Question 29 of 53intermediate🔧 ApplyShort Answer2 marks

Give the journal entry(ies) to be recorded for the following, in case of the dissolution of a partnership firm: For sale of assets.

Correct Answer

Journal Entry for Sale of Assets:

Bank A/c Dr. (with the sale value) To Realisation A/c (Being assets sold during dissolution)

When assets are sold during the dissolution of a partnership firm, the Bank Account is debited with the amount received from the sale. The corresponding credit is given to the Realisation Account. This entry records the cash inflow from selling off the firm's assets and transfers the sale proceeds to the Realisation Account for proper accounting of profit or loss on realisation.

Exercise: Do it Yourself | Q: 3 | (Page 19)
For More Understanding

Explanation

The textbook clearly states the journal entry format for sale of assets during dissolution. The Bank Account is debited with the sale value received, and the Realisation Account is credited. This is a fundamental entry in the dissolution process that records the conversion of assets into cash.

Solution Steps

  1. Step 1: Identify the amount received from sale of assets

  2. Step 2: Debit Bank Account with the sale value received

  3. Step 3: Credit Realisation Account with the same amount

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