Question

Pass the necessary Journal entries for the following transactions on the dissolution of the firm of P and Q after the various assets (other than cash) and outside liabilities have been transferred to Realisation Account.

(i) Bank loan Rs 12,000 was paid.

(ii) Stock worth Rs 16,000 was taken over by partners.

(iii) Partner P paid a creditor Rs 4,000.

(iv) An asset not appearing in the books of accounts realised Rs 1,200.

(v) Expenses of realisation Rs 2,000 were paid by partner Q.

(iv) Profit on realisation Rs 36,000 was distributed between P and Q in 5 : 4 ratio.

Answer 1

$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{L.F.}& \text{Debit}& \text{Credit}\\ & & & \left(\text{Rs}\right)& \left(\text{Rs}\right)\\ & \text{Realisation A/c}\text{Dr}.& & 12,000& \\ & \text{To Bank A/c}& & & 12,000\\ & (\text{Being bank loan paid}& & & \\ & \text{Q's Capital A/c}\text{Dr}.& & 16,000& \\ & \text{To Bank A/c}& & & 16,000\\ & \left(\text{Being the stock taken over by Q}\right)& & & \\ & \text{Realisation A/c}\text{Dr}.& & 4,000& \\ & \text{To P's Capital A/c}& & & 4,000\\ & \left(\text{Being a creditor paid by P credited to his capital account}\right)& & & \\ & \text{Cash/Bank A/c}\text{Dr.}& & 1,200& \\ & \text{To Realisation A/c}& & & 1,200\\ & \left(\text{Being the realisation of the unrecorded asset}\right)& & & \\ & \text{Realisation A/c}\text{Dr.}& & 2,000& \\ & \text{To Q's Capital A/c}& & & 2,000\\ & (\text{Being dissolution expenses paid by Q and credited to his}& & & \\ & \text{capital accounts})& & & \\ & \text{Realisation A/c}\text{Dr.}& & 36,000& \\ & \text{To P's Capital A/c}& & & 20,000\\ & \text{To Q's Capital A/c}& & & 16,000\\ & (\text{Being the profit on realisation credited to partners capital}& & & \\ & \text{accounts in their profit sharing ratio})& & & \end{array}$