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Question -

What journal entries would be recorded for the following transactions on the dissolution of a firm after various assets (other than cash) on the third party liabilities have been transferred to Realisation Account?
1. Arti took over the Stock worth тВ╣ 80,000 at тВ╣ 68,000.
2. There was unrecorded Bike of тВ╣ 40,000 which was taken over By Mr. Karim.
3. The firm paid тВ╣ 40,000 as compensation to employees.
4. Sundry creditors amounting to тВ╣ 36,000 were settled at a discount of 15%.
5. Loss on Realisation тВ╣ 42,000 was to be distributed between Arti and Karim in the ratio of 3:4.



Answer -

Journal┬а

┬а

Particulars

L.F.

Amount

тВ╣

Amount

тВ╣

1

ArtiтАЩs┬аCapital A/c

Dr.

68,000

To┬аRealisation┬аA/c

68,000

(Arti┬аtook over stock worth тВ╣ 80,000 at тВ╣ 68,000)

2.

KarimтАЩs┬аCapital A/c

Dr.

40,000

To┬аRealisation┬аA/c

40,000

(Karim┬аtook over an unrecorded bike of┬а тВ╣ 40,000)

3.

Realisation┬аA/c

Dr.

40,000

To Bank A/c

40,000

(Compensation paid to the employees )

4.

Realisation┬аA/c

Dr.

30,600

To Bank A/c

30,600

(Creditors amounting тВ╣ 36,000 were settled at a discount of 15%) [36,000 ├Ч (85/100)]

5.

ArtiтАЩs┬аCapital A/c

Dr.

18,000

KarimтАЩs┬аCapital A/c

Dr.

24,000

To┬аRealisation┬аA/c

42,000

(Loss on┬аRealisation┬аtransferred to PartnersтАЩ Capital Account)

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