Question

Pass the necessary journal entries for the following transactions on disSolution of the firm of Avyan and Shruti after various assets (other than cash) and third-party liabilities have been transferred to Realisation Account:
(i) Sundry creditors amounting to Rs.40,000 were settled at a discount of 10\%.
(ii) An unrecorded computer of Rs.50,000 was taken over by Shruti.
(iii) Creditors of Rs.5,000 agreed to take over debtors of Rs.8,000 in full settlement of their claim.
(iv) The firm had a debit balance of Rs.42,000 in the Profit and Loss Account on the date of disSolution.
(v) There was an old furniture with the firm which had been written off completely from the books. This was sold for Rs.9,000.
(vi) Realisation expenses amounting to Rs.11,000 were paid by Shruti.

Hint:

When preparing journal entries for disSolution, ensure all assets and liabilities are correctly transferred to the Realisation Account, and adjustments for any unrecorded items or expenses are accurately recorded.

Answer 1

Journal Entries: \[ \begin{array}{|l|c|c|} \hline \textbf{Particulars} & \textbf{Dr. Amount (Rs.)} & \textbf{Cr. Amount (Rs.)} \\ \hline \text{Realisation A/c Dr.} & 36,000 & \\ \text{To Creditors A/c} & & 40,000 \\ \text{To Profit on Settlement A/c} & & 4,000 \\ \hline \text{Shruti’s Capital A/c Dr.} & 50,000 & \\ \text{To Realisation A/c} & & 50,000 \\ \hline \text{Creditors A/c Dr.} & 5,000 & \\ \text{To Debtors A/c} & & 8,000 \\ \text{To Realisation A/c} & & 3,000 \\ \hline \text{Profit \& Loss A/c Dr.} & 42,000 & \\ \text{To Realisation A/c} & & 42,000 \\ \hline \text{Bank A/c Dr.} & 9,000 & \\ \text{To Realisation A/c} & & 9,000 \\ \hline \text{Realisation A/c Dr.} & 11,000 & \\ \text{To Shruti’s Capital A/c} & & 11,000 \\ \hline \end{array} \]