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Question
Journalise the following transactions on the following dates in the books of Ankur.
A. On 1st April 2011, Kiran informs Ankur that Kajol’s acceptance of Rs 8,000 endorsed to him dishonoured and noting charges paid Rs 250.
B. On 11th April 2011, Ankur renews his acceptance of Rs 7,400 to Amol by paying cash Rs 2,400 and accepting new bill for 2 months for the balance plus interest @ 15% p.a.
C. On 15th April 2011, Nilima retired her acceptance to Ankur of Rs 5,700 by paying cash Rs 5,300.
D. On 21st April 2011, recovered Rs 50% of the amount due, from the private estate of Liladhar who declared as insolvent, against his bill of Rs 3,800 which was dishonoured by him on 29th December 2010 and noting charges paid Rs 80.
Solution
Books of Ankur
Journal Entry
| Date | Particulars | L.F. | Debit Amount (Rs.) | Credit Amount (Rs.) |
| 2011 Apr,01 A. |
Kajol Dr. To Kiran A/c (Kajol's acceptance endorsed to Kiran was dishonored and noting charges incurred) |
8,250 | 8,250 | |
| Apr.11 B. |
Ankur A/c Dr. To Bills Receivable A/c (Bill canceled for renewal) |
7,400 | 7,400 | |
| Ankur A/c Dr. To Interest A/c (Interest charges due on Rs 5,000 @ 15% for 2 months) |
125 | 125 | ||
| Cash A/c Dr. Bill Receivable A/c Dr. To Ankur (Cash received and a new bill has been drawn and accepted including Interest charges) |
2,400 5,125 |
7,125 | ||
| Apr.15 C. |
Cash A/c Dr. Rebate A/c Dr. To Bills Receivable A/c (Bill retired under the rebate of Rs 400) |
5,300 400 |
5,700 | |
| Apr.21 D. |
Cash/Bank A/c Dr Bad Debts A/c To Liladhar A/c (Liladhar became insolvent and 50% of the amount recovered from his private estate) |
1,940 1,940 |
3,880 |
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Journalise the following transactions regarding Realisation expenses:
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[b] Realisation expenses amounting to Rs 3,000 were paid by Ashok, one of the partners.
[c] Realisation expenses Rs 2,300 borne by Tarun, personally.
[d] Amit, a partner was appointed to realise the assets, at a cost of Rs 4,000. The actual amount of Realisation amounted to Rs 3,000.
Give journal entries for the following transactions:
1. To record the Realisation of various assets and liabilities,
2. A Firm has a Stock of Rs 1,60,000. Aziz, a partner took over 50% of the Stock at a discount of 20%,
3. Remaining Stock was sold at a profit of 30% on cost,
4. Land and Buildging (book value Rs 1,60,000) sold for Rs 3,00,000 through a broker who charged 2%, commission on the deal,
5. Plant and Machinery (book value Rs 60,000) was handed over to a Creditor at an agreed valuation of 10% less than the book value,
6. Investment whose face value was Rs 4,000 was realised at 50%.
How will you deal with the Realisation expenses of the firm of Rashim and Bindiya in the following cases
1. Realisation expenses amounts to Rs 1,00,000,
2. Realisation expenses amounting to Rs 30,000 are paid by Rashim, a partner.
3. Realisation expenses are to be borne by Rashim for which he will be paid Rs 70,000 as remuneration for completing the dissolution process. The actual expenses incurred by Rashim were Rs 1,20,000.
Rose and Lily shared profits in the ratio of 2:3. Their Balance Sheet on March 31, 2017 was as follows:
Balance Sheet of Rose and Lily as on March 31, 2017
| Liabilities |
Amount (Rs.) |
Assets | Amount (Rs.) | Amount (Rs.) |
| Creditors | 40,000 | Cash | 16,000 | |
| Lily’s loan | 32,000 | Debtors | 80,000 | 76,400 |
| Profit and Loss | 50,000 |
Less: Provision for doubtful Debts |
3600 | |
| Capitals: | Inventory | 109,600 | ||
| Lily | 160,000 | Bills Receivable | 40,000 | |
| Rose | 240,000 | Buildings | 280,000 | |
| 522,000 | 522,000 |
Rose and Lily decided to dissolve the firm on the above date. Assets (except bills receivables) realised Rs 4,84,000. Creditors agreed to take Rs 38,000. Cost of Realisation was Rs 2,400. There was a Motor Cycle in the firm which was bought out of the firm’s money, was not shown in the books of the firm. It was now sold for Rs 10,000. There was a contingent liability in respect of outstanding electric bill of Rs 5,000, Bill Receivable taken over by Rose at Rs 33,000.
