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

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Solution

(a) P's Capital A/C..... Dr. 90000
Bank A/C.... Dr. 125000
To Realisation A/C 215000
(Being stock taken over by P and rest sold off)

(b)(i) Bank A/C..... Dr. 225000
To Realisation A/C 225000
(Being debtors realised)

(ii) Realisation A/C..... Dr. 5000
To Bank A/C 5000
(Being provision sold off after book debts proved bad)

(c) Bank A/C..... Dr. 1470000
To Realisation A/C 1470000
(Being land and building sold after charging 2% commission on sale)

(d) No entry will be passed as no bank or cash is involved.

(e) Bank A/C..... Dr. 75000
To Realisation A/C 75000
(Being investments realised at 125%)

(f) No entry will be passed for goodwill as well as prepaid fire insurance as it has not realised any amount.

(g) Bank A/C..... Dr. 10000
To Realisation A/C 10000
(Being unrecorded asset realised)

(h) Bank A/C.... Dr. 12000
To Realisation A/C 12000
(Being bad debt recovered @ 60%)

(i) Realisation A/C.... Dr. 50000
To P's Capital A/C 50000
(Being Mrs. P's loan discharged by Mr. P)

(j) (1) Realisation A/C.... Dr. 10000
To Bank A/C 10000
(Being creditors paid in cash after discount of Rs. 16000)
(2) Realisation A/C..... Dr. 72000
To Bank A/C 72000
(Being creditors paid 90%)

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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 ₹ 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 ₹ 2,25,000. Provision for Doubtful Debts ₹ 25,000. ₹ 20,000 of the book debts proved bad.
(c) Land and Building (Book value ₹ 12,50,000) sold for ₹ 15,00,000 through a broker who charged 2% commission.
(d) Machinery (Book value ₹ 6,00,000) was handed over to a creditor at a discount of 10%.
(e) Investment (Book value ₹ 60,000) realised at 125%.
(f) Goodwill of ₹ 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 ₹ 10,000.
(h) 'Z' an old customer whose account for ₹ 20,000 was written off as bad in the previous year, paid 60%.
(i) 'P' undertook to pay Mrs. P's loan of ₹ 50,000.
(j) Trade creditors ₹ 1,60,000. Half of the trade creditors accepted Plant and Machinery at an agreed valuation of ₹ 54,000 and cash in full settlement of their claims after allowing a discount of ₹ 16,000. Remaining trade creditors were paid 90% in final settlement.

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%.

Pass the necessary journal entries for the following transactions on the dissolution of the firm of Sudha and Shiva after the various assets (other than cash) and outside liabilities have been transferred to Realisation Account :

(i) Sudha agreed to pay off her husband's loan Rs. 19,000.

(ii) A debtor whose debt of Rs. 9,000 was written off in the books paid Rs. 7,500 in full settlement.

(iii) Shiva took over all investments at Rs. 13,300.

(iv) Sundry creditors Rs. 10,000 were paid at 9% discount

(v) Realisation expenses Rs. 3,400 were paid by Sudha for which she was allowed Rs 3,000.

(vi) Loss on realisation Rs. 9,400 was divided between Sudha and Shiva in 3 : 2 ratio.

Q. Aman and Harsh were partners in a firm. They decided to dissolve their firm. Pass necessary Journal entries for following after various assets (other than Cash and Bank) and the third party liabilities have been transferred to Realisation Account:
(a) There was furniture worth Rs. 50,000. Aman took over 50% of the furniture at 10% discount and the remaining furniture was sold showing at 30% profit on the book value.
(b) Profit and Loss Account was showing a credit balance of Rs. 15,000 on the date of dissolution.
(c) Harsh's loan of Rs. 6,000 was discharged at Rs. 6,200.
(d) The firm paid realisation expenses amounting to Rs. 5,000 on behalf of Harsh who had bear these expenses.
(e) There was a bill for Rs. 1,200 under discount. The bill was received from Soham who proved insolvent and a first and final dividend of 25% was received from his estate.
(f) Creditors, to who, the firm owned Rs. 6,000, accepted stock of Rs. 5,000 at a discount of 5% and the balance in cash.

Rohit, Kunal and Sarthak are partners in a firm. They decided to dissolve their firm. Pass necessary journal entries for the following after various assets (other than Cash and Bank) and the third party liability have been transferred to Realisation Account :

(a) Kunal agreed to pay off his wife's loan of Rs. 6,000.

(b) Total Creditors of the firm were Rs 40,000. Creditors worth Rs 10,000 were given a piece of furniture costing Rs 8,000 in full and final settlement. Remaining Creditors allowed a discount of 10%.

(d) A machine which was not recorded in the books was taken over by Kunal at Rs 3,000, whereas its expected value was Rs 5,000.

(e) The firm had a debit balance of Rs 15,000 in the Profit and Loss Account on the date of dissolution.

(f) Sarthak paid the realisation expenses of Rs 16,000 out of his private funds, who was to get a remuneration of Rs 15,000 for completing dissolution process and was responsible to bear all the realisation expenses.

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