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Question -

Record necessary journal entries in the following cases:
[a] Creditors worth ₹ 85,000 accepted ₹ 40,000 as cash and Investment worth ₹ 43,000, in full settlement of their claim.
[b] Creditors were ₹ 16,000. They accepted Machinery valued at ₹ 18,000 in settlement of their claim.
[c] Creditors were ₹ 90,000. They accepted Buildings valued ₹ 1, 20,000 and paid cash to the firm ₹ 30,000.



Answer -

Journal

 

 

Particulars

L.F.

Amount

₹

Amount

₹

(a)

Realisation A/c

Dr.

40,000

To Cash A/c

40,000

(Creditors worth ₹ 85,000 accepted 40,000 as cash and investment

worth ₹ 43,000 in their full settlement)

(b)

No Entry

(Creditors ₹ 16,000 accepted Machinery ₹ 18,000 in the full

settlement. No entry is required since both asset and liability are

already transferred to the Realisation Account)

(c)

Cash A/c

Dr.

30,000

To Realisation A/c

30,000

(Creditors worth ₹ 90,000 accepted buildings worth ₹ 1,20,000 and

returned ₹ 30,000 as cash after settlement of claim to the firm)

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