Show Realisation Account, Partners Capital Account, Loan Account and Cash Account.
The following is the Balance sheet of Tanu and Manu, who shares profit and losses in the ratio of 5:3, On December 31,2017:
Balance Sheet of Tanu and Manu as on December 31, 2017
| Liabilities | Amt (Rs.) | Amt (Rs.) | Assets | Amt (Rs.) |
|
Sundry Creditors |
|
62,000 |
Cash at Bank |
16,000 |
|
Bills Payable |
|
32,000 |
Sundry Debtors |
55,000 |
|
Bank Loan |
|
50,000 |
Stock |
75,000 |
|
Reserve fund |
|
16,000 |
Motor car |
90,000 |
|
Capital: |
|
|
Machinery |
45,000 |
|
Tanu |
1,10,000 |
|
Investment |
70,000 |
|
Manu |
90,000 |
2,00,000 |
Fixtures |
9,000 |
|
|
|
3,60,000 |
|
3,60,000 |
On the above date the firm is dissolved and the following agreement was made: Tanu agree to pay the bank loan and took away the sundry debtors. Sundry creditors accepts stock and paid Rs 10,000 to the firm. Machinery is taken over by Manu for Rs 40,000 and agreed to pay of bills payable at a discount of 5%.. Motor car was taken over by Tanu for Rs 60,000. Investment realised Rs 76,000 and fixtures Rs 4,000. The expenses of dissolution amounted to Rs 2,200.
Prepare Realisation Account, Bank Account and Partners Capital Accounts.
Pass Journal entries for the following at the time of dissolution of a firm:
(a) Sale of Assets − ₹ 50,000.
(b) Payment of Liabilities − ₹ 10,000.
(c) A commission of 5% allowed to Mr. X, a partner, on sale of assets.
(d) Realisation expenses amounted to ₹ 15,000. The firm had agreed with Amrit, a partner, to reimburse him up to ₹ 10,000.
(e) Z, an old customer, whose account for ₹ 6,000 was written off as bad in the previous year, paid 60% of the amount written off.
(f) Investment (Book Value ₹ 10,000) realised at 150%.
Aman and Harsh were 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 third party liabilities have been transferred to Realisation Account:
(a) There was furniture worth ₹ 50,000. Aman took over 50% of the furniture at 10% discount and the remaining furniture was sold at 30% profit on book value.
(b) Profit and Loss Account was showing a credit balance of ₹ 15,000 on the date of dissolution.
(c) Harsh's loan of ₹ 6,000 was discharged at ₹ 6,200.
(d) The firm paid realisation expenses amounting to ₹ 5,000 on behalf of Harsh who had to bear these expenses.
(e) There was a bill for 1,200 under discount. The bill was received from Soham who proved insolvent and a first and final dividend of 25% was received from his estate.
(f) Creditors, to whom the firm owed ₹ 6,000, accepted stock of ₹ 5,000 at a discount of 5% and the balance in cash.
Lal and Pal were partners in a firm sharing profits in the ratio of 3 : 7. On 1st April, 2015 their firm was dissolved. After transferring assets (other than cash) and outsider's liabilities to Realisation Account, you are given the following information:
(a) A creditor of ₹ 3,60,000 accepted machinery valued at ₹ 5,00,000 and paid to the firm ₹ 1,40,000.
(b) A second creditor for ₹ 50,000 accepted stock at ₹ 45,000 in full settlement of his claim.
