What journal entries would be recorded for the following transactions on the dissolution of a firm after various assets (other than cash) on the third party liabilities have been transferred to Reliasation Account.

1. Arti took over the Stock worth Rs 80,000 at Rs 68,000.

2. There was unrecorded Bike of Rs 40,000 which was taken over By Mr. Karim.

3. The firm paid Rs 40,000 as compensation to employees.

4. Sundry creditors amounting to Rs 36,000 were settled at a discount of 15%.

5. Loss on Realisation Rs 42,000 was to be distributed between Arti and Karim in the ratio of 3:4.

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Solution

Journal

Particulars

L.F.

Amount

Rs

Amount

Rs

1

Arti’s Capital A/c

Dr.

68,000

To Realisation A/c

68,000

(Arti took over stock worth Rs 80,000 at Rs 68,000)

2.

Karim’s Capital A/c

Dr.

40,000

To Realisation A/c

40,000

(Karim took over an unrecorded bike of Rs 40,000)

3.

Realisation A/c

Dr.

40,000

To Bank A/c

40,000

(Compensation paid to the employees )

4.

Realisation A/c

Dr.

30,600

To Bank A/c

30,600

(Creditors amounting Rs 36,000 were settled at a discount of 15%)

[36,000 × (85/100)]

5.

Arti’s Capital A/c

Dr.

18,000

Karim’s Capital A/c

Dr.

24,000

To Realisation A/c

42,000

(Loss on Realisation transferred to Partners’ Capital Account)

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Similar questions

What journal entries would be recorded for the following transactions on the dissolution of a firm after various assets (Other than cash) on the third party liabilities have been transferred to realisation account ?

1. Arti took over the Stock worth Rs. 80,000 at Rs. 68,000.

2. There was unrecorded Bike of Rs. 40,000, which was taken over by Mr. Karim.

3. The firm paid Rs. 40,000 as compensation to employees.

4. Sundry creditors amounting to Rs. 36,000 were settled at a discount of 15 $%$ .

5. Loss on realisation Rs. 42,000 was to be distributed between Arti and Karim in the ratio of 3 : 4.

Q. Pass necessary Journal entries for the following transaction 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
(a) Bank loan worth Rs. 12,000 was paid.
(b) Stock worth Rs. 16,000 was taken over by partner Q.
(c) Partner P paid a creditor Rs. 4,000.
(d) An asset not appearing in the books of accounts realised Rs. 1,200.
(e) Expenses of realisation Rs. 2,000 were paid by partner Q.
(f) Profit on realisation Rs. 36,000 was distributed between P and Q in Rs. 5:4 ratio.

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.

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.

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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Journal
	Particulars		L.F.	Amount Rs	Amount Rs
1	Arti’s Capital A/c	Dr.		68,000
	To Realisation A/c				68,000
	(Arti took over stock worth Rs 80,000 at Rs 68,000)

2.	Karim’s Capital A/c	Dr.		40,000
	To Realisation A/c				40,000
	(Karim took over an unrecorded bike of Rs 40,000)

3.	Realisation A/c	Dr.		40,000
	To Bank A/c				40,000
	(Compensation paid to the employees )

4.	Realisation A/c	Dr.		30,600
	To Bank A/c				30,600
	(Creditors amounting Rs 36,000 were settled at a discount of 15%) [36,000 × (85/100)]

5.	Arti’s Capital A/c	Dr.		18,000
	Karim’s Capital A/c	Dr.		24,000
	To Realisation A/c				42,000
	(Loss on Realisation transferred to Partners’ Capital Account)