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Home Questions KZSE6X5AWT
Target Exam

CUET

Subject

Accountancy

Chapter

Dissolution of Partnership Firm

Question:

Investment with book value of ₹1,00,000 were given to the creditors in full settlement of their account. The remaining investment were taken over by X (partner) at an agreed value of ₹45,000 in cash. Record journal entry for the above transactions.

Options:

Bank A/C Dr     45,000
          To Realisation 45,000

Creditors A/C   Dr    1,00,000
X's Capital A/C Dr     45,000
         To Realisation A/C     1,45,000

X's Capital A/C Dr   45,000
        To Realisation A/C     45,000

Cash A/C Dr    1,45,000
        To Realisation A/C        45,000
        To Capital A/C           1,00,000

Correct Answer:

Bank A/C Dr     45,000
          To Realisation 45,000

Explanation:

The correct answer is Option (1).

Bank A/C Dr     45,000
          To Realisation 45,000.

Investment with book value of ₹1,00,000 were given to the creditors in full settlement of their account- No journal entry is passed for it.

The partner took investments in cash means he has paid cash of 45000 to the firm and investments are already transferred to the realisation account. So journal entry passed according to it.
Bank A/c Dr. 45000 (Amount received by the firm)
    To Realisation A/c 45000 (Investments)

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