Book Value of assets (other than cash and bank) transferred to Realisation Account is ₹ 1,00,000. 50% of the assets are taken over by a partner Atul, at a discount of 20%; 40% of the remaining assets are sold at a profit of 30% on cost; 5% of the balance being obsolete, realised nothing and remaining assets are handed over to a Creditor, in full settlement of his claim.
You are required to record the Journal entries for realisation of assets.

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Solution

Journal

Date

Particulars

L.F.

Amount

(₹)

Amount

(₹)

Realisation A/c

Dr.

1,00,000

To Sundry Assets A/c

1,00,000

(All assets other than cash and bank transferred to Realisation Account)

Atul’s Capital A/c

Dr.

40,000

To Realisation A/c

40,000

(Atul took over 50% of assets worth Rs 1,00,000 at 20% discount)[1,00,000 @ 50% @ 80%]

Bank A/c

Dr.

26,000

To Realisation A/c

26,000

(Assets worth Rs 20,000, i.e. 40% of assets of Rs 50,000 are soldat a profit of 30%) [50,000 × (40/100) × (130/100)]

No entry for obsolete assets and for the assets givento the creditors in the full settlement as these are already transferred tothe Realisation Account)

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Similar questions

Give journal entries for the following transactions:

1. To record the Realisation of various assets and liabilities,

2. A Firm has a Stock of Rs 1,60,000. Aziz, a partner took over 50% of the Stock at a discount of 20%,

3. Remaining Stock was sold at a profit of 30% on cost,

4. Land and Buildging (book value Rs 1,60,000) sold for Rs 3,00,000 through a broker who charged 2%, commission on the deal,

5. Plant and Machinery (book value Rs 60,000) was handed over to a Creditor at an agreed valuation of 10% less than the book value,

6. Investment whose face value was Rs 4,000 was realised at 50%.

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Journal
Date	Particulars		L.F.	Amount (₹)	Amount (₹)
	Realisation A/c	Dr.		1,00,000
	To Sundry Assets A/c				1,00,000
	(All assets other than cash and bank transferred to Realisation Account)

	Atul’s Capital A/c	Dr.		40,000
	To Realisation A/c				40,000
	(Atul took over 50% of assets worth Rs 1,00,000 at 20% discount)[1,00,000 @ 50% @ 80%]

	Bank A/c	Dr.		26,000
	To Realisation A/c				26,000
	(Assets worth Rs 20,000, i.e. 40% of assets of Rs 50,000 are soldat a profit of 30%) [50,000 × (40/100) × (130/100)]

	No entry for obsolete assets and for the assets givento the creditors in the full settlement as these are already transferred tothe Realisation Account)