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Question
Pass Journal entries for the following:
(a) Realisation expenses amounted to ₹ 10,000 were paid by the firm on behalf of Alok, a partner, with whom it was agreed at ₹ 7,500.
(b) Realisation expenses amounted to ₹ 5,000. It was agreed that the firm will pay ₹ 2,000 and balance by Ravinder, a partner.
(c) Dissolution expenses amounted to ₹ 10,000 were paid by Amit, a partner, on behalf of the firm.
Solution
Journal
|
S.N. |
Particulars |
L.F. |
Debits Amount Rs |
Credit Amount Rs |
|
|
(a) |
Realisation A/c |
Dr. |
|
7,500 |
|
|
To Alok’s Capital A/c |
|
|
7,500 |
||
|
(Remuneration allowed to Alok) |
|
|
|
||
|
Alok’s capital A/c |
Dr. |
|
10,000 |
|
|
|
To Bank A/c |
|
|
10,000 |
||
|
(Expenses paid by the firm on behalf of Alok) |
|
|
|
||
|
Alternatively, only one single entry can also be passed instead of above two entries. |
|
|
|
||
|
Realisation A/c |
Dr. |
|
7,500 |
|
|
|
Alok’s Capital A/c |
Dr. |
|
2,500 |
|
|
|
To Bank A/c |
|
|
10,000 |
||
|
(Realisation expenses paid) |
|
|
|
||
|
(b) |
Realisation A/c |
Dr. |
|
5,000 |
|
|
To Ravinder’s Capital A/c |
|
|
|
3,000 |
|
|
To Bank A/c |
|
|
2,000 |
||
|
(Realisation expenses paid) |
|
|
|
||
|
(c) |
Realisation A/c |
Dr. |
|
10,000 |
|
|
To Amit’s Capital A/c |
|
|
10,000 |
||
|
(Realisation expenses paid by Amit on behalf of the firm) |
|
|
|
||
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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 |
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Balance Sheet of Surjit and Rahi as on March 31, 2017
| Liabilities | Amt (Rs.) | Assets | Amt (Rs.) |
| Creditors | 38,000 | Bank | 11,500 |
| Mrs. Surjit loan | 10,000 | Stock | 6,000 |
| Reserve | 15,000 | Debtors | 19,000 |
| Rahi’s loan | 5,000 | Furniture | 4,000 |
| Capital’s: | Plant | 28,000 | |
| Surjit | 10,000 | Investment | 10,000 |
| Rahi | 8,000 | Profit and Loss | 7,500 |
| 86,000 | 86,000 |
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1. Surjitagreed to take the investments at Rs 8,000 and to pay Mrs. Surjit’s loan.
2. Other assets wererealisedas follows:
| Stock | Rs. 5,000 |
| Debtors | Rs. 18,500 |
| Furniture | Rs. 4,500 |
| Plant | Rs. 25,000 |
3. Expenses onRealisationamounted to Rs 1,600.
4. Creditors agreed to accept Rs 37,000 as a final settlement.
You are required to prepare Realisation Account, Partners’ Capital Account and Bank Account.
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Balance Sheet of Anup and Sumit as on December 31, 2017
| Liabilities | Amt (Rs.) | Amt (Rs.) |
Assets | Amt (Rs.) |
| Sundry Creditors | 27,000 | Cash at bank | 11,000 | |
| Reserve fund | 10,000 | Sundry Debtors | 12,000 | |
| Loan | 40,000 | Plants | 47,000 | |
| Capital : | 120,000 | Stock | 42,000 | |
| Anup | 60,000 | Leasehold land | 60,000 | |
| Sumit | 60,000 |
Furniture |
25,000 | |
| 197,000 | 197,000 |
The Assets were realised as follows:
| Rs. | |
| Lease hold land | 72,000 |
| Furniture | 22,500 |
| Stock | 40,500 |
| Plant | 48,000 |
| Sundry Debtors | 10,500 |
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Prepare Realisation Account, Bank Account, Partners Capital Accounts to close the books of the firm.
Ashu and Harish are partners sharing profit and losses as 3:2. They decided to dissolve the firm on December 31, 2017. Their balance sheet on the above date was:
Balance Sheet of Ashu and Harish as on December 31, 2017
| Liabilities | Amt (Rs.) | Amt (Rs.) | Assets | Amt (Rs.) |
| Capitals: | 162,000 | Building | 80,000 | |
| Ashu | 108,000 | Machinery | 70,000 | |
| Harish | 54,000 | Furniture | 14,000 | |
| Creditors | 88,000 | Stock | 20,000 | |
| Bank overdraft | 50,000 | Investments | 60,000 | |
| Debtors | 48,000 | |||
| Cash in hand | 8,000 | |||
| 300,000 | 300,000 |
Ashu is to take over the building at Rs 95,000 and Machinery and Furniture is take over by Harish at value of Rs 80,000. Ashu agreed to pay Creditor and Harish agreed to meet Bank overdraft. Stock and Investments are taken by both partner in profit sharing ratio. Debtors realised for Rs 46,000, expenses of Realisation amounted to Rs 3,000. Prepare necessary ledger Account.
