Question

Rishi, Manu and Komal were partners in a firm sharing profits and losses in the ratio of 3 : 4 : 5. On 31^st March, 2024 their firm was dissolved. After transferring sundry assets (except cash in hand and cash at bank) and third party liabilities to realisation account, the following transactions took place:
(i) A creditor of ₹2,00,000 took over an old machine for ₹70,000 that had been completely written off and his balance was settled at a discount of 10%.
(ii) Remaining creditors of ₹8,00,000 agreed to take over stock of ₹6,00,000 in full settlement of their claim.
(iii) The remaining stock of ₹3,00,000 was sold at a loss of 30%.
(iv) Dissolution expenses amounting to ₹90,000 were paid by Komal.
(v) Saransh, an old customer whose account for ₹40,000 was written off as bad debt in the previous year, paid ₹36,000.
(vi) Loss on dissolution amounted to ₹2,40,000.
Pass necessary journal entries for the above transactions to close the books of Rishi, Manu and Komal at the time of dissolution of the firm.

Hint:

While closing books on dissolution, always transfer assets and liabilities to Realisation A/c. Expenses borne by a partner are credited to their capital account.

Answer 1

Journal Entry (i): 
 

Particulars	Dr. (₹)	Cr. (₹)
Realisation A/c	70,000
Creditors A/c	1,10,000
To Realisation A/c		1,80,000
(Being creditor of ₹2,00,000 settled by giving asset of ₹70,000 and 10% discount)

 Journal Entry (ii):
 

Particulars	Dr. (₹)	Cr. (₹)
Creditors A/c	8,00,000
To Realisation A/c		6,00,000
To Profit on Settlement (Realisation A/c)		2,00,000

 Journal Entry (iii):
 

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c	2,10,000
Realisation A/c	90,000
To Stock A/c		3,00,000
(Remaining stock sold at 30% loss)

 Journal Entry (iv):
 

Particulars	Dr. (₹)	Cr. (₹)
Realisation A/c	90,000
To Komal’s Capital A/c		90,000
(Being dissolution expenses borne by Komal)

 Journal Entry (v):
 

Particulars	Dr. (₹)	Cr. (₹)
Bank A/c	36,000
To Realisation A/c		36,000
(Being recovery of bad debts previously written off)

 Journal Entry (vi):
 

Particulars	Dr. (₹)	Cr. (₹)
Rishi’s Capital A/c	72,000
Manu’s Capital A/c	96,000
Komal’s Capital A/c	1,20,000
To Realisation A/c		2,40,000
(Being realisation loss shared in 3:4:5 ratio)