The Question : Madhav, Madhusudan and Mukund were partners in Jaganath Associates. They decided to dissolve the firm on 31st March 2021. Pass necessary journal entries for the following transactions after various assets (other than cash) and third-party liabilities have been transferred to realization account: (i) Old machine fully written off was sold for ₹ 42,000 while a payment of ₹ 6,000 is made to bank for a bill discounted being dishonoured. (ii) Madhusudan accepted an unrecorded asset of ₹80,000 at ₹75,000 and the balance through cheque, against the payment of his loan to the firm of ₹1,00,000. (iii) Stock of book value of ₹30,000 was taken by Madhav, Madhusudan and Mukund in their profit sharing ratio.(iv) The firm had paid realization expenses amounting to ₹5,000 on behalf of Mukund(v) There was a vehicle loan of ₹ 2,00,000 which was paid by surrender of asset to the bank at an agreed value of ₹ 1,40,000 and the shortfall was met from firm’s bank account.
Solution for the question :
Books of Jaganath AssociatesDateParticularsL.F.Dr. Amount(₹)Cr. Amount(₹31.03.2021Bank A/c Dr.42,000To Realization A/c (Being old machinery realised)42,000To Bank A/c (Being payment made to bank for bill discounted)6,000 6,00031.03.2021Madhusudan’s Loan A/c Dr1,00,000To Realisation A/c75,000To Bank A/c (Being payment made against Madhusudan’s loan through an unrecorded asset and cheque)25,00031.03.2021 Madhav’s Capital A/c Dr.10,000Madhusudan’s Capital A/c Dr.10,000Mukund’s Capital A/c Dr.10,000To Realisation A/c(Being unrealized stock taken by partners in their profit sharing ratio)30,00031.03.2021Mukund’s Capital A/c Dr.5,000To Bank A/c (Being realization expenses paid on behalf of Mukund) 5,00031.03.2021Realization A/c Dr.60,000To Bank A/c (Being payment of vehicle loan made)60,000
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