Question

Book value of assets ( other than cash and bank) transferred to Realisation Account is ₹ 1,00,000. 50% of the assets are taken over by a partner Atul, at a discount of 20%; 40% of the remaining assets are sold at a profit of 30% on cost 5% of the balance being obsolete realised nothing and remaining assets are handed over to a Creditor in full settlement of his claim.
You are required to record the journal entries for realisation of assets.

Answer 1

Answer:

As per the journal,

(A) An amount of Rs. 1,00,000 and Rs. 32,500 has been debited from the Realisation account and it has been credited to Sundry Assets account.

This is being all the assets other than cash and bank transferred to Realisation Account.

(B) An amount of Rs. 40000 has been debited from the Atul's capital account and it has been credited to the Realisation A/c.

This is being the amount which Atul took over 50% of assets worth Rs 1,00,000 at 20% discount [1,00,000 @ 50 % @ 80 %]

(C) An amount of Rs. 26000 has been debited from the Bank account and it has been credited to the realisation A/c

This is being the assets worth Rs.20000, i.e. 40% of assets of Rs. 50,000 are sold at a profit of 30%)

$[50,000 \times (40 / 100) \times(130 / 100)]$

(D) No entry for obsolete assets and for the assets  given to the creditors in the full settlement as  these are already transferred to the Realisation  Account.