Page 179 - DEBKVOL-1

8.4 Double Entry Book Keeping—CBSE XII

(iv) Realisation A/c ...Dr. 7,500
To Concerned Partner’s Capital A/c 7,500
(Remuneration to partner credited to his Capital Account)
Explanation: Partner is paid ` 7,500 towards his remuneration and
expenses of dissolution. The excess expenses, i.e., ` 2,500
(` 10,000 – ` 7,500) will be borne by the partner and not by the firm.
(v) Realisation A/c ...Dr. 3,000
Concerned Partner’s Capital A/c ...Dr. 5,000
To Cash/Bank A/c 8,000
(Dissolution expenses paid by the firm, firm’s share of expenses debited
to Realisation Account and balance to Concerned Partner’s Capital Account)
Explanation: Total expenses of dissolution are ` 8,000. Out of this,
` 3,000 is to be borne by the firm and balance ` 5,000 by the partner.
Therefore, ` 3,000 is debited to Realisation Account. Balance ` 5,000 is
debited to Concerned Partner’s Capital Account. Cash/Bank Account
is credited because the expenses are paid by the firm.
(vi) Realisation A/c ...Dr. 3,000
To Concerned Partner’s Capital A/c 3,000
(Realisation expenses paid by the partner credited to his Capital Account)
Explanation: Total expenses of dissolution ` 8,000 are paid by the
partner. Out of these expenses, firm is to bear ` 3,000. Since the
partner has paid the dissolution expenses on behalf of the firm,
Realisation Account is debited and Concerned Partner’s Capital
Account is credited with ` 3,000. Entry is not passed for ` 5,000,
it being borne and also paid by the partner.

(vii) No entry is to be passed.
Explanation: Entry for expenses of dissolution will not be passed because
the expenses (` 5,000) are borne and also paid by the partner.

(viii) (a) Realisation A/c ...Dr. 5,000
To X’s Capital A/c 5,000
(Remuneration payable to X for completing dissolution process)
(b) Realisation A/c ...Dr. 8,000
To Cash/Bank A/c 8,000
(Realisation expenses paid)
Explanation: X, the partner, is paid ` 5,000 as remuneration for completing
dissolution process. However, the expenses of dissolution are met by
the firm. Therefore, X’s Capital A/c is credited with ` 5,000 (remuneration)
and ` 8,000 being expenses met by the firm is debited to Realisation
Account and credited to Cash/Bank A/c.
(ix) X’s Capital A/c ...Dr. 5,000
To Y’s Capital A/c 5,000
(Realisation expenses to be borne by X, paid by Y)