Question

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

1. Nitish, an old customer, whose account for ₹ 11,000 was written off as bad debt in the previous year, paid 70% of the amount.
2. Sundry creditors amounting to ₹ 40,000 were settled at a discount of 20%
3. Radha took over investments worth ₹ 23,000 at ₹ 20,000.
4. Profit and Loss Account showed a debit balance of ₹ 18,000.
5. Sudha's loan amounting to ₹ 15,000 was paid.
6. Machinery of the book value of ₹ 1,00,000 was given to a creditor of ₹ 85,000 in full settlement. 

Answer 1

Journal Entries
In the books of Radha and Sudha
Date	Particulars	L.F.	Amount Dr. (₹)	Amount Cr. (₹)
(i)	Bank A/c   ...Dr.		7,700
	To Realization A/c			7,700
	(Being amount recovered from nitish)
(ii)	Realization A/c   ...Dr.		32,000
	To Bank A/c			32,000
	(Being amount paid to Creditors)
(iii)	Radha's Capital A/c   ...Dr.		20,000
	To Realization A/c			20,000
	(Being Investment takes over by radha)
(iv)	Radha's Capital A/c   ...Dr.		9,000
	Sudha's Capital A/c   ...Dr.		9,000
	To Profit and Loss A/c			18,000
	(Being debit balance of Profit and Loss written off)
(v)	Sudha's Loan A/c   ...Dr.		15,000
	To Bank A/c			15,000
	(Being Sudha's loan paid by firm)
(vi)	No entry		–
				–