Page No 8.50:
Question 17:
Pass the Journal entries for the following transactions on the
dissolution of the firm of P and Q after various assets
(other than cash) and outside liabilities have been transferred to Realisation
Account:
(a) Stock ` 2,00,000. 'P' took over 50% of stock at a discount of 10%.
Remaining stock was sold at a profit of 25% on cost.
(b) Debtor ` ` 2,25,000. Provision for Doubtful Debts `
25,000. ` 20,000 of the book debts proved bad.
(c) Land and Building (Book value ` 12,50,000) sold
for ` 15,00,000 through a broker who charged 2% commission.
(d) Machinery (Book value
` 6,00,000) was handed over to a creditor at a discount
of 10%.
(e) Investment (Book value ` 60,000) realised at 125%.
(f) Goodwill of
` 75,000 and prepaid fire insurance of `
10,000.
(g) There was an old furniture in the firm which had been written off
completely in the books. This was sold for ` 10,000.
(h) 'Z' an old customer whose account for ` 20,000
was written off as bad in the previous year, paid 60%.
(i) 'P' undertook to pay M `. P's loan of `
50,000.
(j) Trade Creditors
` 1,60,000. Half of the trade Creditors accepted Plant
and Machinery at an agreed valuation of ` 54,000 and cash
in full settlement of their claims after allowing a discount of `
16,000. Remaining trade Creditors were paid 90% in final settlement.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit Amount ( `) |
Credit Amount ( `) |
|
|
|
|
|
|
|
|
|
a. |
P’s Capital A/c |
Dr. |
|
90,000 |
|
|
|
Bank A/c |
Dr. |
|
1,25,000 |
|
|
|
To Realisation A/c |
|
|
|
2,15,000 |
|
|
(Stock realized) |
|
|
|
|
|
|
|
|
|
|
|
|
b. |
Bank A/c |
Dr. |
|
2,05,000 |
|
|
|
To Realisation A/c |
|
|
|
2,05,000 |
|
|
(Debtor realized) |
|
|
|
|
|
|
|
|
|
|
|
|
c. |
Bank A/c |
Dr. |
|
14,70,000 |
|
|
|
To Realisation A/c |
|
|
|
14,70,000 |
|
|
(Land and Building realized) |
|
|
|
|
|
|
|
|
|
|
|
|
d. |
No Entry |
|
|
|
|
|
|
|
|
|
|
|
|
e. |
Bank A/c |
Dr. |
|
75,000 |
|
|
|
To Realisation A/c |
|
|
|
75,000 |
|
|
(Investment realized ) |
|
|
|
|
|
|
|
|
|
|
|
|
f. |
No Entry |
|
|
|
|
|
|
|
|
|
|
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|
g. |
Bank A/c |
Dr. |
|
10,000 |
|
|
|
To Realisation A/c |
|
|
|
10,000 |
|
|
(Unrecorded furniture realized ) |
|
|
|
|
|
|
|
|
|
|
|
|
h. |
Bank A/c |
Dr. |
|
12,000 |
|
|
|
To Realisation A/c |
|
|
|
12,000 |
|
|
(Bad debts recovered ) |
|
|
|
|
|
|
|
|
|
|
|
|
i. |
Realisation A/c |
Dr. |
|
50,000 |
|
|
|
To P’s Capital A/c |
|
|
|
50,000 |
|
|
(Wife’s loan paid by partner) |
|
|
|
|
|
|
|
|
|
|
|
|
J. |
Realisation A/c |
Dr. |
|
82,000 |
|
|
|
To Bank A/c (10,000 + 72,000) |
|
|
|
82,000 |
|
|
(Creditors paid) |
|
|
|
|
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Page No 8.51:
Question 18:
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.
