(i) Contingent liability worth Rs. 7,000 proved to be actual liability and was to be paid by the firm. |
(ii) Bill of Rs. 2,000 discounted with the bank has been dishonoured by the drawee. |
(iii) Contingent liability worth Rs. 25,000 was undertaken by Q for Rs. 15,000. |
(iv) An employee met with an accident in the factory and suffered serious injuries. The firm has been ordered by the court to pay a compensation of Rs. 20,000 to the employee. The firm has made the payment. |
(v) Claim for damages by the customer amounting to Rs 8,000 was admitted by the firm and paid. |
(vi) The firm lost a litigation case and was ordered to pay a penalty of Rs. 16,000 which was paid. |
Answer:
JOURNAL
Date Particulars LF Amt (Dr) Amt (Cr) (i) Revaluation A/c Dr 7,000 To Liability A/c 7,000 (Being contingent liability due) (ii) Revaluation A/c Dr 2,000 To Liability for Bill Dishonoured A/c 2,000 (Being bill discounted dishonoured) (iii) Revaluation A/c Dr 25,000 To Liability A/c 25,000 (Being contingent liability due) Liability A/c Dr 15,000 To Q's Capital A/c 15,000 (Being contingent liability paid) (iv) Compensation to Employee A/c Dr 20,000 To Bank A/c 20,000 (Being compensation paid to employees) (v) Claim for Damages A/c Dr 8,000 To Bank A/c 8,000 (Being claim for damages paid by the firm) (vi) Litigation Case A/c Dr 16,000 To Bank A/c 16,000 (Being penalty of Rs. 16,000 paid by the firm) (vii) Revaluation A/c Dr 34,000 To S's Capital A/c 17,000 To Q's Capital A/c 11,333 To V's Capital A/c 5,667 (Being profit on revaluation account Rs. 34,000 (7,000+2,000+25,000) is distributed in profit sharing ratio 6 : 4 : 2)
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