Page 178 - DEBKVOL-1

Chapter 8 Dissolution of a Partnership Firm 8.3
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Solved Questions

Illustration 1.
Pass Journal entries for the following transactions:
(i) Realisation expenses amounted to ` 10,000.
(ii) Realisation expenses amounted to ` 5,000 were paid by a partner.
(iii) Realisation expenses amounted to ` 5,000 were paid by the firm on behalf of a partner.
(iv) A partner was paid remuneration (including expenses) of ` 7,500 to carry out dissolution
of the firm. Actual expenses were ` 10,000.
(v) Dissolution expenses were ` 8,000. Out of the said expenses, ` 3,000 were to be borne
by the firm and the balance by a partner. ` 8,000 are paid by the firm.
(vi) Dissolution expenses were ` 8,000; ` 3,000 were to be borne by the firm and the balance
by a partner. The expenses were paid by a partner.
(vii) Realisation expenses of ` 5,000 were to be borne and paid by a partner.
(viii) X, the partner, is paid remuneration of ` 5,000 for completing the dissolution process.
Realisation expenses of ` 8,000 are met by the firm.
(ix) Realisation expenses of ` 5,000 were to be borne by X, a partner. However, it was paid
by Y.
Solution: JOURNAL

Date Particulars L.F. Dr. (`) Cr. (`)
(i) Realisation A/c ...Dr. 10,000
To Cash/Bank A/c 10,000
(Dissolution expenses paid)
Explanation: The expenses of dissolution are borne and paid by
the firm, since the question does not specify who is to bear the
dissolution expenses. Therefore, the expenses are treated to
be expenses of the firm.
(ii) Realisation A/c ...Dr. 5,000
To Concerned Partner’s Capital A/c 5,000
(Dissolution expenses paid by the partner credited to his
Capital Account)
Explanation: The expenses of dissolution are borne by the firm
but paid by the partner on behalf of the firm. Therefore, Concerned
Partner’s Capital Account is credited.
(iii) Concerned Partner’s Capital A/c ...Dr. 5,000
To Cash/Bank A/c 5,000
(Dissolution expenses paid by the firm on behalf of the partner
debited to his Capital Account)
Explanation: The expenses of dissolution are borne by
the partner but are paid by the firm. Therefore, Concerned
Partner’s Capital Account is debited. Since the amount is
paid by the firm, Cash/Bank Account is credited.