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Question -

Give journal entries for the following transactions:
1. To record the Realisation of various liabilities and assets,
2. A Firm has a Stock of ₹ 1, 60,000. Aziz, a partner took over 50% of the Stock at a discount of 20%,
3. Remaining Stock was sold at a profit of 30% on cost,
4. Land and Building (book value ₹ 1,60,000) sold for ₹ 3,00,000 through a broker who charged 2%, commission on the deal,
5. Plant and Machinery (book value ₹ 60,000) was handed over to a Creditor at an agreed valuation of 10% less than the book value,
6. Investment whose face value was ₹ 4,000 was realised at 50%.



Answer -

Journal

 

Particulars

L.F.

Amount

₹

Amount

₹

1)

(a)

For Transfer of Assets

Realisation A/c

Dr.

–

To Assets A/c (Individually)

–

(Assets transferred to Realisation Account)

(b)

For Transfer of Liabilities

Liabilities A/c (Individually)

Dr.

–

To Realisation A/c

–

(Liabilities transferred to Realisation Account)

(c)

For sale of Asset

Cash/Bank A/c

Dr.

–

To Realisation A/c

–

(Assets sold)

(d)

For liabilitiy paid

Realisation A/c

Dr.

–

To Cash/Bank A/c

–

(Liabilities paid)

2)

Aziz’s Capital A/c

Dr.

64,000

To Realisation A/c

64,000

(Aziz, a partner took over 50% of stock at 20% discount, the value

of the total stock  was ₹ 1,60,000)

[1,60,000 × (50/100) × (80/100) = ₹ 64,000]

3)

Bank A/c

Dr.

1,04,000

To Realisation A/c

1,04,000

(Stock worth ₹ 80,000  sold at a profit of 30% on cost) [80,000 × (130/100 = ₹ 1,04,000)]

4)

Bank A/c

Dr.

2,94,000

To Realisation A/c

2,94,000

(Land and Building sold for ₹ 3,00,000 and 2% commission

paid to the broker)

5)

No entry

(Plant and Machinery ₹ 60,000 handed over to the creditors at a

discount of 10%.  No entry is required as both the asset and liability

are already transferred to the Realisation Account)

6)

Bank A/c

Dr.

2,000

To Realisation A/c

2,000

(Investments worth ₹ 4,000 were realised at 50%)

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