Question

The book value of assets (other than cash and bank) transferred to Realisation Account is Rs 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:

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Answer 2

Explanation:

1. Realisation A/C.... Dr. 100000

To Sundry Assets A/C 100000

(Being assets transferred to Realisation account)

2. Atul's Capital A/C..... Dr. 40000

To Realisation A/C 40000

(Being assets taken over by Atul)

[ Note: 50%of 100000= 50000

Discount= 20% of 50000= 10000

Hence, value after discount= 50000-10000

= 40000]

3. Bank A/C.... Dr. 26000

To Realisation A/C 26000

(Being assets sold)

[ Note: 40% of 50000= 20000

Profit= 30% of 20000= 6000

Hence, value after profit= 20000+6000

= 26000]

4. No entry is passed since creditors are handed over obsolete assets in full settlement of their claim.