Based on following answer the question.
Meena and Tina are partners in a firm and sharing profit as 3 : 2. They decided to dissolve their firm on March 31, 2017 when their Balance Sheet was as follows:
Balance Sheet Meena and Tina as on March 31, 2017
| Liabilities | Amount (₹) | Assets | Amount (₹) |
| Capital | Machinery | 70,000 | |
| Meena 90,000 | Investments | 50,000 | |
| Tina 80,000 | 1,70,000 | Stock | 22,000 |
| Sundry creditors | 60,000 | Sundry debtors | 1,03,000 |
| Bills payable | 20,000 | Cash at bank | 5,000 |
| 2,50,000 | 2,50,000 |
The assets and liabilities were disposed of as follows:
a. Machinery were given to creditors in full settlement of their account and stock were given to bills payable in full settlement
b. Investments were taken over by Tina at book value. Sundry debtors of book value ₹50,000 were taken over by Meena at 10% less and remaining debtors realised ₹51,000.
c. Realisation expenses amount to ₹2,000.
The value of machinery given to creditor in full settlement of their claim will be :
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → No entry is passed
On dissolution, machinery is first transferred to the debit of the Realisation Account and creditors to its credit at book value. When the creditors then accept the machinery in full settlement of their claim, nothing is paid or received in cash, so no entry is passed for the settlement, even though the machinery (₹70,000) is worth more than the creditors (₹60,000).
NCERT (2026-27 edition):
NCERT (2026-27 edition): |
