Creditors having book value of ₹1,00,000 and furniture having 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 balance were settled at 10% discount. Identify the correct option on the basis of above information.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Creditors will be paid at ₹39,600
The creditors take the furniture as part payment, so only the cash paid for the rest is recorded:
Furniture taken over = 80% of ₹70,000 = ₹56,000
Balance due to creditors = ₹1,00,000 − ₹56,000 = ₹44,000
Discount = 10% of ₹44,000 = ₹4,400
Cash paid to creditors = ₹44,000 − ₹4,400 = ₹39,600