Pass necessary Journal entries for the following transactions on the dissolution of the firm P and Q after the various assets (other than cash) and outside liabilities have been transferred to Realisation Account:
(a) Bank Loan ₹ 12,000 was paid.
(b) Stock worth ₹ 16,000 was taken over by partner Q.
(c) Partner P paid a creditor ₹ 4,000.
(d) An asset not appearing in the books of accounts realised ₹ 1,200.
(e) Expenses of realisation ₹ 2,000 were paid by partner Q.
(f) Profit on realisation ₹ 36,000 was distributed between P and Q in 5 : 4 ratio.
Pass necessary Journal entries to record the following unrecorded assets and liabilities in the books of Paras and Priya:
(a) There was an old furniture in the firm which had been written off completely in the books. This was sold for ₹ 3,000.
(b) Ashish, an old customer whose account for ₹ 1,000 was written off as bad in the previous year, paid 60%, of the amount.
(c) Paras agreed to takeover the firm's goodwill (not recorded in the books of the firm), at a valuation of ₹ 30,000.
(d) There was an old typewriter which had been written off completely from the books. It was estimated to realise ₹ 400. It was taken by Priya at an estimated price less 25%.
(e) There were 100 shares of ₹ 10 each in Star Limited acquired at a cost of ₹ 2,000 which had been written-off completely from the books. These shares are valued @ ₹ 6 each and divided among the partners in their profit-sharing ratio.
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.
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 ₹ 6,000.
(b) Total Creditors of the firm were ₹ 40,000. Creditors worth ₹ 10,000 were given a piece of furniture costing ₹ 8,000 in full and final settlement. Remaining Creditors allowed a discount of 10%.
(c) Rohit had given a loan of ₹ 70,000 to the firm which was duly paid.
(d) A machine which was not recorded in the books was taken over by Kunal at ₹ 3,000, whereas its expected value was ₹ 5,000.
(e) The firm had a debit balance of ₹ 15,000 in the Profit and Loss Account on the date of dissolution.
(f) Sarthak paid the realisation expenses of ₹ 16,000 out of his private funds, who was to get a remuneration of ₹ 15,000 for completing dissolution process and was responsible to bear all the realisation expenses.
A, B and C are in partnership sharing profits and losses in the proportions of 1/2, 1/3 and 1/6 respectively. On 31st March, 2019, they decided to dissolve the partnership and the position of the firm on this date is represented by the following Balance Sheet:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Creditors | 40,000 | Cash at Bank | 3,000 | |
| Loan A/c: | Stock | 50,000 | ||
| A | 10,000 | Sundry Debtors | 50,000 | |
| Workmen Compensation Reserve | 21,000 | Land and Building | 57,000 | |
| Capital A/cs: | Profit and Loss A/c | 15,000 | ||
| A | 60,000 | Advertisement Suspense A/c | 6,000 | |
| B | 40,000 | |||
|
C |
10,000 | 1,10,000 | ||
| 1,81,000 | 1,81,000 | |||
During the course of realisation, a liability under a suit for damages is settled at ₹ 20,000 as against ₹ 5,000 only provided for in the books of the firm.
Land and Building were sold for ₹ 40,000 and the Stock and Sundry Debtors realised ₹ 30,000 and ₹ 42,000 respectively. The expenses of realisation amounted to ₹ 1,200.
There was a car in the firm, which was completely written off from the books. It was taken by A for ₹ 20,000. He also agreed to pay Outstanding Salary of ₹ 20,000 not provided in books.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.
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.
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 31st March, 2017
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Capitals: | Capital: Manan | 10,000 | ||
| Srijan | 2,00,000 | Plant | 2,20,000 | |
| Raman | 1,50,000 | 3,50,000 | Investments | 70,000 |
| Creditors | 75,000 | Stock | 50,000 | |
| Bills Payable | 40,000 | Debtors | 60,000 | |
| Outstanding Salary | 35,000 | Bank | 10,000 | |
| Profit and Loss Account | 80,000 | |||
| 5,00,000 | 5,00,000 | |||
On the above date they decided to dissolve the firm.
(a) Srijan was appointed to realise the assets and discharge the liabilities. Srijan was to receive 5% commission on sale of assets (except cash) and was to bear all expenses of realisation.
(b)
| Assets were realised as follows: | ₹ |
| Plant | 85,000 |
| Stock | 33,000 |
| Debtors | 47,000 |
(c) Investments were realised at 95% of the book value.
(d) The firm had to pay ₹ 7,500 for an outstanding repair bill not provided for earlier.
(e) A contingent liabillity in respect of bills receivable, discounted with the bank had also materialised and had to be discharged for ₹ 15,000.
(f) Expenses of realisation amounting to ₹ 3,000 were paid by Srijan.
Prepare Realisation Account, Partners' Capital Accounts and Bank Account.
X and Y were partners sharing profits and losses in the ratio of 3 : 2. They decided to dissolve the firm on 31st March, 2019. On that date, their Capitals were X − ₹ 40,000 and Y − ₹ 30,000. Creditors amounted to ₹ 24,000.
Assets were realised for ₹ 88,500. Creditors of ₹ 16,000 were taken over by X at ₹ 14,000. Remaining Creditors were paid at ₹ 7,500. The cost of realisation came to ₹ 500.
Prepare necessary accounts.
