38 Journal Entries on Dissolution of Partnership Firm in Exam.
These are the main journal entries usually asked in exam. There’s no set collection given here but jumbled to bring random factor for preparation.
All the following Journal Entries have been given here assuming that:
(a) All the assets and liabilities have already been transferred to Realisation Account.
(b) Persons mentioned in transactions are Partners, unless specifically mentioned.
38 Journal Entries on Dissolution of Partnership Firm in Exam. - Part 1
1. Dissolution expenses amounted to ₹6,500.
Realisation A/c Dr. 6,500
To Cash / Bank A/c 6,500
2. Dissolution expenses ₹7,800 were paid by Abha.
Realisation A/c Dr. 7,800
To Abha's Capital A/c 7,800
3. Vibha was appointed to look after the dissolution process for which she was given a remuneration of ₹12,000.
Realisation A/c Dr. 12,000
To Vibha's Capital A/c 12,000
4. Sudha was appointed to look after the dissolution work for which she was allowed a remuneration of ₹15,000. She agreed to bear dissolution expenses. Actual dissolution expenses paid by her amounted to ₹11,800.
Realisation A/c Dr. 15,000
To Sudha's Capital A/c 15,000
5. Anuj was to look after the dissolution process for which he was allowed a remuneration of ₹12,000 he also agreed to bear dissolution expenses. Actual expenses ₹9,500 were paid by the firm.
(i) Realisation A/c Dr. 12,000
To Anuj's Capital A/c 12,000
(ii) Anuj's Capital A/c Dr. 9,500
To Cash /Bank A/c 9,500
6. Anuradha looked after the dissolution work for remuneration of ₹8,500 and agreed to bear dissolution expenses upto ₹ 6,000. Actual expenses paid by her were ₹7,600.
(i) Realisation A/c Dr. 8,500
To Anuradha's Capital A/c 8,500
(ii) Realisation A/c Dr. 1,600
To Anuradha's Capital A/c 1,600
7. Vibha was appointed to look after the dissolution work for which she was allowed a remuneration of ₹12,000. She agreed to take over investment of the book value of ₹11,000 towards payment of her remuneration.
No Entry
8. Creditors worth ₹85,000 accepted ₹40,000 as cash and Investment worth ₹43,000, in full settlement of their claim.
Realisation A/c Dr. 40,000
To Bank A/c 40,000
9. Creditors were ₹16,000. They accepted Machinery valued at ₹18,000 in settlement of their claim.
No Journal Entry
10. Creditors were ₹90,000. They accepted Buildings valued ₹1,20,000 and paid cash to the firm ₹30,000.
Bank A/c Dr. 30,000
To Realisation A/c 30,000
38 Journal Entries on Dissolution of Partnership Firm in Exam. - Part 2
11. There was an old computer which was written-off in the books of accounts in the previous year. The same has been taken over by a partner Nitin for ₹3,000.
Nitin’s Capital A/c Dr. 3,000
To Realisation A/c 3,000
12. Payment of unrecorded liabilities of ₹3,200.
Realisation A/c Dr. 3,200
To Bank A/c 3,200
13. Profit on Realisation amounting to ₹18,000 is to be distributed between the partners Ashish and Tarun equally.
Realisation A/c Dr. 18,000
To Ashish’s Capital A/c 7,500
To Tarun’s Capital A/c 7,500
14. An unrecorded asset realised ₹5,500.
Bank A/c Dr. 5,500
To Realisation A/c 5,500
15. A Firm has a Stock of ₹1,60,000. Aziz, a partner took over 50% of the Stock at a discount of 20%, Remaining Stock was sold at a profit of 30% on cost.
(1) Aziz’s Capital A/c Dr. 64,000
To Realisation A/c 64,000
(2) Bank A/c Dr. 1,04,000
To Realisation A/c 1,04,000
16. Land and Buildging (book value ₹1,60,000) sold for ₹ 3,00,000 through a broker for 2%, commission on the deal.
Bank A/c Dr. 2,94,000
To Realisation A/c 2,94,000
17. Plant and Machinery (book value ₹60,000) was handed over to a Creditor at an agreed valuation of 10% less than the book value.
No Journal Entry
18. Realisation expenses are to be borne by Rashmi and he will be paid ₹70,000 as remuneration for completing the dissolution process. The actual expenses incurred by Rashmi were ₹1,20,000.
Realisation A/c Dr. 70,000
To Rashmi’s Capital A/c 70,000
19. The book value of assets (other than cash and bank) transferred to Realisation Account is ₹1,00,000. 50% of the assets are taken over by a partner Atul, at a discount of 20%; 40% of the remaining assets are sold at a profit of 30% on cost; 5% of the balance being obsolete, realised nothing and remaining assets are handed over to a Creditor, in full settlement of his claim.
