Question

Pass the necessary journal entries for the following transactions on the disSolution of the partnership firm of Mohit and Rohit after the various assets (other than cash and bank) and the third-party liabilities have been transferred to the realisation account:
(i)A machine, not recorded in the books, was taken over by Mohit at \rupee 7,000, whereas its expected value was \rupee 10,000.
(ii)Rohit’s loan of \rupee 15,000 was settled at \rupee 13,500.
(iii)The firm had investments of \rupee 1,00,000. Mohit took over 50\% of the investments at a discount of 10\%, while the remaining investments were sold off for \rupee 60,000.
(iv)Realisation expenses amounted to \rupee 23,000.
(v)Sundry creditors amounting to \rupee 45,000 were settled at a discount of \rupee 2,000.
(vi)Loss on realisation of \rupee 12,000 was divided between the partners in their profit-sharing ratio.

Hint:

Transfer all liabilities and assets to the Realisation Account before making adjustments for partner-specific settlements.

Answer 1

Journal Entries: \[ \begin{array}{|c|c|c|c|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
2023-04-01 & Mohit’s Capital A/c & 7,000 &
& To Realisation A/c & & 7,000
2023-04-01 & Realisation A/c & 13,500 &
& To Rohit’s Loan A/c & & 13,500
2023-04-01 & Mohit’s Capital A/c & 45,000 &
& To Realisation A/c & & 45,000
2023-04-01 & Bank A/c & 60,000 &
& To Realisation A/c & & 60,000
2023-04-01 & Realisation A/c & 23,000 &
& To Bank A/c & & 23,000
2023-04-01 & Realisation A/c & 43,000 &
& To Sundry Creditors A/c & & 45,000
& To Bank A/c & & 2,000
2023-04-01 & Profit and Loss A/c & 12,000 &
& To Mohit’s Capital A/c (3/5) & & 7,200
& To Rohit’s Capital A/c (2/5) & & 4,800
\end{array} \]