Answer:
|
Journal |
|||||
|
Date |
Particulars |
L.F. |
Debit Amount (
`) |
Credit Amount (
`) |
|
|
(a) |
Realisation
A/c |
Dr. |
|
12,000 |
|
|
|
To Dharam’s Capital A/c |
|
|
|
12,000 |
|
|
(Remuneration
paid) |
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
Realisation
A/c |
Dr. |
|
15,000 |
|
|
|
To Jay's’s Capital A/c |
|
|
|
15,000 |
|
|
(Remuneration
paid) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Jay's
Capital A/c |
Dr. |
|
16,000 |
|
|
|
To Vijay's Capital A/c |
|
|
|
16,000 |
|
|
(Expenses
borne by Jay, paid by Vijay) |
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
Realisation
A/c |
Dr. |
|
7,000 |
|
|
|
To Deepa’s Capital A/c |
|
|
|
7,000 |
|
|
(Remuneration
paid) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deepa’s
Capital A/c |
Dr. |
|
6,000 |
|
|
|
To Bank A/c |
|
|
|
6,000 |
|
|
(Expenses
paid by firm) |
|
|
|
|
|
|
|
|
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|
(d) |
No Entry |
|
|
|
|
|
|
|
|
|
|
|
|
(e) |
Realisation
A/c |
Dr. |
|
10,000 |
|
|
|
To Jeev's Capital A/c |
|
|
|
10,000 |
|
|
(Remuneration
paid) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeev's
Capital A/c |
Dr. |
|
12,000 |
|
|
|
To Bank A/c |
|
|
|
12,000 |
|
|
(Expenses
paid by firm) |
|
|
|
|
|
|
|
|
|
|
|
|
(f) |
No Entry |
|
|
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|
Page No 8.51:
Question 19:
Ramesh and Umesh were partners in a firm sharing profits in the ratio of their capitals. On 31st March, 2013, their Balance Sheet was as follows:
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|
|
|
||||
|
Liabilities |
Amount |
Assets |
Amount |
|||
|
Creditors
|
1,70,000 |
Bank |
1,10,000 |
|||
|
Workmen
Compensation Reserve |
2,10,000 |
Debtor |
2,40,000 |
|||
|
General
Reserve |
2,00,000 |
Stock |
1,30,000 |
|||
|
Ramesh's
Current Account |
80,000 |
Furniture |
2,00,000 |
|||
|
Capital
A/cs: |
|
Machinery |
9,30,000 |
|||
|
Ramesh |
7,00,000 |
|
Umesh's
Current Account |
|
50,000 |
|
|
Umesh |
3,00,000 |
10,00,000 |
|
|
|
|
|
|
|
|
|
|
||
|
|
16,60,000 |
|
16,60,000 |
|||
|
|
|
|
|
|||
On the above date the firm was dissolved.
(a) Ramesh took over 50% of stock at ` 10,000 less than book value. The remaining stock was sold
at a loss of ` 15,000. Debtor were realised
at a discount of 5%.
(b) Furniture was taken over by Umesh for ` 50,000 and
machinery was sold for ` 4,50,000.
(c) Creditors were paid in full.
(d) There was an unrecorded bill for repai ` for
`
1,60,000 which was settled at ` 1,40,000.
Prepare Realisation Account.
Answer:
|
Realisation Account |
||||||
|
Dr. |
|
Cr. |
||||
|
Particulars |
Amount ` |
Particulars |
Amount ` |
|||
|
Sundry Assets- |
|
Creditors |
1,70,000 |
|||
|
Debtor |
2,40,000 |
|
Ramesh’s Current A/c (Stock) |
55,000 |
||
|
Stock |
1,30,000 |
|
Cash A/c (Assets Realised) |
|
||
|
Furniture |
2,00,000 |
|
Stock |
50,000 |
|
|
|
Machinery |
9,30,000 |
15,00,000 |
Machinery |
4,50,000 |
|
|
|
|
|
Debtor |
2,28,000 |
7,28,000 |
||
|
To Cash A/c (Liabilities) |
|
Umesh’s Current A/c (Furniture) |
50,000 |
|||
|
Creditors |
1,70,000 |
|
|
|
||
|
Outstanding Bill |
1,40,000 |
3,10,000 |
Realisation Loss |
|
||
|
|
|
Ramesh’s |
5,64,900 |
|
||
|
|
|
Umesh’s Current A/c |
2,42,100 |
8,07,000 |
||
|
|
18,10,000 |
|
18,10,000 |
|||
|
|
|
|
|
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Page No 8.52:
Question 20:
Pradeep and Rajesh were partners in a firm sharing profits and losses in the ratio of 3 : 2. They decided to dissolve their partnership firm on 31st March, 2018. Pradeep was deputed to realise the assets and to pay off the liabilities. He was paid ` 1,000 as commission for his services. The financial position of the firm on 31st March, 2018 was as follows:
|
|
|||||
|
Liabilities |
Amount ( `) |
Assets |
Amount ( `) |
||
|
Creditors
|
80,000 |
Building |
1,20,000 |
||
|
M
`.
