CBSE 2025, Set 3

Question

Pass the necessary journal entries for the following transactions on the dissolution of a partnership firm of M, N and S after various assets (other than cash) and external liabilities have been transferred to Realisation Account:
(i) S took over an unrecorded asset of ₹ 80,000 at ₹ 60,000.
(ii) Creditors of ₹ 1,20,000 accepted machinery of ₹ 1,00,000 in full settlement of their claim.
(iii) The firm paid realisation expenses of ₹ 10,000 on behalf of partner N.
(iv) Partner M's loan of ₹ 60,000 was paid ₹ 64,000.
(v) Profit on realisation ₹ 90,000 was distributed among the partners M, N and S in the ratio of 2 : 2 : 1.

Edvaya · Accepted Answer

The correct answer is Subjective. **Journal Entries on Dissolution** | Date | Particulars | L.F. | Dr. Amount (₹) | Cr. Amount (₹) | |---|---|---|---|---| | (i) | S's Capital A/c ...Dr.     To Realisation A/c (Unrecorded asset taken over by partner S) | | 60,000 | 60,000 | | (ii) | *No Entry* (Asset given to a creditor in full settlement requires no entry) | | | | | (iii) | N's Capital A/c ...Dr.     To Cash/Bank A/c (Realisation expenses paid by firm on behalf of N) | | 10,000 | 10,000 | | (iv) | M's Loan A/c ...Dr. Realisation A/c ...Dr.     To Cash/Bank A/c (M's loan settled for more than book value, excess charged to realisation) | | 60,000 4,000 | 64,000 | | (v) | Realisation A/c ...Dr.     To M's Capital A/c     To N's Capital A/c     To S's Capital A/c (Profit on realisation distributed among partners in 2:2:1) | | 90,000 | 36,000 36,000 18,000 |

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Accountancy > Accounting For Partnership Firms > Dissolution Of Partnership Firm

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