(c) A third creditor amounting to ₹ 90,000 accepted ₹ 45,000 in cash and investments worth ₹ 43,000 in full settlement of his claim.
(d) Loss on dissolution was ₹ 15,000.
Pass necessary Journal entries for the above transactions in the books of firm assuming that all payments were made by cheque.
What Journal entries would be passed for discharge of following unrecorded liabilities on the dissolution of a firm of partners A and B:
(a) There was a contingent liability in respect of bills discounted but not matured of ₹ 18,500. An acceptor of one bill of ₹ 2,500 became insolvent and fifty paise in a rupee was recovered. The liability of the firm on account of this bill discounted and dishonoured has not so far been recorded.
(b) There was a contingent liability in respect of a claim for damages for ₹ 75,000, such liability was settled for ₹ 50,000 and paid by the partner A.
(c) Firm will have to pay ₹ 10,000 as compensation to an injured employee, which was a contingent liability not accepted by the firm.
(d) ₹ 5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70% by a compromise between the customer and the firm.
Pass necessary Journal entries on the dissolution of a firm in the following cases:
(a) Dharam, a partner, was appointed to look after the process of dissolution at a remuneration of ₹ 12,000 and he had to bear the dissolution expenses. Dissolution expenses ₹ 11,000 were paid by Dharam.
(b) Jay, a partner, was appointed to look after the process of dissolution and was allowed a remuneration of ₹ 15,000. Jay agreed to bear dissolution expenses. Actual dissolution expenses ₹ 16,000 were paid by Vijay, another partner on behalf of Jay.
(c) Deepa, a partner, was to look after the process of dissolution and for this work she was allowed a remuneration of ₹ 7,000. Deepa agreed to bear dissolution expenses. Actual dissolution expenses ₹ 6,000 were paid from the firm's bank account.
(d) Dev, a partner, agreed to do the work of dissolution for ₹ 7,500. He took away stock of the same amount as his commission. The stock had already been transferred to Realisation Account.
(e) Jeev, a partner, agreed to do the work of dissolution for which he was allowed a commission of ₹ 10,000. He agreed to bear the dissolution expenses. Actual dissolution expenses paid by Jeev were ₹ 12,000. These expenses were paid by Jeev by drawing cash from the firm.
(f) A debtor of ₹ 8,000 already transferred to Realisation Account agreed to pay the realisation expenses of ₹ 7,800 in full settlement of his account.
Bale and Yale are equal partners of a firm. They decide to dissolve their partnership on 31st March, 2019 at which date their Balance Sheet stood as:
| Liabilities | ₹ | Assets | ₹ | |
| Capital A/cs: | Building | 45,000 | ||
| Bale | 50,000 | Machinery | 15,000 | |
| Yale | 40,000 | 90,000 | Furniture | 12,000 |
| General Reserve | 8,000 | Debtors | 8,000 | |
| Bale's Loan A/c | 3,000 | Stock | 24,000 | |
| Creditors | 14,000 | Bank | 11,000 | |
| 1,15,000 | 1,15,000 | |||
(a) The assets realised were:
Stock ₹ 22,000; Debtors ₹ 7,500; Machinery ₹ 16,000; Building ₹ 35,000.
(b) Yale took over the Furniture at ₹ 9,000.
(c) Bale agreed to accept ₹ 2,500 in full settlement of his Loan Account.
(d) Dissolution Expenses amounted to ₹ 2,500.
Prepare the:
(i) Realisation Account; (ii) Capital Accounts of Partners;
(iii) Bale's Loan Account; (iv) Bank Account.
Balance Sheet of P, Q and R as at 31st March, 2019, who were sharing profits in the ratio of 5 : 3 : 1, was:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Bills Payable |
40,000 |
Cash at Bank | 40,000 | ||
| Loan from Bank | 30,000 | Stock | 19,000 | ||
| General Reserve |
9,000 |
Sundry Debtors |
42,000 |
|
|
| Capital A/cs: |
|
Less: Provision for Doubtful Debts |
2,000 |
40,000 |
|
| P | 44,000 | ||||
| Q |
36,000 |
|
Building | 40,000 | |
| R |
20,000 |
1,00,000 |
Plant and Machinery |
40,000 |
|
|
|
|
|
|||
|
1,79,000 |
1,79,000 |
||||
|
|
|
||||
The partners dissolved the business. Assets realised − Stock ₹ 23,400; Debtors 50%; Fixed Assets 10% less than their book value. Bills Payable were settled for ₹ 32,000. There was an Outstanding Bill of Electricity ₹ 800 which was paid off. Realisation expenses ₹ 1,250 were also paid.