(1) Realisation A/c Dr. 1,00,000
To Sundry Assets 1,00,000
(2) Atul’s Capital A/c Dr. 40,000
To Realisation A/c 40,000
(3) Bank A/c Dr. 26,000
To Realisation A/c 26,000
(4) No Journal Entry for Handing over remaining assets to Creditors.
20. Ashish, an old customer whose account for ₹1,000 was written-off as bad in the previous year, paid 60%, of the amount.
Bank A/c Dr. 600
To Realisation A/c 600
21. Paras agreed to take over the firm’s goodwill (not recorded in the books of the firm), at a valuation of ₹30,000.
Paras A/c Dr. 30,000
To Realisation A/c 30,000
22. There was an old typewriter which had been written-off completely from the books. It was estimated to realise ₹400. It was taken away by Riya at an estimated price less 25%.
Riya’s Capital A/c Dr. 300
To Realisation A/c 300
38 Journal Entries on Dissolution of Partnership Firm in Exam. - Part 3
23. here were 100 shares of ₹10 each in Star Limited acquired at a cost of ₹2,000 which had been written-off completely from the books. These shares are valued @ ₹6 each and divided among the partners A and B in their profit sharing ratio.
A’s Capirtal A/c Dr. 300
B’s Capital A/c Dr. 300
To Realisation A/c 600
24. The firm paid ₹40,000 as compensation to employees.
Realisation A/c Dr. 40,000
To Bank 40,000
25. Sundry creditors amounting to ₹36,000 were settled at a discount of 15%.
Realisation A/c Dr. 30,600
To Bank 30,600
26. Loss on realisation ₹42,000 was to be distributed between Kartik and Hari in the ratio of 3:4.
Kartik’s Capirtal A/c Dr. 18,000
Hari’s Capital A/c Dr. 24,000
To Realisation A/c 42,000
27. Dhawan’s Loan of ₹50,000 to the firm was settled by paying ₹42,000.
Dhawan’s Loan A/c Dr. 50,000
To Bank A/c 42,000
To Realisation A/c 8,000
28. Avni’s Loan of ₹40,000 was settled by paying giving an unrecorded asset of ₹45,000.
Avni’s Loan A/c Dr. 40,000
To Realisation A/c 40,000
29. Loan to Paru ₹60,000 was settled through payment of Paru’s brother loan of the same amount.
Realisation A/c Dr. 60,000
To Loan to Paru A/c 60,000
30. Noor’s loan of ₹80,000 to the firm and she took over machinery of ₹60,000 as part payment.
Noor’s Loan A/c Dr. 80,000
To Realisation A/c 60,000
To Bank A/c 20,000
31. At the time of dissolution, Perry, a creditor of the firm agreed to take over the furniture of the book value of ₹1,00,000 at ₹89,000 and the balance in cash in full settlement of his account of ₹1,10,000.
Realisation A/c Dr. 21,000
To Bank A/c 21,000
32. Gracy a partner, is allowed a remuneration of ₹13,000 for dissolution work and is to bear all the expenses of realisation which amounted to ₹5,000 were paid by the firm.
Realisation A/c 13,000
To Gracy’s Capital A/c 8,000
To Bank A/c 5,000
33. Komal a partner, agreed to pay off her brother’s loan of ₹13,000 at a discount of 5%.
Realisation A/c Dr. 12,350
To Komal’s capital A/c 12,350
34. All partners are agreed that the process of realisation at the time dissolution will be accomplished by Arun for which he will be paid ₹10,000 along with the amount of expense which amounted to 2% of total value realised from the Assets on dissolution. Some assets were sold for Cash at a cumulative Value of ₹12,00,000 and the remaining were taken over by creditors at a valuation of ₹3,00,000.
Realisation A/c Dr. 40,000
Arun’s Capital 40,000
35. Deferred Advertisement Expenditure A/c appeared in the books at ₹28,000.
Partners’ Capital A/c 28,000 (In profit sharing ratio)
To Realisation A/c 28,000
36. Out of the Stock of ₹1,20,000; Tarun (a partner) took over 1/3 of the stock at a discount of 25% and 50% of remaining stock was took over by a Creditor of ₹30,000 in full settlement of his claim. Balance amount of stock realized at ₹25,000.
(1) Tarun’s capital A/c Dr. 30,000
To Realisation A/c 30,000
(2) No Journal Entry
(3) Bank A/c Dr. 25,000
To Realisation A/c 25,000
37. An outstanding bill for repairs and renewal of ₹3,000 was settled through an unrecorded asset which was valued at ₹10,000. Balance being settled in Cash.
Bank A/c Dr. 7,000
To Realisation A/c 7,000
38. At the time of dissolution, Harry, a creditor of the firm agreed to take over the furniture of the book value of ₹1, 00,000 at ₹ 89,000 and the balance in cash in full settlement of his account of ₹1, 10,000.
Realisation A/c Dr. 21,000
To Bank A/c 21,000