Sita, Rita and Meeta are partners sharing profits and losses equally. On 31st March, 2022, they decided to dissolve the business. On that date, the Capital Account Balance were Sita-₹1,00,000; Rita-₹80,000 and Meeta-₹60,000. Creditors for ₹30,000 and Reserve Fund for ₹30,000 were also lying in the books of the firm while on Assets side Sundry Assets were existing at ₹2,70,000. Sundry assets included patents for ₹20,000. The tangible assets were realised at 90% of the book value while creditors were settled at 110%. Realisation expenses were ₹10,000 paid by Sita. There was an unrecorded assets of ₹5,000 which was taken over by Meeta.

Answer question on the basis of above information.

Calculate the loss/profit on realisation of Assets and liabilities on the basis of preparation of Realisation A/c.

₹53,000 Loss on Realisation

The correct answer is option 3- ₹53,000 Loss on Realisation.

* Tangible asset = 2,70,000 - 20,000(patent)
                        = 2,50,000

Realisation on tangible asset is 90% i.e. 2,50,000 x 90/100
                                                       = ₹2,25,000

* Creditors = ₹30,000
Paid at 110% i.e. 30,000 x 110/100
                      = ₹33000

* Realisations expenses has to be paid by firm but it is paid by partner Sita. So, the journal entry for this -
Realisation A/c  Dr. ₹10,000
    To Sita's Capital A/c    ₹10,000

* Unrecorded assets of ₹5,000 is taken over by partner Meeta. Journal entry for this-
Meeta's Capital A/c Dr. ₹5,000
   To Realisation A/c   ₹5,000