Question

Give the necessary journal entries in each of the following alternative cases :

(i) Realisation expenses amounted to Rs. 500.

(ii) Realisation expenses paid by the firm amounted to Rs. 500 and the partner has to bear the realisation expenses.

(iii) 'A' one of the partners was to bear all the realisation expenses for which he was given a commission of 2% of net cash realised from dissolution. Cash realised from assets was Rs 25,000 and cash paid for liabilities amounted to Rs 5,000

Answer 1

JOURNAL

$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{L.F.}& \text{Dr. (Rs)}& \text{Cr. (Rs)}\\ \text{(i)}& \text{Realisation A/c}\text{Dr.}& & 500& \\ & \text{To Bank A/c}& & & 500\\ & \text{(Payment of realisation expenses)}& & & \\ & \underset{–}{}& & & \\ \text{(ii)}& \text{Partner's Capital A/c}\text{Dr.}& & 500& \\ & \text{To Bank A/c}& & & 500\\ & \text{(Payment of realisation expenses by the firm on behalf of}& & & \\ & \text{the partner)}& & & \\ & \underset{–}{}& & & \\ \text{(iii)}& \text{Bank A/c}\text{Dr.}& & 25,000& \\ & \text{To Realisation A/c}& & & 25,000\\ & \text{(Amount realised on sale of assets)}& & & \\ & \underset{–}{}& & & \\ & \text{Realisation A/c}\text{Dr.}& & 5,000& \\ & \text{To Bank A/c}& & & 5,000\\ & \text{(Amount paid for liabilities)}& & & \\ & \underset{–}{}& & & \\ & \text{Realisation A/c}\text{Dr.}& & 400& \\ & \text{To A's Capital A/c}& & & 400\\ & \text{(Commission allowed to A)}@2\%\text{on Rs 20,000}& & & \\ & \text{i.e., 25,000 - 5,000)}& & & \end{array}$