Question

Raman and Richa were partners in a firm sharing profits in the ratio of 7 : 3. On 31.03.2024 the Balance Sheet of the firm was as follows:

Liabilities	₹	₹	Assets	₹
Capitals:			Land and Buildings	7,50,000
Raman	7,00,000		Furniture	1,20,000
Richa	3,00,000	10,00,000	Debtors	1,32,000
Sundry Creditors		1,75,000	Stock	1,03,000
			Cash	70,000
		11,75,000		11,75,000

The firm was dissolved on 1.4.2024 and the assets and liabilities were settled as follows:

1. Land and building was taken over by Raman at a depreciation of 10% for cash;
2. Creditors of ₹ 1,25,000 took over stock and debtors in full settlement of their claim;
3. Remaining creditors were paid by Richa;
4. Furniture realised ₹ 5,000 less than the book value.
5. Expenses of realisation were ₹ 400.

Prepare Realisation Account in the books of the firm.

Hints: No entry is to be passed for creditors taking over stock and debtors. Entry for remaining creditors taken paid by Richa:

Realisation A/c   Dr. 50,000
     To Richa's Capital A/с 50,000

Answer 1

Dr.	Realisation Account		Cr.
Particulars	₹	Particulars	₹
To Land and Buildings A/c	7,50,000	By Sundry Creditors A/c	1,75,000
To Furniture A/c	1,20,000	By Bank A/c – Land and Buildings	6,75,000
To Debtors A/c	1,32,000	By Bank A/c – Furniture	1,15,000
To Stock A/c	1,03,000	By Raman’s Capital A/c – Loss on Realisation	1,33,280
To Richa’s Capital A/c – Creditors paid by her	50,000	By Richa’s Capital A/c – Loss on Realisation	57,120
To Bank A/c – Realisation Expenses	400
Total	11,55,400	Total	11,55,400

Working note:

Loss on Realisation = ₹ 1,90,400

Loss shared in the ratio 7 : 3:

Raman’s share = ₹ 1,90,400 × `7/10` = ₹ 1,33,280

Richa’s share = ₹ 1,90,400 × `3/10` = ₹ 57,120

Note: No separate entry is passed when creditors of ₹ 1,25,000 take over stock and debtors in full settlement.