Read the following information and answer the following question.
X & Y are partners sharing profits and losses in the ratio 4:3. They decide to dissolve the firm. On the date of dissolution following information is available-
X's Capital = ₹1,25,030
Y's Capital = ₹2,070
Creditors = ₹23,150
Cash = ₹4,520.
Remaining assets realised at ₹1,24,910 and the dissolution expenses are ₹1,860. Both Partners are solvent.
What will be the profit or loss on realisation?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Loss (22,680).
REALISATION ACCOUNT
| Particulars | Amount (₹) | Particulars | Amount (₹) |
| To Assets (Note 1) | 1,45,730 | By Creditors | 23,150 |
| To Cash A/c (Creditors paid) | 23,150 | By Cash A/c (assets realised) | 1,24,910 |
| To Cash A/c (dissolution expenses) | 1,860 | By loss transferred to partners Capital A/c X's Capital A/c (4/7) 12,960 Y Capital A/c (3/7) 9,720 |
22,680 |
| 1,70,740 | 1,70,740 |
So, total loss on realisation account is 22,680.
NOTE 1-
Assets = Creditors + capital - cash
= 23,150 + 1,25,030 + 2,070 - 4,520
= ₹1,45,730