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Question
Sudhatai sold goods to Chhayatai on credit for 4 months for Rs 10,000 on 7th Sept., 2009. Chhayatai paid on her account of Rs 4,000 at 2% cash discount and accepted bill for the balance at 2 months. On the same date Sudhatai discounted with her bank at 12% p.a. on due date Chhayatai honoured her bill.
A. You required to write journal of Sudhatai.
B. Pass journal entries in the books of Sudhatai assuming that on due date the bill is dishonoured and Sudhatai’s bank paid noting chargers Rs 100.
Solution
Case -A
Books of Sudhatai
Journal Entry
| Date | Particulars | L.F. | Debit Amount Rs. | Credit Amount Rs. |
| 2009 Sept.07 |
Chhayatai Dr. To Sales A/c (Goods sold to Chhayatai) |
10,000 | 10,000 | |
| Sept.07 |
Cash A/c Dr. |
3,920 80 |
4000 | |
| Sept.07 | Bills Receivable A/c Dr. To Chhayatai A/c (Bill accepted by Chhayatai) |
6,000 | 6,000 | |
| Sept.07 | Bank A/c Dr. Discount Charges A/c Dr. To Bills Receivable A/c (Bill discounted with Bank at 12% per annum) |
5,880 120 |
6000 |
Case - B
Books Of Sudhatai
Journal Entry
| Date | Particulars | L.F. | Debit Amount Rs. | Credit Amount Rs. |
| 2009 Sept.07 |
Chhayatai Dr. To Sales A/c (Goods sold to Chhayatai) |
10,000 | 10,000 | |
| Sept.07 |
Bank A/c Dr. |
3,920 |
4,000 | |
| Sept. 07 | Bills Receivable A/c Dr. To Chhayatai A/c (Bill Accepted by Chhayatai) |
6,000 | 6,000 | |
| Sept . 07 | Bank A/c Dr. Discount Charges A/c Dr. To Bills Receivable A/c (Bill discount with Bank at 12% per annum) |
5,880 120 |
6,000 | |
| Nov.10 |
Chhayatai A/c Dr. |
6,100 | 6,100 |
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Give journal entries for the following transactions:
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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.
Shilpa, Meena and Nanda decided to dissolve their partnership on March 31,2017. Their profit sharing ratio was 3:2:1 and their Balance Sheet was as under:
Balance Sheet of Shilpa, Meena and Nanda as on March 31, 2017
| Liabilities |
Amount |
Assets | Amount (Rs.) |
| Capitals: | Land | 81,000 | |
| Shilpa | 80,000 |
Stock |
56,760 |
| Meena | 40,000 | Debtors | 18,600 |
| Bank loan | 20,000 | Nanda’s Capital Account | 23,000 |
| Creditors | 37,000 |
Cash |
10,840 |
| Provision for doubtful debt | 1,200 | ||
| General Reserve | 12,000 | ||
| 190,200 | 190,200 |
The stock of value of Rs 41,660 are taken over by Shilpa for Rs 35,000 and she agreed to discharge bank loan. The remaining stock was sold at Rs 14,000 and debtors amounting to Rs 10,000 realised Rs 8,000. land is sold for Rs 1,10,000. The remaining debtors realised 50% at their book value. Cost of Realisation amounted to Rs 1,200. There was a typewriter not recorded in the books worth Rs 6,000 which were taken over by one of the Creditors at this value. Prepare Realisation Account.
