Question

Lal and Pal were partners in a firm sharing profits in the ratio of 3 : 7. On 1st April, 2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to Realisation Account, you are given the following information:
(a) A creditor of ₹ 3,60,000 accepted machinery valued at ₹ 5,00,000 and paid to the firm ₹ 1,40,000.
(b) A second creditor for ₹ 50,000 accepted stock at ₹ 45,000 in full settlement of his claim.
(c) A third creditor amounting to ₹ 90,000 accepted ₹ 45,000 in cash and investments worth ₹ 43,000 in full settlement of his claim.
(d) Loss on dissolution was ₹ 15,000.
Pass necessary Journal entries for the above transactions in the books of firm assuming that all payments were made by cheque.

Answer 1

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In the books of … Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
(a)	Bank A/c	Dr.		1,40,000
	To Realisation A/c				1,40,000
	(A creditor of Rs 3,60,000 accepted machinery valued at Rs 5,00,000 and paid Rs 1,40,000 to the firm)
(b)	No entry
(c)	Realisation A/c	Dr.		45,000
	To Cash A/c				45,000
	(A third creditor of Rs 90,000 accepted Rs 45,000 in cash and investments worth Rs 43,000 in full settlement of his claim)
(d)	Lal’s Capital A/c	Dr.		4,500
	Pal’s Capital A/c	Dr.		10,500
	To Realisation A/c				15,000
	(Loss on dissolution transferred to partners’ capital accounts)

Note: No entry will be made when asset is taken over by the creditor