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 Building (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 Entries.

$$\begin{array}{cccccc}1.\left(i\right)& \text{Transfer of Assets to Realisation and Payment of Liabilities}& & & & \\ & & & & & \\ & \text{Realisation A/c}& \text{Dr.}& & & \\ & \text{To Assets}\left(\text{Separately}\right)& & & & \\ & \text{To Cash/Bank}\left(\text{Liability paid}\right)& & & & \\ & \underset{–}{\text{(Assets transferred to realisation and liabilities paid)}}& & & & \\ \left(ii\right)& \text{For Transfer of Liabilities to Realisation and Sale of Assets}& & & & \\ & & & & & \\ & \text{Liabilities A/c}\left(\text{Separately}\right)& \text{Dr.}& & & \\ & \text{Cash / Bank A/c}& \text{Dr.}& & & \\ & \text{To Realisation A/c}& & & & \\ & \underset{–}{\text{(Liabilities transferred to realisation and assets sold)}}& & & & \\ \left(iii\right)& \text{For Sales of Assets}& & & & \\ & \text{Cash / Bank A/c}& \text{Dr.}& & & \\ & \text{To Realisation A/c}& & & & \\ & \underset{–}{\text{(Assets sold)}}& & & & \\ \left(iv\right)& \text{For Liabilities Paid}& & & & \\ & \text{Realisation A/c}& \text{Dr.}& & & \\ & \text{To Cash / Bank A/c}& & & & \\ & \underset{–}{\text{(Liabilities paid)}}& & & & \\ 2.& \text{Aziz's Capital A/c}& \text{Dr.}& 64,000& & \\ & \text{To Realisation A/c}& & & 64,000& \\ & \underset{–}{\text{(50}\%\text{of stock taken over by partner Aziz at 20}\%\text{discount}}& & & & \\ 3.& \text{Bank A/c}& \text{Dr.}& 1,04,000& & \\ & \text{To Realisation A/c}& & & 1,04,000& \\ & \text{(50\% remaining stock worth}& & & & \\ & \underset{–}{\text{Rs. 80,000 sold at 30\% profit i.e., 24,000 + 80,000)}}& & & & \\ 4.& \text{Bank A/c}& \text{Dr.}& 2,94,000& & \\ & \text{To Realisation A/c}& & & 2,94,000& \\ & \text{(Being land building sold for}& & & & \\ & \underset{–}{\text{Rs. 3,00,000 and paid 2\% commision to broken out of it)}}& & & & \\ 5.& \text{No entry will be}& & & & \\ & \underset{–}{\text{passed as no cash/bank is involved}}& & & & \\ 6.& \text{Bank A/c}& \text{Dr.}& 2,000& & \\ & \text{To Realisation A/c}& & & 2,000& \\ & \text{(Investments worth Rs. 4,000 realised}& & & & \\ & \text{at 50\% of book value)}& & & & \end{array}$$