Rita, Geeta and Ashish were partners in a firm sharing profits/losses in the ratio of 3:2:1. On March 31, 2017 their balance sheet was as follows:
| Liabilities | Amt (Rs.) | Amt (Rs.) | Assets | Amt (Rs.) |
| Capitals: | 160,000 | Cash | 22,500 | |
| Rita | 80,000 | Debtors | 52,300 | |
| Geeta | 50,000 | Stock | 36,000 | |
|
Ashish |
30,000 | Investments | 69,000 | |
| Creditors | 65,000 | Plant | 91,200 | |
| Bills payable | 26,000 | |||
| General reserve | 20,000 | |||
| 271,000 | 271,000 |
On the date of above-mentioned date the firm was dissolved:
1. Rita was appointed to realise the assets. Rita was to receive 5% commission on the rate of assets (except cash) and was to bear all expenses of Realisation,
2. Assets were realised as follows:
| Rs | |
| Debtors | 30,000 |
| Stock | 26,000 |
| Plant |
42,750 |
3. Investments were realised at 85% of the book value,
4. Expenses of Realisation amounted to Rs 4,100,
5. Firm had to pay Rs 7,200 for outstanding salary not provided for earlier,
6. Contingent liability in respect of bills discounted with the bank was also materialised and paid off Rs 9,800,
Prepare Realisation Account, Capital Accounts of Partners’ and Cash Account.
Sanjay, Tarun and Vineet shared profit in the ratio of 3:2:1. On December 31,2017 their balance sheet was as follows:
Balance Sheet of Sanjay, Tarun and Vineet as on December 31, 2017
| Liabilities | Amt (Rs.) |
Amt (Rs.) |
Assets | Amt (Rs.) |
| Capitals: | 270,000 | Plant | 90,000 | |
| Sanjay | 100,000 | Debtors | 60,000 | |
| Tarun | 100,000 | Furniture | 32,000 | |
| Vineet | 70,000 | Stock | 60,000 | |
| Creditors | 80,000 |
Investments |
70,000 | |
| Bills payable | 30,000 | Bills receivable | 36,000 | |
| Cash in hand | 32,000 | |||
| 380,000 | 380,000 |
On this date the firm was dissolved. Sanjay was appointed to realise the assets. Sanjay was to receive 6% commission on the sale of assets (except cash) and was to bear all expenses of Realisation.
Sanjay realised the assets as follows: Plant Rs 72,000, Debtors Rs 54,000, Furniture Rs 18,000, Stock 90% of the book value, Investments Rs 76,000 and Bills receivable Rs 31,000. Expenses of Realisation amounted to Rs 4,500.
Prepare Realisation Account, Capital Accounts and Cash Account
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.
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%.
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.
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.
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.
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.
Rita and Sobha are partners in a firm, Fancy Garments Exports, sharing profits and losses equally. On 1st April, 2019, the Balance Sheet of the firm was:
| Sundry Creditors | 75,000 | Cash | 6,000 | |||||
| Bills Payable | 30,000 | Bank | 30,000 | |||||
| Rita's Loan | 15,000 | Stock | 75,000 | |||||
| Reserve | 24,000 | Book Debts | 66,000 | |||||
| Capital A/cs: | Less: Provision for Doubtful Debts | 6,000 | 60,000 | |||||
| Rita | 90,000 | |||||||
| Sobha | 30,000 | 1,20,000 | Plant and Machinery | 45,000 | ||||
| Land and Building | 48,000 | |||||||
| 2,64,000 | 2,64,000 | |||||||
The firm was dissolved on the date given above. The following transactions took place:
(a) Rita took 25% of the Stock at a discount of 20% in settlement of her loan.
(b) Book Debts realised ₹ 54,000; balance of the Stock was sold at a profit of 30% on cost.
(c) Sundry Creditors were paid out at a discount of 10%. Bills Payable were paid in full .
(d) Plant and Machinery realised ₹ 75,000. Land and Building ₹ 1,20,000.
(e) Rita took the goodwill of the firm at a value of ₹ 30,000.
(f) An unrecorded asset of ₹ 6,900 was handed over to an unrecorded liability of ₹ 6,000 in full settlement.
(g) Realisation expenses were ₹ 5,250.
Show Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.
Rita and Sobha are partners in a firm, Fancy Garments Exports, sharing profits and losses equally. On 1st April, 2019, the Balance Sheet of the firm was:
| Sundry Creditors | 75,000 | Cash | 6,000 | |||||
| Bills Payable | 30,000 | Bank | 30,000 | |||||
| Rita's Loan | 15,000 | Stock | 75,000 | |||||
| Reserve | 24,000 | Book Debts | 66,000 | |||||
| Capital A/cs: | Less: Provision for Doubtful Debts | 6,000 | 60,000 | |||||
| Rita | 90,000 | |||||||
| Sobha | 30,000 | 1,20,000 | Plant and Machinery | 45,000 | ||||
| Land and Building | 48,000 | |||||||
| 2,64,000 | 2,64,000 | |||||||
The firm was dissolved on the date given above. The following transactions took place:
(a) Rita took 25% of the Stock at a discount of 20% in settlement of her loan.
