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

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Solution

1. Realisation A/C.... Dr. 100000
To Sundry Assets A/C 100000
(Being assets transferred to Realisation account)

2. Atul's Capital A/C..... Dr. 40000
To Realisation A/C 40000
(Being assets taken over by Atul)
[ Note: 50%of 100000= 50000
Discount= 20% of 50000= 10000
Hence, value after discount= 50000-10000
= 40000]

3. Bank A/C.... Dr. 26000
To Realisation A/C 26000
(Being assets sold)
[ Note: 40% of 50000= 20000
Profit= 30% of 20000= 6000
Hence, value after profit= 20000+6000
= 26000]

4. No entry is passed since creditors are handed over obsolete assets in full settlement of their claim.

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Similar questions

Q. 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.

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%.

Q. Pass necessary Journal entries for the following transaction on the dissolution of the firm of P and Q after the various assets (other than cash) and outside liabilities have been transferred to realisation Account
(a) Bank loan worth Rs. 12,000 was paid.
(b) Stock worth Rs. 16,000 was taken over by partner Q.
(c) Partner P paid a creditor Rs. 4,000.
(d) An asset not appearing in the books of accounts realised Rs. 1,200.
(e) Expenses of realisation Rs. 2,000 were paid by partner Q.
(f) Profit on realisation Rs. 36,000 was distributed between P and Q in Rs. 5:4 ratio.

Pass the necessary Journal entries for the following transactions on the dissolution of the firm of P and Q after the various assets (other than cash) and outside liabilities have been transferred to Realisation Account.

(i) Bank loan Rs 12,000 was paid.

(ii) Stock worth Rs 16,000 was taken over by partners.

(iii) Partner P paid a creditor Rs 4,000.

(iv) An asset not appearing in the books of accounts realised Rs 1,200.

(v) Expenses of realisation Rs 2,000 were paid by partner Q.

(iv) Profit on realisation Rs 36,000 was distributed between P and Q in 5 : 4 ratio.

Q. Pass necessary Journal entries for the following transactions on the dissolution of the firm P and Q after the various assets (other than cash) and outside liabilities have been transferred to Realisation Account:
(a) Bank Loan ₹ 12,000 was paid.
(b) Stock worth ₹ 16,000 was taken over by partner Q.
(c) Partner P paid a creditor ₹ 4,000.
(d) An asset not appearing in the books of accounts realised ₹ 1,200.
(e) Expenses of realisation ₹ 2,000 were paid by partner Q.
(f) Profit on realisation ₹ 36,000 was distributed between P and Q in 5 : 4 ratio.

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