Question

What Journal entries will you pass in case of dissolution of partnership firm.

Answer 1

Journal entries at the time of Dissolution of a firm are following:

Journal Entries for Realistion Account
	Date	particulars		L.F	Amount (Dr.) Rs.	Amount (Cr.) Rs.
(i)		Realisation A/c	Dr....		Book value of assets	same
		To Sundry Assets A/c.
		(being book value of assets transferred to Realisation Alc
(ii)		Provision for bad debts A/c	Dr..		values as per B/S	same
		Provision for deprecitation To Realisation A/c	Dr..
		(being various specific reserves and funds trans...)
(iii)		Bank A/c	Dr...		Amt. of asset	same
		Realisation To Realisation A/c	Dr...
		(being record for the amt realised by sale of assets)
(iv)		Particulars capital A/c..... To Realisation A/c	Dr....		The price as which asets taken over	same
		(being assets taken over by the partners)
(v)		Sundry liabilities A/c. To Realisation A/c	Dr..		Book value of liabilities	same
		(being transfer of liabilities to realisation at bank book value)
(vi)		Realisation A/c To Bank A/c	Dr.		liab. paid off	same
		(being paymet of liabilities)
(vii)		Partner's loan A/c To cash A/c	Dr..		Amt. of loan	Amt paid at dist
		To Realisation A/c
		(being payment of loan at discount)
(viii)		Realisation A/c	Dr..		liab. taken over same
		To partner's current/capital A/c (being the liab. taken over by the partners)
(ix)		Realisation A/c To partner capital/current A/c			Profit Profit
		(being profit on realisation transferred cap. or current A/c)