Question

Settled credit purchase account by paying cash Rs.9500. Required:Journal entries

Answer 1

Creditor/ supplier. A/c dr 9500
To bank A/c. 9500

Answer 2

In the 1st entry bank is debited as it is an asset which is increasing for the business. Debtors/receivables is also an asset but is decreasing as less is owed to the business. So this account is credited. In the 2nd entry we show that bad debts is recorded as an expense (debit).

ANSWER

(a) Partner's Loan A/c Dr. 10000

To Bank A/c 10000

(Being payment of partner's loan)

(b) X's Capital A/c Dr. 300

To Realisation A/c 300

(Being unrecorded asset taken over by partner)

(c) X's Capital A/c Dr. 10000

Y's Capital A/c Dr. 10000

Z's Capital A/c Dr. 10000

To Profit and Loss A/c 30000

(Being debit balance of profit and loss distributed among partners)

(d) Bank A/C..... Dr. 125000

To Realisation A/c 125000

(Being realisation of assets)

(e) Realisation A/c Dr. 2000

To Y's Capital A/c 2000

(Being remuneration given to Y to carry out dissolution)

(f) No entry is passed since creditors are paid in full settlement of their account.

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