The firm of Manjeet, Sujeet and Jagjeet was dissolved on 31st March, 2018. It was agreed that
Sujeet will take care of the dissolution related activities and will get 10% of the value of assets
realised. Sujeet agreed to bear the realisation expenses. Assets realised Rs. 10,00,000 and
realisation expenses were Rs.90,000, which were paid from the firm's cash. Rs. 4,50,000 were paid
to the creditors in full settlement of their claim
Pass necessary journal entries for the above transactions in the books of the firm.
Answers
Answer:
a) Bank A/c......................Dr. 10,00,750
To Realisation A/c 10,00,750
(Assets realised)
b) Realisation A/c............Dr. 1,00,075
To Sujeet’s Capital A/c 1,00,075
(10% of assets realised paid as remuneration)
c) Sujeet’s Capital A/c........Dr. 90,000
To Bank/Cash A/c 90,000
(realisation expense paid on behalf of sujeet)
d) Realisation A/c............Dr. 4,50,000
To Bank A/c 4,50,000
(Creditors paid in full settlement)
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Journal Entries in the books of firm on 31 March 2018.
Asset Realised -
Bank A/C DR 10,00,000
To Realisation A/C 10,00,000
( Being asset realised )
Interest given to Sujeet -
Realisation A/C DR 1,00,000
To Sujeet A/C 1,00,000
( Being interest recieved as agreed )
Realisation Expenses Paid -
Sujeet A/C DR 90,000
To Realisation A/c A/C 90,000
( Being realisation expenses paid by partner )
Creditors paid in full settlement -
Realisation A/c Dr 4,50,000
To Bank A/C 4,50,000
( Being creditors paid in full settlement )