Question

Pass the necessary journal entries for the following transactions on the disSolution of the firm of Sudha and Shiva after the various assets (other than cash and bank) and third-party liabilities have been transferred to realisation account: Sudha agreed to pay off her husband’s loan \rupee 19,000. A debtor, whose debt of \rupee 9,300 was written off as bad debts in the books, paid \rupee 7,500 in full settlement. Shiva took over all investments at \rupee 13,300. An unrecorded creditor of \rupee 20,000 was paid by Sudha at a discount of 10\%. The firm had 300 shares in Veligare Ltd. acquired at a cost of \rupee 3,000 and had been written off completely from the books. These shares were valued at \rupee 5 each and divided among the partners in their profit-sharing ratio. Realisation expenses \rupee 3,400 were paid by Sudha for which she was allowed a remuneration of \rupee 3,000.

Hint:

In disSolution, all transactions such as realization of assets, settlement of liabilities, and payment of expenses are routed through the Realisation Account.

Answer 1

Journal Entries: \begin{center} \begin{tabular}{|l|p{8cm}|r|r|} Date & Particulars & Debit (\rupee) & Credit (\rupee)
-- & Realisation A/c & 19,000 & --
& To Sudha’s Capital A/c & -- & 19,000
& \textit{(Sudha agreed to pay off her husband’s loan)} & &
-- & Bank A/c & 7,500 & --
& To Realisation A/c & -- & 7,500
& \textit{(Bad debt recovered from debtor)} & &
-- & Shiva’s Capital A/c & 13,300 & --
& To Realisation A/c & -- & 13,300
& \textit{(Investments taken over by Shiva)} & &
-- & Realisation A/c & 18,000 & --
& To Bank A/c & -- & 18,000
& \textit{(Unrecorded creditor of \rupee 20,000 settled at 10\% discount)} & &
-- & Realisation A/c & 1,500 & --
& To Sudha’s Capital A/c & 1,050 & --
& To Shiva’s Capital A/c & 450 & --
& \textit{(Veligare Ltd. shares distributed among partners in profit-sharing ratio)} & &
-- & Realisation A/c & 3,400 & --
& To Bank A/c & -- & 3,400
& \textit{(Realisation expenses paid by Sudha)} & &
-- & Realisation A/c & 3,000 & --
& To Sudha’s Capital A/c & -- & 3,000
& \textit{(Remuneration allowed to Sudha for realisation work)} & &
\end{tabular} \end{center}