Question

Anurag and Prem were partners sharing profits and losses in 2 : 1. On 31st March, 2020 their Balance Sheet was as follows:

Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Sundry Creditors		60,000	Bank		83,000
Mrs. Anurag’s Loan		80,000	Sundry Debtors	60,000	57,000
Anurag’s Loan		50,000	Less: Provision for Doubtful Debts	3,000
Workmen’s Compensation Reserve		1,20,000	Stock		1,00,000
Investment Fluctuation Reserve		10,000	Furniture		20,000
Profit and Loss		5,000	Plant		4,00,000
Capitals:		3,95,000	Investments		45,000
Anurag	3,50,000		Advertisement Expenses		15,000
Prem	45,000
		7,20,000			7,20,000

The firm was dissolved on the above date:

1. Anurag took over 60% of the stock at a discount of 20%; 25% of the remaining stock was sold at a profit of 40% on cost; Remaining stock was found obsolete and realised nothing.
2. Firm had to pay ₹ 90,000 as compensation to workers.
3. Sundry Creditors took over investments in full settlement.
4. Sundry Debtors realised at 75% and plant realised 20% less.
5. Prem agreed to take over the responsibility of completing dissolution work and he was given furniture as his remuneration.
6. Realisation expenses amounted to ₹ 10,000.

Prepare Realisation Account.

Hints: 

(i) Book value of remaining 25% stock: 25% of 40,000 = 10,000

Realised value of stock: `10,000xx140/100` = ₹ 14,000

(ii) 

Workmen’s Compensation Reserve A/c    ...Dr.	90,000	-
To Realisation A/c	-	90,000
Realisation A/c    ...Dr.	90,000	-
To Bank A/c	-	90,000

Workmen Compensation Reserve amounting to ₹ 30,000 will be transferred to the Cr. side of Capital Accounts.

(iii) There will be no entry of sundry creditors taking over the investments.

(iv) There will be no entry of Prem taking over furniture as his remuneration.

Answer 1

Dr.	Realisation A/c			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets:		By Sundry Creditors		60,000
Sundry Debtors	60,000	By Mrs. Anurag’s Loan		80,000
Stock	1,00,000	By Provision for Doubtful Debts		3,000
Furniture	20,000	By Investment Fluctuation Reserve		10,000
Plant	4,00,000	By Workmen Fluctuation Reserve		90,000
Investments	45,000	By Bank A/c		3,79,000
To Bank A/c (Workmen Compensation claim)	90,000	Sundry Debtors	45,000
To Bank A/c (Mrs. Anurag’s Loan)	80,000	Plant	3,20,000
To Bank A/c (Realisation expenses)	10,000	Stock	14,000
		By Anurag’s Capital A/c (stock taken over)		48,000
		By Loss on Realisation t/f to Capital A/c:		1,35,000
		Anurag	90,000
		Prem	45,000
	8,05,000			8,05,000