Question

Rishika and Shivika were partners in a firm sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2024 stood as follows: 
Balance Sheet of Rishika and Shivika as at 31st March, 2024

Liabilities	Amount (₹)	Assets	Amount (₹)
Capitals:		Equipment	45,00,000
Rishika – ₹30,00,000  Shivika – ₹20,00,000	50,00,000	Investments	5,00,000
Shivika’s Husband’s Loan	5,00,000	Debtors	35,00,000
Creditors	40,00,000	Stock	8,00,000
		Cash at Bank	2,00,000
Total	95,00,000	Total	95,00,000

The firm was dissolved on the above date and the following transactions took place: 
(i) Equipements were given to creditors in full settlement of their account. 
(ii) Investments were sold at a profit of 20% on its book value. 
(iii) Full amount was collected from debtors. 
(iv) Stock was taken over by Rishika at 50% discount. 
(v) Actual expenses of realisation amounted to ₹ 2,00,000 which were paid by the firm. Prepare Realisation Account.

Hint:

Always account for non-cash settlements (like giving equipment to creditors), profits/losses on asset sales, and ensure expenses are debited to Realisation. Profit/Loss is divided in old ratio.

Answer 1

Realisation Account

Debit	Amount (₹)	Credit	Amount (₹)
To Equipment Account	45,00,000	By Creditors Account (settled with equipment)	40,00,000
To Investments Account	5,00,000	By Bank Account (Investments realised ₹6,00,000)	6,00,000
To Debtors Account	35,00,000	By Bank Account (Debtors realised)	35,00,000
To Stock Account	8,00,000	By Rishika’s Capital Account (Stock taken at 50%)	4,00,000
To Bank Account (Realisation Expenses)	2,00,000	By Loss on Realisation (shared in 3:2)
		Rishika’s Capital Account	2,40,000
		Shivika’s Capital Account	1,60,000
Total	95,00,000	Total	95,00,000

Final Outcome:
Loss on Realisation = ₹4,00,000
Rishika’s Share (3/5) = ₹2,40,000
Shivika’s Share (2/5) = ₹1,60,000