Tuesday, December 11, 2018
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Join Date: Dec 2018
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Discount Received
Quote:
Originally Posted by Fatima Saleem
Pool and Burns, who share profits and losses equally, decide to dissolve their
partnership at June 30, 2015. Their balance sheet on that date was as follows:
(Rs.) ( Rs.)
Buildings 80,000
Tools and fixtures 2,900
82,900
Debtors 8,400
Cash 600
9,000
Sundry creditors ( 4,100 )
Net current assets 4,900
Total Assets 87,800
Capital account. Pool 52,680
Burns 35,120
87,800
The debtors realized Rs. 8,200, the building Rs. 66,000 and tools and fixtures Rs. 1,800.
The expenses of dissolution were Rs. 400 and discounts totaling Rs. 300 were received
from creditors.
Required: Prepare the accounts necessary to show the results of the realization and of
the disposal of the cash.
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In this question, the issue only prevails in the treatment of discount received 300 rupees. I believe its treatment will base on following entry; discount received 300 (dr) capital-pool 300 (Cr) and discount received debit 300 and burns account credit. In this way, you will be able to treat this transaction into capital account with balance b/d of owners. So, the remaining part of sundry creditors will be treated with its real value which is 3800 after discount. Hope this answer will satisfy you. Thanks
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