Question

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.

Answer 1

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
a.	P’s Capital A/c	Dr.		90,000
	Bank A/c	Dr.		1,25,000
	To Realisation A/c				2,15,000
	(Stock realized)
b.	Bank A/c	Dr.		2,05,000
	To Realisation A/c				2,05,000
	(Debtors realized)
c.	Bank A/c	Dr.		14,70,000
	To Realisation A/c				14,70,000
	(Land and Building realized)
d.	No Entry
e.	Bank A/c	Dr.		75,000
	To Realisation A/c				75,000
	(Investment realized )
f.	No Entry
g.	Bank A/c	Dr.		10,000
	To Realisation A/c				10,000
	(Unrecorded furniture realized )
h.	Bank A/c	Dr.		12,000
	To Realisation A/c				12,000
	(Bad debts recovered )
i.	Realisation A/c	Dr.		50,000
	To P’s Capital A/c				50,000
	(Wife’s loan paid by partner)
J.	Realisation A/c	Dr.		82,000
	To Bank A/c (10,000 + 72,000)				82,000
	(Creditors paid)