Question

Give the necessary journal entries for the following transactions on dissolution of the firm of Rohan and  Sohan on 31st March, 2017. They shared profits and losses in the ratio of 3 : 2.

(i)             Profit and Loss Account was showing a credit balance of ₹12,000 which was distributed among the partners.

(ii)           Advertisement Suspense Account of ₹ 8,000 was showing in the books at the time of dissolution.

(iii)         Rohan’s loan was repaid by the firm of  ₹20,000 through bank.

(iv)         Workmen compensation reserve appear in the books of

₹15,000 and no liability against it is due.

 

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Answer 1

In this question, we are asked to pass the necessary journal entries.

                        JOURNAL ENTRIES RELATED TO DISSOLUTION

Profit and Loss A/C 12,000

    To Rohan A/C 7,200

    To Sohan A/C 4,800

(Being profit distributed among partners)

Sohan's Capital A/C 4,800

Rohan's Capital A/C 3,200

  To Advertisement Suspense A/C 8,000

(Being advertisement suspense distributed)

Rohan's Loan A/C DR 20,000

     To Bank A/C 20,000

(Being Rohan's was repaid by the bank)

Workmen Compensation Reserve A/C 15,000

   To Rohan A/C 9,000

   To Sohan A/C 6,000

(Being workmen compensation reserve appears in the books)

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