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.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → ₹53,000 Loss on Realisation
Debit side of the Realisation Account:
Sundry Assets ₹2,70,000 + Bank (creditors paid at 110%) ₹33,000 + Sita’s Capital (expenses) ₹10,000 = ₹3,13,000
Credit side:
Creditors ₹30,000 + Bank (tangible assets ₹2,50,000 × 90%) ₹2,25,000 + Meeta’s Capital (unrecorded asset) ₹5,000 = ₹2,60,000
Patents (₹20,000) realise nothing, as no value is given for them.
Loss on realisation = ₹3,13,000 − ₹2,60,000 = ₹53,000