question_answer

A, B and C are partners. They decided to dissolve their firm. Pass necessary journal entries for the following after various assets (other than cash and bank) and the third party liabilities have been transferred to realisation account.

(i) There were total debtors of Rs. 76,000. A provision for doubtful debts also stood in the books at Rs. 6,000, Rs. 12,000 debtors proved bad and rest paid the amount due.

(ii) A agreed to pay off her husband's loan of Rs. 7,000 at a discount of 5%.

(iii) A machine which was not recorded in the books was taken over by B at Rs. 3,000, whereas its expected value was Rs. 5,000.

(iv) The firm had a debit balance of Rs. 27,000 in the profit and loss account on the date of dissolution.

(v) A contingent liability (not provided for) of Rs. 4,000 was also discharged.

(vi) C paid realisation expenses of Rs. 15,000 out of her pocket and she was to get a remuneration of Rs. 18,000 for completing the dissolution process.

Answer:

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