(b) Book Debts realised ₹ 54,000; balance of the Stock was sold at a profit of 30% on cost.
(c) Sundry Creditors were paid out at a discount of 10%. Bills Payable were paid in full .
(d) Plant and Machinery realised ₹ 75,000. Land and Building ₹ 1,20,000.
(e) Rita took the goodwill of the firm at a value of ₹ 30,000.
(f) An unrecorded asset of ₹ 6,900 was handed over to an unrecorded liability of ₹ 6,000 in full settlement.
(g) Realisation expenses were ₹ 5,250.
Show Realisation Account, Partners' Capital Accounts and Bank Account in the books of the firm.
Anju, Manju and Sanju were partners in a firm sharing profits in the ratio of 2 : 2 : 1. On 31st March, 2019, their Balance Sheet was:
| Liabilities | Amount (₹) |
Assets | Amount (₹) |
|
| Creditors | 50,000 | Cash | 60,000 | |
| Bank Loan | 35,000 | Debtors | 75,000 | |
| Employees' Provident Fund | 15,000 | Stock | 40,000 | |
| Investments Fluctuation Reserve | 10,000 | Investments | 20,000 | |
| Commission Received in Advance | 8,000 | Plant | 50,000 | |
| Capital A/cs: | Profit and Loss A/c | 3,000 | ||
| Anju | 50,000 | |||
| Manju | 50,000 | |||
|
Sanju |
30,000 | 1,30,000 | ||
| 2,48,000 | 2,48,000 | |||
On this date, the firm was dissolved. Anju was appointed to realise the assets. Anju was to receive 5% commission on the sale of assets (except cash) and was to bear all expenses of realisation.
Anju realised the assets as follows: Debtors ₹ 60,000; Stock ₹ 35,500; Investments ₹ 16,000; Plant 90% of the book value. Expenses of Realisation amounted to ₹ 7,500. Commission received in advance was returned to customers after deducting ₹ 3,000.
Firm had to pay ₹ 8,500 for Outstanding Salary, not provided for earlier, Compensation paid to employees amounted to ₹ 17,000. This liability was not provided for in the above Balance Sheet. ₹ 20,000 had to be paid for Employees' Provident Fund.
Prepare Realisation Account, Capital Accounts of Partners and Cash 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.
A, B and C were partners sharing profits in the ratio of 5 : 3 : 2. On 31st March, 2019, A's Capital and B's Capital were ₹ 30,000 and ₹ 20,000 respectively but C owed ₹ 5,000 to the firm. The liabilities were ₹ 20,000. The assets of the firm realised ₹ 50,000.
Prepare Realisation Account, Partner's Capital Accounts and Bank Account.
A and B were partners sharing profits and losses as to 7/11th to A and 4/11th to B. They dissolved the partnership on 30th May, 2018. As on that date their capitals were: A ₹ 7,000 and B ₹ 4,000. There were also due on Loan A/c to A ₹ 4,500 and to B ₹ 750. The other liabilities amounted to ₹ 5,000. The assets proved to have been undervalued in the last Balance Sheet and actually realised ₹ 24,000.
Prepare necessary accounts showing the final settlement between partners.
A, B and C were in partnership sharing profits and losses in the ratio of 2 : 1 : 1. They decided to dissolve the partnership. On that date of dissolution, Sundry Assets (including cash ₹ 5,000) amounted to ₹ 88,000, assets realised ₹ 80,000 (including an unrecorded asset which realised ₹ 4,000). A contingent liability on account of bills discounted ₹ 8,000 was paid by the firm. The Capital Accounts of A, B and C showed a balance of ₹ 20,000 each.
Prepare Realisation Account, Partners' Capital Accounts and Cash Account.
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.
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.
