A & B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm. The position of assets and liabilities on the date of dissolution was:
| LIABILITIES | AMOUNT (₹) | ASSETS | AMOUNT (₹) |
| Loan by B | 20,000 | Goodwill | 30,000 |
| Capitals | Furniture | 40,000 | |
| A 1,00,000 | Building | 90,000 | |
| B 1,40,000 | 2,40,000 | Debtors | 50,000 |
| Cash | 50,000 | ||
| 2,60,000 | 2,60,000 |
It was agreed that following transactions will take place:
a) A wanted to start the business in sole proprietorship so he took building and furniture at 10% less than book value.
b) All the debtors proved good except a person C who did not pay ₹10,000
The amount recovered from the debtors is:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹40,000
All debtors paid in full except C, who did not pay ₹10,000.
Debtors as per balance sheet = ₹50,000
Less: not paid by C = ₹10,000
Amount recovered = ₹40,000
The ₹40,000 is credited to the Realisation Account (Bank A/c Dr. To Realisation A/c); the debtors themselves were debited to it at their book value of ₹50,000.