Journal entries for dissolutions, Financial Accounting

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Journal Entries for Dissolutions

The following journal entries are relevant for the purpose of recording all dissolutions:

1)    DR.    Revaluation account
CR.  Asset account
(With the  book value of the assets being sold / or being realized)

2)    DR.    Cash book
    CR.    Realisation account
(With the cash received on the assets being realized)

3)    DR.    Realisation account
CR.    Cash book
(With the dissolution expenses  paid)

4)    DR.    Creditors account payables
CR.    Cash book
(With payment made to the creditors)

5)    DR.    Creditors
CR.    Realization  account
(With the discount received from account payable or creditors)

6)    Dr.    Realization account
CR.    Capital accounts
(With the profit on realization being the balancing figure and according to PSR)
Incase it is a loss, then the entries are received.

7)   DR.    Current account
CR.    Capital accounts
(To transfer the accounts due to the partners on their current accounts to the capital account)

8)    DR    Capital accounts
    CR.    Cash book
(To close off the capital accounts with the cash book)


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