Based on following case, answer question.
Nayana and Arushi were partners sharing profit equally. Their Balance Sheet as at March 31, 2017 was as follows:
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Balance Sheet of Nayana and Arushi as on March 31,2017 |
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Liabilities |
Amount (₹) |
Assets |
Amount (₹) |
|
Capitals: Nayana 1,00,000 Arushi 50,000 Creditors Arushi’s Current account Workmen Cooperation Reserve Bank overdraft |
1,50,000 20,000 10,000 15,000 5,000 |
Bank
Debtors Stock Furniture Machinery Nayana’s current account |
30,000
25,000 35,000 40,000 60,000 10,000 |
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|
2,00,000 |
|
2,00,000 |
The firm was dissolved on the above date:
(1) Nayana took over 50% of the stock at 10% less on its book value, and the remaining stock was sold at a gain of 15%. Furniture and Machinery realised for ₹30,000 and ₹50,000 respectively.
(2) There was an unrecorded investment which was sold for ₹34,000
(3) Debtors realised 90% only and ₹1,200 were recovered for bad debts written-off last year.
(4) There was an outstanding bill for repairs which had to be paid for ₹2,000
Calculate the total amount realised in Cash/Bank at the time of dissolution of the firm from sale of assets & recovery.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹1,57,825
Unrecorded Investment = 34,000
Furniture = 30,000
Machinery= 50,000
Debtors (90%) 22,500
Stock = 20,125 (NOTE 1)
Bad debts recovered 1,200
Total = ( 34,000+30,000+50,000+22,500+20,125+1200)
= 1,57,825
NOTE-1
Stock = 35000
50% is taken by Nayana means 35000 x 50/100
= 17500
Remaining stock = 35,000 - 17,500
= 17,500
Remaining stock sold at gain of 15%
Remaining stock = 17500 x 15/100
= 26,25
Realised amount of remaining stock = 17,500 + 2,625
= 20,125