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Question -

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.

You are required to record the journal entries for Realisation of assets.



Answer -

Journal

 

Particulars

L.F.

Amount

₹

Amount

₹

Realisation A/c

Dr.

1,00,000

To Sundry Assets A/c

1,00,000

(Assets other than cash and bank transferred to Realisation Account)

Atul’s Capital A/c

Dr.

40,000

To Realisation A/c

40,000

(Atul took over 50% of assets worth ₹ 1,00,000 at 20% discount) [1,00,000 × (50/100) × (80/100)]

Bank A/c

Dr.

26,000

To Realisation A/c

26,000

(Assets worth ₹ 20,000, i.e. 40% of assets of ₹ 50,000 are sold

at a profit of 30%) [50,000 × (40/100) × (130/100)]

No entry is made for obsolescence of the assets and the assets given

to the creditors in the full settlement as these are already transferred to

the Realisation Account and adjusted)

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