Creditors having a book value of ₹1,00,000 and furniture having a book value of ₹70,000 were appearing in the balance sheet of a partnership firm. On 31st March, 2022 the firm was dissolved and creditors decided to take over furniture at 80% of book value and the balance was settled at a 10% discount.

Identify the correct option on the basis of the above information.

Creditors will be paid at ₹39,600

The correct answer is option 2- Creditors will be paid at ₹39,600.

Book value of furniture = ₹70,000
80% value of furniture is 70,000 x 80/100
                                      = ₹56,000
After taking furniture of book value ₹70,000 at ₹56,000 remaining creditors will be = 1,00,000 - 56,000
                                                                                                                                   = ₹44,000
₹44,000 is paid at discount of 10%
Discount is 44,000 x10/100
             = ₹4,400
Amount paid to creditors = 44,000 -4,400
                                        = ₹39,600