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Question
Give the necessary Journal entries for the following transactions on dissolution of the firm of Sonu and Monu on 31st March, 2021, after transfer of various assets (other than cash and bank balance) and the third party liabilities to Realisation Account. They shared profits and losses in the ratio of 2 : 1.
- Sonu agreed to take over the firm's goodwill (not recorded in the books of the firm) at a valuation of ₹ 40,000.
- Bills payable of ₹ 30,000 falling due on 30th April, 2021 were discharged at ₹ 29,550.
- Stock worth ₹ 8,00,000 was taken over by partner, Sonu at 10% discount.
- Creditors off ₹ 2,00,000 accepted machinery valued at ₹ 2,20,000 in full settlement of their claim.
- Expenses of realisation ₹ 10,000 were paid by partner, Sonu.
Solution
| In the books of Sonu and Monu Journal Entries |
||||
| Date | Particulars | L.F. | Amount Dr. (₹) |
Amount Cr. (₹) |
| i. | Sonu's Capital A/c ...Dr. | 40,000 | - | |
| To Realisation A/c | - | 40,000 | ||
| (Being unrecorded goodwill taken over by Sonu) |
||||
| ii. | Realisation A/c ...Dr. | 29,550 | - | |
| To Cash A/c | - | 29,550 | ||
| (Being B/P discharged) | ||||
| iii. | Sonu's Capital A/c ...Dr. | 7,20,000 | - | |
| To Realisation A/c | - | 7,20,000 | ||
| (Being stock taken over by Sonu) | ||||
| iv. | No Entry | |||
| v. | Realisation A/c ...Dr. | 10,000 | - | |
| To Sonu's capital A/c | - | 10,000 | ||
| (Being realisation exp. paid by a partner) | ||||
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RELATED QUESTIONS
Shanti and Satya were partners in firm in a sharing profit in the ratio of 4:1. On 31st march ,2013 their Balance Sheet was as follows:
Balance Sheet of Shanti and Satya as on 31st March, 2013
| Liabilities | Amount(Rs.) | Assets | Amount(Rs.) |
|
Creditors Workman Compention Fund Satya’s Current Account Capital’s: Shanti Satya
|
45,000 40,000 65,000
2,00,000 1,00,000
|
Bank Debtors Stock Furniture Machinery Shanti’s Current Account
|
55,000 60,000 85,000 1,00,000 1,30,000 20,000
|
| 4,50,000 | 4,50,000 |
On the above date the firm was dissolved:
1. Shanti took over 40% of the stock at 10% less than its book value and the remaining stock was sold for Rs.40,000. Furniture realized Rs.80,000.
2. An unrecorded investment was sold for Rs.20,000. Machinery was sold at a loss of Rs.60,000.
3. Debtors realized Rs.55,000.
4. There was an outstanding bill for repairs for which Rs.19,000 were paid.
Prepare Realisation Account.
Srijan, Raman and Manan were partners in a firm sharing profits and losses in the ratio of 2: 2: 1. On 31st March 2017 their Balance Sheet was as follows:
| Balance Sheet of Srijan , Raman and Manan as on 31.3.2017 |
|||
| Liabilities |
Amount Rs |
Assets
|
Amount Rs |
|
Capitals: Srijan 2,00,000 Raman 1,50,000 Creditors Bills Payable Outstanding Salary
|
3,50,000 75,000 40,000 35,000
|
Capital: Manan Plant Investment Stock Debtors Bank Profit & Loss A/c |
10,000 2,20,000 70,000 50,000 60,000 10,000 80,000 |
| 5,00,000 | 5,00,000 | ||
On the above date, they decided to dissolve the firm.
1) Srijan was appointed to realise the assets and discharge the liabilities. Srijan was to receive 5% commission on the sale of assets (except cash) and was to bear all expenses of realisation.
2) Assets were realised as follows:
| Rs | |
| Plant | 85,000 |
| Stock | 33,000 |
| Debtors | 47,000 |
3) Investments were realised at 95% of the book value.
4) The firm had to pay Rs 7,500 for an outstanding repair bill not provided for earlier.
5) A contingent liability in respect of bills receivable, discounted with the bank had also materialised and had to be discharged for Rs 15,000.
6) Expenses of realisation amounting to Rs 3,000 were paid Srijan.
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| Balance Sheet of Jayant and Ramakant as on 31st March 2013 | |||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
|
Creditors Workman Compensation Fund Satya’s Current Account Capital's: Jayant Ramaknat |
75,000 45,000 15,000
|
Bank Debtors Stock Furniture Machinery Shanti’s Current Account |
70,000 2,00,000 20,000 20,000 3,12,000 13,000 |
|
|
6,35,000 |
|
6,35,000 |
On the above date the firm was dissolved:
1. Jayant took over 40% of the stock at 20% less than its book value and the remaining stock was sold for Rs 15,000. Furniture realized Rs 20,000.
2. An unrecorded asset was sold for Rs 3,000. Machinery was sold at a loss of Rs 75,000.
3. Debtors realized Rs 10,000.
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| Balance sheet of Anu, Bhanu and Charu as on 31st March, 2021: |
|||||
| Liabilities | Amount (₹) | Amount (₹) | Assets | Amount (₹) | Amount (₹) |
| Creditors | 24,000 | Bank | 10,000 | ||
| Profit & Loss A/c | 5,000 | Debtors | 20,000 | 19,600 | |
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400 | |||
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| 1,12,000 | 1,12,000 | ||||
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| Particulars | (₹) |
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| Shiv's Current A/c (Dr.) | 6,000 |
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