Sohan and Rohan decided to dissolve their firm and convert it into an Ltd company. Their assets were Rs.2,20,000 and trade liabilities Rs.60,000. Purchase price is agreed at Rs.1,80,000. Expenses amounted to Rs.10,000, paid by the firm. Calculate realisation profit or loss from realisation A/C.
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S.N.
Particulars
L.F.
Debits
Amount
Rs
Credit
Amount
Rs
(a)
Realisation A/c
Dr.
1,500
To Cash A/c
1,500
(Realisation expenses paid)
(b)
Realisation A/c
Dr.
600
To Mohan’s Capital A/c
600
(Realisation expenses paid by Mohan)
(c)
Realisation A/c
Dr.
2,000
To Mohan’s capital A/c
2,000
(Commission allowed to Mohan on dissolution of the firm)
(d)
No entry
No journal entry is passed because both motor car and creditors accounts have already been transferred to Realisation Account and nothing is recovered or paid in terms of Cash and Bank
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