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Goodwill Valuation (Retirement)

Land and Buil...

Question

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. Journalise the transaction, at the time of dissolution of the firm.

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Solution

JOURNAL
$\begin{matrix} Date & Particulars & L.F. & Dr. (Rs) & Cr. (Rs) Cash A/c D r . & 2, 94, 000 To Realisation A/c & 2, 94, 000 (The land and building sold through broker, paid 2% of realisable value to broker) \end{matrix}$

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Q. Land and Building (book value) ₹ 1,60,000 sold for ₹ 3,00,000 through a broker who charged 2% commission on the deal. Journalise the transaction, at the time of dissolution of the firm.

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 $%$

Q. Pass the Journal entries, for the following transactions on the dissolution of the firm of P and Q after various assets (other than cash) and outside liabilities have been transferred to Realisation Account
(a) Stock Rs. 2,00,000. 'P' took over 50% of stock at a discount of 10%. Remaining stock was sold at a profit of 25% on cost.
(b) Debtors Rs. 2,25,000. Provision for Doubtful Debts Rs. 25,000. Rs. 20,000 of the book debts proved bad.
(c) Land and Building (Book value Rs. 12,50,000) sold for Rs. 15,00,000 through a broker who charged 2% commission.
(d) Machinery (Book value Rs. 6,00,000) was handed over to a creditor at a discount of 10%
(e) Investment (Book value Rs. 60,000) ranted at 125%.
(f) Goodwill of Rs. 75,000 and prepaid fire insurance of 10,000.
(g) There was an old furniture in the firm which had been written off completely in the books. This was sold for Rs. 10,000.
(h) 'Z' an old customer whose account for Rs. 20,000 was written off as bad in the previous year, paid 60%.
(i) 'P' undertook to pay Mrs. P's loan of Rs. 50,000.
(j) Trade creditors Rs. 1,60,000. Half of the trade cretlitors accepted Plant and Machlnery at an agreed valuation of Rs. 54,000 and cash in full settlement of their claims after allowing a discount of Rs. 16,000.
Remaining trade creditors were paid 90% in final settlement

Q. What Journal entries would you pass in the following cases?
(a) Expenses of realisation Rs. 1,500
(b) Expenses of realisation Rs. 600 but paid by Mohan, a partner.
(c) Mohan, one of the partners of the firm, was asked to look into the dissolution of the firm for which he was allowed a commission of Rs. 2,000
(d) Motor car of book value Rs. 5,000 taken over by creditors of the book value of Rs. 40,000 in full settlement.

A broker charges a man 100% commission for renting a flat in a city. The rent of the flat is Rs. 5000. The broker gets a commission of Rs. ___ .

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