs. 15,000 which was distributed between the partners.

(c) Harsh's loan of Rs. 6,000 was discharged at R.s 6,200.

(d) The firm paid realization expenses amounting to Rs. 5,000 on behalf of Harsh who had to bear these expenses.

(e) There was a bill for Rs. 1,200 under discount. The bill was received from Soham who proved insolvent and a first and final dividend of 25% of bill amount was received from his estate.

(f) Creditors, to whom the firm owed Rs. 6,000, accepted stock of Rs. 5,000 at a discount of 5% and the balance in cash.

(g) The loss on dissolution was Rs. 8,000.

Answer 1

JOURNAL

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Dr. (Rs)}& \text{Cr. (Rs.)}\\ \text{(a)}& \text{Aman's Capital A/c}& \text{Dr.}& & 22,500& \\ & \text{Bank A/c}& & & 32,500& \\ & \text{To Realisation A/c}& & & & 55,000\\ & \text{(Half of the furniture taken over by Aman and the}& & & & \\ & \text{remaining half realised at 30\% profit)}& & & & \\ \text{(b)}& \text{Profit and Loss A/c}& \text{Dr.}& & 15,000& \\ & \text{To Aman's Capital A/c}& & & & 7,500\\ & \text{To Harsh's Capital A/c}& & & & 7,500\\ & \text{(Balance of Profit and Loss Account credited to the}& & & & \\ & \text{partners in their profit sharing ratio)}& & & & \\ \text{(c)}& \text{Realisation A/c}& \text{Dr.}& & 6,200& \\ & \text{To Bank A/c}& & & & 6,200\\ & \text{(Harsh's Loan of Rs 6,000 discharged at Rs 6,200)}& & & & \\ \text{(d)}& \text{Harsh's Capital A/c}& \text{Dr.}& & 5,000& \\ & \text{To Bank A/c}& & & & 5,000\\ & \text{(Realisation expenses paid on behalf of Harsh)}& & & & \\ \text{(e)}& \text{Realisation A/c}& \text{Dr.}& & 1,200& \\ & \text{To Bank A/c}& & & & 1,200\\ & \text{(Payment made to the bank from whom the bill was}& & & & \\ & \text{discounted)}& & & & \\ & \text{Bank A/c}& \text{Dr.}& & 300& \\ & \text{To Realisation A/c}& & & & \\ & \left(25\%\text{of the dishonoured bill recovered}\right)& & & & 300\\ \text{(f)}& \text{Realisation A/c}& \text{Dr.}& & 1,250& \\ & \text{To Bank A/c}& & & & 1,250\\ & \text{(Stock accepted by Creditors and the balance amount}& & & & \\ & \text{paid in Cash)}& & & & \\ \text{(g)}& \text{Aman's Capital A/c}& \text{Dr.}& & 4,000& \\ & \text{Harsh's Capital A/c}& \text{Dr.}& & 4,000& \\ & \text{To Realisation A/c}& & & & 8,000\\ & \text{(Loss on realisation transferred to capital account of partners)}& & & & \end{array}$