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Question

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%.


Solution

 

Journal

 

Particulars

L.F.

Amount

Rs

Amount

Rs

1)

 

 

 

 

 

(a)

For Transfer of Assets

 

 

 

 

 

Realisation A/c

Dr.

 

-

 

 

To Assets A/c (Individually)

 

 

 

-

 

(Assets transferred to Realisation Account)

 

 

 

 

 

 

 

 

 

 

(b)

For Transfer of Liabilities

 

 

 

 

 

Liabilities A/c (Individually)

Dr.

 

-

 

 

To Realisation A/c

 

 

 

-

 

(Liabilities transferred to Realisation Account)

 

 

 

 

 

 

 

 

 

 

(c)

For sale of Asset

 

 

 

 

 

Cash/Bank A/c

Dr.

 

-

 

 

To Realisation A/c

 

 

 

-

 

(Assets sold)

 

 

 

 

 

 

 

 

 

 

(d)

For liabilitiy paid

 

 

 

 

 

Realisation A/c

Dr.

 

-

 

 

To Cash/Bank A/c

 

 

 

-

 

(Liabilities paid)

 

 

 

 

 

 

 

 

 

 

2)

Aziz’s Capital A/c

Dr.

 

64,000

 

 

To Realisation A/c

 

 

 

64,000

 

(Aziz, a partner took over 50% of stock at 20% discount, the value

of the total stock  was Rs 1,60,000)

[1,60,000 × (50/100) × (80/100) = Rs 64,000]

 

 

 

 

 

 

 

 

 

3)

Bank A/c

Dr.

 

1,04,000

 

 

To Realisation A/c

 

 

 

1,04,000

 

(Stock worth Rs 80,000  sold at a profit of 30% on cost)

[80,000 × (130/100 = Rs 1,04,000)]

 

 

 

 

 

 

 

 

 

4)

Bank A/c

Dr.

 

2,94,000

 

 

To Realisation A/c

 

 

 

2,94,000

 

(Land and Building sold for Rs 3,00,000 and 2% commission

paid to the broker)

 

 

 

 

 

 

 

 

 

5)

No entry

 

 

 

 

 

(Plant and Machinery Rs 60,000 handed over to the creditors at a

discount of 10%.  No entry is required as both the asset and liability

are already transferred to the Realisation Account)

 

 

 

 

 

 

 

 

 

6)

Bank A/c

Dr.

 

2,000

 

 

To Realisation A/c

 

 

 

2,000

 

(Investments worth Rs 4,000 were realised at 50%)

 

 

 

 

 

 

 

 

 

NOTE: In this chapter, it has been assumed that all receiving and payments are made through bank.

 

 


Accountancy
Partnership Accounts
Standard XII

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