Page 140 - ISCDEBK-12

6.14 Double Entry Book Keeping (Section A)—ISC XII

Illustration 7.
X, Y and Z were the partners in a firm sharing profits in the ratio of
2 : 2 : 1. The firm was dissolved on 31st March, 2018. After transfer of assets and external
liabilities to Realisation Account the following transactions took place:
(i) R, a Creditor, to whom ` 60,000 were due to be paid, accepted Office Furniture at
` 40,000 and the balance was paid to him in cash.
(ii) S, a Creditor, to whom ` 1,60,000 were due to be paid, took over Machinery at
` 2,00,000. Balance was paid by him in cash.
(iii) T, an Unrecorded Creditor of ` 90,000 was paid by X at a discount of 10%.
(iv) An Unrecorded Computer of ` 20,000 was taken over by Y at a discount of 10%.

(v) Workmen Compensation Reserve ` 30,000; Workmen Compensation paid ` 15,000.
(vi) Prepaid Insurance of ` 10,000 and Goodwill of ` 50,000 were also appearing in
the Balance Sheet but no other additional information was given related to these
two items.
Pass necessary Journal entries for the above transactions in the books of the firm.

Solution: JOURNAL

Date Particulars L.F. Dr. (`) Cr. (`)
(i) Realisation A/c ...Dr. 20,000
To Bank A/c 20,000
(Being the balance cash paid to the creditor)
(ii) Bank A/c ...Dr. 40,000
To Realisation A/c 40,000
(Being the net proceeds received from the creditor who took over
machinery at ` 2,00,000)
(iii) Realisation A/c ...Dr. 81,000
To X’s Capital A/c 81,000
(Being an unrecorded liability taken over by X at a discount of 10%)
(iv) Y’s Capital A/c ...Dr. 18,000
To Realisation A/c 18,000
(Being an unrecorded computer taken over by Y at a discount of 10%)
(v) (a) Realisation A/c ...Dr. 15,000
To Bank A/c 15,000
(Being the liability discharged)
(b) Workmen Compensation Reserve A/c ...Dr. 15,000
To X’s Capital A/c 6,000
To Y’s Capital A/c 6,000
To Z’s Capital A/c 3,000
(Being the transfer of excess workmen compensation reserve)
(vi) No Journal entry is required since there is no realisation.