Question

Abhay, Bikram, and Chris were partners in a firm sharing profits and losses equally. They decided to dissolve their partnership firm on 31^st March, 2023. The firm’s Balance Sheet on the date of dissolution was as follows: \[ \begin{array}{|c|c|c|c|} \hline \textbf{Liabilities} & \textbf{Amount (₹)} & \textbf{Assets} & \textbf{Amount (₹)} \\ \hline \text{Capital:} & & \text{Plant and Machinery} & 80,000 \\ \text{Abhay} & 68,000 & \text{Furniture} & 45,000 \\ \text{Bikram} & 1,00,000 & \text{Motor Car} & 1,25,000 \\ \text{Chris} & 77,000 & \text{Stock} & 30,000 \\ \text{Creditors} & 1,20,000 & \text{Debtors} & 70,000 \\ & & \text{Cash at Bank} & 15,000 \\ \hline \textbf{Total} & 3,65,000 & \textbf{Total} & 3,65,000 \\ \hline \end{array} \] Adjustments:

• Plant and Machinery was taken over by Abhay at an agreed valuation of ₹ 75,000.
• Furniture realised ₹ 40,000.
• Motor Car was taken over by Bikram for ₹ 1,30,000.
• Debtors realised 10% less than their book value.
• 10% of the stock was taken over by Chris for ₹ 4,500. The remaining stock was sold for ₹ 30,000.
• Realisation expenses amounted to ₹ 5,000.

Hint:

In a Realisation Account, ensure all liabilities and assets are appropriately transferred and accounted for, including any takeovers by partners or realisation expenses.

Answer 1

Realisation Account: \[ \begin{array}{|l|r|r|} \hline \textbf{Particulars} & \textbf{Amount (₹)} & \textbf{Amount (₹)} \\ \hline \textbf{Assets Transferred:} & & \\ \hspace{0.5cm} \text{Plant and Machinery} & 80,000 & \\ \hspace{0.5cm} \text{Furniture} & 45,000 & \\ \hspace{0.5cm} \text{Motor Car} & 1,25,000 & \\ \hspace{0.5cm} \text{Stock} & 30,000 & \\ \hspace{0.5cm} \text{Debtors} & 70,000 & \\ \hline \textbf{Realisation Expenses Paid in Cash} & & 5,000 \\ \hline \textbf{Assets Taken Over by Partners:} & & \\ \hspace{0.5cm} \text{Chris (10\% Stock)} & 4,500 & \\ \hspace{0.5cm} \text{Abhay (Plant and Machinery)} & 75,000 & \\ \hspace{0.5cm} \text{Bikram (Motor Car)} & 1,30,000 & \\ \hline \textbf{Liabilities Transferred:} & & \\ \hspace{0.5cm} \text{Creditors} & & 1,20,000 \\ \hline \textbf{Assets Realised and Received in Cash:} & & \\ \hspace{0.5cm} \text{Furniture Sold} & & 40,000 \\ \hspace{0.5cm} \text{Debtors Realised (90\% of ₹ 70,000)} & & 63,000 \\ \hspace{0.5cm} \text{Remaining Stock Sold} & & 30,000 \\ \hline \textbf{Total} & 4,59,500 & 4,59,500 \\ \hline \end{array} \]