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%.

Answer 1

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.