Page 190 - DEBKVOL-1

Chapter 8 Dissolution of a Partnership Firm 8.15
.
Illustration 13.
A, B and C share profits of a business in the ratio of 2 : 2 : 1 respectively. They decide to dissolve
the firm on 31st March, 2018. Give the necessary Journal entries to record the realisation of
following unrecorded assets in the books of the firm:
(i) There is an old typewriter which had been written off completely from the books. It is
estimated to realise ` 2,000. It is taken by ‘B’ a partner at the estimated price less 20%.
(ii) There was an old furniture in the firm which had been written of completely in the
books. This was sold for ` 5,000.
(iii) ‘Z’ an old customer whose account for ` 3,000 was written off as bad debt in the previous
year, paid 40%.
(iv) ‘B’ agreed to take over the firm’s goodwill (not recorded in the books of the firm) at a
valuation of ` 80,000.
(v) There were 1,000 shares of ` 100 each of Moontrack Ltd. acquired at a cost of ` 80,000
which had been written off completely from the books. These shares are valued at
` 50,000 and divided among the partners in their profit-sharing ratio.
Solution: JOURNAL

Date Particulars L.F. Dr. (`) Cr. (`)
(i) B‘s Capital A/c ...Dr. 1,600
To Realisation A/c 1,600
(Unrecorded typewriter taken by B)
(ii) Bank A/c ...Dr. 5,000
To Realisation A/c 5,000
(Unrecorded furniture realised)
(iii) Bank A/c ...Dr 1,200
To Realisation A/c 1,200
(Debt earlier written off recovered)
(iv) B‘s Capital A/c ...Dr. 80,000
To Realisation A/c 80,000
(Unrecorded goodwill taken over by B)
(v) A’s Capital A/c ...Dr. 20,000
B’s Capital A/c ...Dr. 20,000
C’s Capital A/c ...Dr. 10,000
To Realisation A/c 50,000
(Unrecorded shares taken away by partners in their profit-sharing ratio)
Illustration 14.
There was one unrecorded asset estimated at ` 15,000, half of which was given to settle
unrecorded liability of ` 25,000 in settlement of a claim of ` 12,500 and remaining half was sold
in the market at a profit of ` 1,000. Give necessary Journal entries.
Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
Bank A/c ...Dr. 8,500
To Realisation A/c 8,500
(Remaining half of unrecorded asset realised
1/2 of ` 15,000 + ` 1,000 = ` 8,500)
Realisation A/c ...Dr. 12,500
To Bank A/c 12,500
(Remaining half of unrecorded liability discharged) (Note)
Note: No entry is to be passed for unrecorded asset given to settle unrecorded liability. The actual amount
patowards unrecorded liability (after adjusting the agreed value of the asset).