What journal entries would be passed for discharge of following unrecorded liabilities on the dissolution of a firm of partners A and B:
(a) There was a contingent liability in respect of bills discounted but not matured of ₹ 18,500. An acceptor of one bill of ₹ 2,500 became insolvent and fifty paise in a rupee was recovered. The liability of the firm on account of this bill discounted and dishonoured has not so far been recorded.
(b) There was a contingent liability in respect of a claim fro damages for ₹ 75,000 such liability was settled for ₹ 50,000 and paid by the partner A.
(c) Firm will have to pay ₹ 10,000 as compensation to an injured employee, which was a contingent liability not accepted by the firm.
(d) ₹ 5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70% by a compromise between the customer and the firm.
Answers
Answer:
As per the journal,
(A) An amount of Rs. 1250 has been debited from the Bank A/c and it has been credited to Realisation account.
This is being the amount which is received.
(B) An amount of Rs. 2,500 has been debited from the realisation account and it has been credited to the Bank A/c.
This is being the amount when the liabilities discharged.
(C) An amount of Rs. 50,000 has been debited from the realisation account and it has been credited to the A's capital A/c
This is being the amount obtained when the liabilities are paid by a partner.
(D) An amount of Rs. 10,000 has been debited from the realisation account and it has been credited to the Bank A/c.
This is being the amount obtained when the liabilities discharged.
(E) An amount of Rs. 3,500 has been debited from the realisation account and it has been credited to the Bank A/c.
This is being the amount obtained when the liabilities discharged.