Prepare Realisation Account, Partner's Capital Accounts and Bank Account.
Vinod, Vijay and Venkat are partners sharing profits and losses in the ratio of 3 : 2 : 1. They decided to dissolve their firm on 31st March, 2019, the date on which their Balance Sheet stood as:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Creditors |
17,000 |
Bank | 3,500 | ||
| Bills Payable | 12,000 | Stock | 19,800 | ||
| Vinod's Loan |
5,300 |
Debtors |
15,000 |
|
|
| General Reserve |
6,000 |
Less: Provision for Doubtful Debts |
1,000 |
14,000 |
|
| Capital A/cs: | Investments | 4,000 | |||
| Vinod | 25,000 | Furniture | 10,000 | ||
| Vijay |
11,000 |
|
Machinery | 33,000 | |
| Venkat |
8,000 |
44,000 |
|||
|
84,300 |
84,300 |
||||
The following additional information is given:
(a) The Investments are taken by Vinod for ₹ 5,000 in settlement of his loan
(b)
| Assets realised as follows: | ₹ |
| Stock | 17,500 |
| Debtors | 14,500 |
| Furniture | 6,800 |
| Machinery | 30,300 |
(c) Expenses on realisation amounted to ₹ 2,000.
Close the books of the firm giving relevant Ledger Accounts.
A, B and C were equal partners. On 31st March, 2019, their Balance Sheet stood as:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Creditors | 50,400 | Cash | 3,700 | |
| Reserve | 12,000 | Stock | 20,100 | |
| Capital A/cs: | Debtors | 62,600 | ||
| A | 40,000 | Loan to A | 10,000 | |
| B | 25,000 | Investments | 16,000 | |
| C | 15,000 | 80,000 | Furniture | 6,500 |
| Building | 23,500 | |||
| 1,42,400 | 1,42,400 | |||
The firm was dissolved on the above date on the following terms:
(a) For the purpose of dissolution, Investments were valued at ₹ 18,000 and A took over the Investments at this value.
(b) Fixed Assets realised ₹ 29,700 whereas Stock and Debtors realised ₹ 80,000.
(c) Expenses of realisation amounted to ₹ 1,300.
(d) Creditors allowed a discount of ₹ 800.
(e) One Bill receivable for ₹ 1,500 under discount was dishonoured as the acceptor had become insolvent and was unable to pay anything and hence the bill had to be met by the firm.
Prepare Realisation Account, Partner's Capital Accounts and Cash Account showing how the accounts would finally be settled among the partners.
A and B are partners in a firm sharing profits and losses in the ratio of 2 : 1. On 31st March, 2019, their Balance Sheet was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Bank Overdraft | 30,000 | Cash in Hand | 6,000 | |||||
| General Reserve | 56,000 | Bank Balance | 10,000 | |||||
| Investments Fluctuation Reserve | 20,000 | Sundry Debtors | 26,000 | |||||
| A's Loan | 34,000 | Less: Provision for Doubtful Debtors | 2,000 | 24,000 | ||||
| Capital A/c: | ||||||||
| A | 50,000 | Investments | 40,000 | |||||
| Stock | 10,000 | |||||||
| Furniture | 10,000 | |||||||
| Building | 60,000 | |||||||
| B's Capital | 30,000 | |||||||
| 1,90,000 | 1,90,000 | |||||||
On that date, the partners decide to dissolve the firm. A took over Investments at an agreed valuation of ₹ 35,000. Other assets were realised as follows:
Sundry Debtors: Full amount. The firm could realise Stock at 15% less and Furniture at 20% less than the book value. Building was sold at ₹ 1,00,000.
