Practicing Success
A and B are partners in a partnership firm sharing profits in the ratio of 3:2. They decided to dissolve the partnership firm. All assets other than cash and liabilities have been transferred to Realisation Account. Following information is available: Book value of stock = ₹4,00,000 |
What is the journal entry of realisation of the building if it is sold for ₹8,00,000 through a broker who charged a 2% commission? |
Bank A/c Dr. ₹7,74,000 Bank A/c Dr. ₹7,84,000 Realisation A/c Dr. ₹7,50,000 None of these |
Bank A/c Dr. ₹7,84,000 |
The correct answer is option 2-
Realised value = 8,00,000-16,000 Journal entry will be: Bank account is debited with the increase in cash balance of the firm and realisation account is credited as building has been already transferred to realisation account. |