Question

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

1. Sundry creditors amounting to ₹ 40,000 were settled at a discount of 10%.
2. An unrecorded computer of ₹ 50,000 was taken over by Shruti.
3. Creditors of ₹ 5,000 agreed to take over debtors of ₹ 8,000 in full settlement of their claim.
4. The firm had a debit balance of ₹ 42,000 in the Profit and Loss Account on the date of dissolution.
5. There was an old furniture with the firm which had been written off completely from the books. This was sold for ₹ 9,000.
6. Realisation expenses amounting to ₹ 11,000 were paid by Shruti.

Answer 1

Journal Entries
Date	Particulars	L.F.	Amount (₹)	Amount (₹)
(i)	Realization A/c   ...Dr.		36,000
	To Bank A/c			36,000
	(Being creditors settled at 10% discount)
(ii)	Shruti's Capital A/c   ...Dr.		50,000
	To Realization A/c			50,000
	(Being unrecorded computer taken over by Shruti)
(iii)	No entry
(iv)	Avyan Capital's A/c   ...Dr.		21,000
	Shruti' s Capital A/c   ...Dr.		21,000
	To Profit and Loss A/c			42,000
	(Being debit balance of Profit and Loss A/c distributed between partners)
(v)	Bank A/c   ...Dr.		9,000
	To Realization A/c			9,000
	(Being an old furniture with the firm sold off)
(vi)	Realization A/c   ...Dr.		11,000
	To Shruti's Capital A/c			11,000
	(Being realization expenses paid by Shruti on behalf of the firm])