Pradeep's Loan |
40,000 |
Investment |
30,600 |
||
|
Rajesh's
Loan |
24,000 |
Debtor |
34,000 |
|
|
|
Investment
Fluctuation Fund |
8,000 |
Less: Provision for
Doubtful Debts |
4,000 |
30,000 |
|
|
Capital
A/cs: |
|
|
Bills
Receivable |
37,400 |
|
|
Pradeep |
42,000 |
|
Bank |
6,000 |
|
|
Rajesh |
42,000 |
84,000 |
Profit
and Loss A/c |
8,000 |
|
|
|
|
|
Goodwill |
4,000 |
|
|
|
2,36,000 |
|
2,36,000 |
||
|
|
|
|
|
||
Following terms and conditions were agreed upon:
(a) Pradeep agreed to pay off his wife's loan.
(b) Half of the Debtor realised ` 12,000 and
remaining Debtor were used to pay off 25% of the Creditors .
(c) Investment sold to Rajesh for ` 27,000.
(d) Building realised ` 1,52,000.
(e) Remaining Creditors were to be paid
after two months, they were paid immediately at 10% p.a. discount.
(f) Bill receivables were settled at a loss of ` 1,400.
(g) Realisation expenses amounted to ` 2,500.
Prepare Realisation Account.
Answer:
|
Dr. |
Realisation A/c |
Cr. |
|||||
|
Particulars |
Amount ( `) |
Particulars |
Amount ( `) |
||||
|
To
Building |
1,20,000 |
By
Provision for Doubtful Debts |
4,000 |
||||
|
To
Investments |
30,600 |
By
Creditors |
80,000 |
||||
|
To
Debtor |
34,000 |
By
Mr. Pradeep’s Loan |
40,000 |
||||
|
To
Bills Receivable |
37,400 |
By
Investment Fluctuation Fund |
8,000 |
||||
|
To
Goodwill |
4,000 |
|
|
||||
|
To
Pradeep’s Capital A/c (Wife loan paid) |
40,000 |
By
Bank A/c: |
|
||||
|
To
Cash A/c (Creditors Paid) (WN1) |
59,000 |
Debtor |
12,000 |
|
|||
|
To
Pradeep’s Capital A/c (Commission) |
1,000 |
Building |
1,52,000 |
|
|||
|
To
Cash A/c (Realisation Expenses) |
2,500 |
Bills Receivable |
36,000 |
2,00,000 |
|||
|
To
Profit transferred to: |
|
|
|
||||
|
Pradeep’s
Capital A/c |
18,300 |
|
By
Cash A/c (Sale of
Investments) |
27,000 |
|||
|
Rajesh’s
Capital A/c |
12,200 |
30,500 |
|
|
|||
|
|
|
|
|
||||
|
|
3,59,000 |
|
3,59,000 |
||||
|
|
|
|
|
||||
Working Notes:
|
Remaining
Creditors to be paid |
= |
` (80,000 × 75/100) = ` 60,000 |
|
Discount
Received on Creditors |
= |
` (60,000 × 10/100 × 2/12) = ` 1,000 |
|
Amount paid to the Creditors |
= |
` (60,000 – 1,000) = ` 59,000 |
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