Question

Pradeep and Paresh partners in a firm, decided to dissolve their partnership firm on 1st April, 2026. Pradeep was deputed to realise the assets and to pay off the liabilities. He was paid ₹ 10,000 as commission for his services. Balance Sheet of the firm on 31st March, 2026, was as follows:

BALANCE SHEET as at 31st March, 2026
Liabilities	₹	₹	Assets	₹	₹
Sundry Creditors		1,29,400	Building		3,00,000
Mrs. Pradeep’s Loan		40,000	Investment		30,000
Paresh’s Loan		24,000	Sundry Debtors	71,400	67,400
Investment Fluctuation Reserve		8,000	Less: Provision for Doubtful Debts	4,000
Capital A/cs:		2,42,000	Bank		16,000
Pradeep	1,21,000		Profit & Loss A/c		20,000
Paresh	1,21,000		Goodwill		10,000
		4,43,400			4,43,400

The following terms and conditions were agreed upon:

1. Pradeep agreed to pay his wife’s loan.
2. Investment was given to Paresh for ₹ 27,000.
3. Building realised ₹ 3,50,000.
4. Creditors were to be paid after two months; they were paid immediately at 10% p.a. discount.
5. Realisation expenses were ₹ 2,500.

Prepare Realisation Account.

Answer 1

Dr.	Realisation Account				Cr.
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets A/c (Transfer):			By Sundry Liabilities A/c
Building		3,00,000	Sundry Creditors		1,29,400
Investment		30,000	Mrs. Pradeep’s Loan		40,000
Sundry Debtors (Gross)		71,400	By Provision for Doubtful Debts A/c		4,00,000
Goodwill		10,000	By Investment Fluctuation Reserve		8,000
To Pradeep’s Capital A/c:			By Paresh’s Capital A/c (Investment taken)		27,000
Commission for services		10,000	By Bank A/c (Assets Realised):		4,21,400
Settlement of Wife’s Loan		40,000	Building	3,50,000
To Bank A/c (Liabilities Paid):		1,29,743	Sundry Debtors	71,400
Sundry Creditors	1,27,243
Realisation Expenses	2,500
To Gain (Profit) on Realisation transferred to:		38,657
Pradeep’s Capital A/c	19,329
Paresh’s Capital A/c	19,328
		6,29,800			6,29,800