Question

C, D and E were partners in a firm sharing profits in the ratio of 3 : 1 : 1. Their Balance Sheet as at 31st March, 2022, was as follows:

BALANCE SHEET OF C, D AND E as at 31st March, 2022
Liabilities	₹	₹	Assets	₹
Capital A/cs:		7,00,000	Machinery	3,20,000
C	4,00,000		Investments	3,00,000
E	2,00,000		Stock	2,00,000
D	1,00,000		Debtors	1,00,000
C’s Loan		1,20,000	Cash at Bank	2,00,000
Sundry Creditors		1,00,000
Bills Payable		2,00,000
		11,20,000		11,20,000

On the above date, the firm was dissolved due to certain disagreement among the partners:

1. Machinery of ₹ 3,00,000 were given to creditors in full settlement of their account and remaining machinery was sold for ₹ 10,000.
2. Investments realised ₹ 2,90,000.
3. Stock was sold for ₹ 1,80,000.
4. Debtors for ₹ 20,000 proved bad.
5. Realisation expenses amounted to ₹ 10,000. Prepare Realisation Account.

Answer 1

Dr.	Realisation Account			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets A/c (Transfer):		By Sundry Creditors		1,00,000
Machinery	3,20,000	By Bills Payable		2,00,000
Investments	3,00,000	By Bank A/c (Machinery)		10,000
Stock	2,00,000	By Bank A/c (Investments)		2,90,000
Debtors	1,00,000	By Bank A/c (Stock)		1,80,000
To Bank A/c (Bills payable)	2,00,000	By Bank A/c (Debtors)		80,000
To Bank A/c (Expenses)	10,000	By Partners’ Capital A/c (loss)		2,70,000
		C	1,62,000
		D	54,000
		E	54,000
	11,30,000			11,30,000