question_answer

Pass the necessary journal entries for the following transactions on the dissolution of the firm of A, B and C (who were sharing profits in the ratio of 4 : 3 : 3) after the transfer of all assets (other than cash) and external liabilities to realisation account.

(i) A, one of the partners was to bear all the realisation expenses for which he was given a commission of 2% of net cash realised from dissolution. Cash realised from assets was Rs. 25,000 and cash paid for liabilities amounted to Rs. 5,000. Expenses of realized Rs. 1,000 paid by A.

(ii) Workmen compensation reserve Rs. 30,000, workmen compensation paid Rs. 10,000.

(iii) Commission received in advance Rs. 1,000 was returned to customers after deducting Rs. 200.

(iv) There was a bill for Rs. 1,000 under discount. The bill was received from X who proved insolvent and a first and final dividend of 25% was received from his estate.

(v) Bankers (who granted loan of Rs. 7,000) accepted stock of Rs. 6,000 at a discount of 20% and the balance in cash.

(vi) Prepaid insurance of Rs. 5,000 and goodwill of Rs. 50,000 were also appearing in the balance sheet but no other additional information was given with regard to these two items.

Answer:

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