Question

Aman and Harsh were partners in a firm. They decided to dissolve their firm. Pass necessary Journal entries for following after various assets (other than Cash and Bank) and the third party liabilities have been transferred to Realisation Account:
(a) There was furniture worth Rs. 50,000. Aman took over 50% of the furniture at 10% discount and the remaining furniture was sold showing at 30% profit on the book value.
(b) Profit and Loss Account was showing a credit balance of Rs. 15,000 on the date of dissolution.
(c) Harsh's loan of Rs. 6,000 was discharged at Rs. 6,200.
(d) The firm paid realisation expenses amounting to Rs. 5,000 on behalf of Harsh who had 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% was received from his estate.
(f) Creditors, to who, the firm owned Rs. 6,000, accepted stock of Rs. 5,000 at a discount of 5% and the balance in cash.

Answer 1

(a) Bank A/c Dr. 32500

Aman's Capital A/c Dr. 22500

To Realisation A/c 55000

(Being 50% of asset sold at 30% profit and 50% of asset taken over by Aman at 10% discount)

(b) Profit and Loss A/c Dr. 15000

To Aman's Capital A/c 7500

To Harsh's Capital A/c 7500

(Being profit and loss distributed among partners equally)

(c) Harsh's Loan A/c Dr. 6200

To Bank A/c 6200

(Being Harsh's loan paid off)

(d) Harsh's Capital A/c Dr. 5000

To Bank A/c 5000

(Being realisation expenses borne by the firm on behalf of Harsh)

(e) Bank A/c Dr. 300

To Realisation A/c 300

(Being bad debt recovered @25%)

(f) Realisation A/c Dr. 1250

To Bank A/c 1250

(Being cash given to discharge creditors)