Compensation to employees paid by the firm amounted to ₹ 10,000. This liability was not provided for in the above Balance Sheet.
You are required to close the books of the firm by preparing Realisation Account, Partners' Capital Accounts and Bank Account.
X, Y and Z carrying on business as merchants and sharing profits and losses in the ratio of 2 : 2 : 1, dissolved their firm as at 31st March, 2019 on which date their Balance Sheet was as follows:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|||||
| Sundry Creditors | 41,500 | Cash at Bank | 22,500 | |||||
| Bills Payable | 20,000 | Stock | 80,000 | |||||
| Bank Loan | 40,000 | Debtors | 50,000 | |||||
| General Reserve | 50,000 | Less: Provision for Doubtful Debts | 2,500 | 47,500 | ||||
| Investments Fluctuation Reserve | 40,000 | Investments | 55,000 | |||||
| Capital A/cs: | Premises | 1,51,500 | ||||||
| X | 75,000 | |||||||
| Y | 75,000 | |||||||
| Z | 15,000 | 1,65,000 | ||||||
| 3,56,500 | 3,56,500 | |||||||
A bill for ₹ 5,000 received from Mohan discounted from bank is not met on maturity.
The assets except Cash at Bank and Investments were sold to a company which paid ₹ 3,25,000 in cash.The Investments were sold and ₹ 56,500 were received. Mohan proved insolvent and a dividend of 50% was received from his estate. Sundry Creditors (including Bills Payable) were paid ₹ 57,500 in full settlement. Realisation Expenses amounted to ₹ 15,000.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.
A, B and C were partners sharing profits in the ratio of 2 : 2 : 1. They decided to dissolve their firm on 31st March, 2019 when the Balance Sheet was:
|
Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
||
| Creditors |
40,000 |
Cash |
40,000 |
||
| Bills Payable |
46,000 |
Debtors |
70,000 |
||
| Employees’ Provident Fund |
32,000 |
Less: Provision for Doubtful Debts |
6,000 |
64,000 |
|
| Mrs. A’s Loan |
38,000 |
Stock |
50,000 |
||
| C’s Loan |
30,000 |
Investments |
60,000 |
||
| Investments Fluctuation Reserve |
16,000 |
Furniture |
42,000 |
||
| Capitals A/cs: | Machinery |
1,36,000 |
|||
| A |
1,20,000 |
Land |
1,00,000 |
||
| B |
1,00,000 |
Goodwill |
30,000 |
||
| C |
1,00,000 |
3,20,000 |
|||
|
5,22,000 |
5,22,000 |
||||
Following transactions took place:
(a) A took over Stock at ₹ 36,000. He also took over his wife's loan.
(b) B took over half of Debtors at ₹ 28,000.
(c) C took over Investments at ₹ 54,000 and half of Creditors at their book value.
(d) Remaining Debtors realised 60% of their book value. Furniture sold for ₹ 30,000; Machinery ₹ 82,000 and Land ₹ 1,20,000.
(e) An unrecorded asset was sold for ₹ 22,000.
(f) Realisation expenses amounted to ₹ 4,000.
Prepare necessary Ledger Accounts to close the books of the firm.
On 1st April, 2018, A, B and C commenced business in partnership sharing profits and losses in proportion of 1/2, 1/3 and 1/6 respectively. They paid into their Bank A/c as their capitals ₹ 22,000; ₹ 10,000 by A, ₹ 7,000 by B and ₹ 5,000 by C. During the year, they drew ₹ 5,000; being ₹ 1,900 by A, ₹ 1,700 by B and ₹ 1,400 by C.
On 31st March, 2019, they dissolved their partnership, A taking up Stock at an agreed valuation of ₹ 5,000, B taking up Furniture at ₹ 2,000 and C taking up Debtors at ₹ 3,000. After paying up their Creditors, there remained a balance of ₹ 1,000 at Bank. Prepare necessary accounts showing the distribution of the cash at the Bank and of the further cash brought in by any partner or partners as the case required.
