Question

At the time of dissolution of a firm, creditors are ₹ 3,50,000; Firm’s Capital is ₹ 6,00,000; Cash Balance is ₹ 50,000. Other assets realised ₹ 7,50,000. Gain/Loss in the Realisation Account will be ______.

Options

• ₹ 1,50,000 (Gain)

• ₹ 2,00,000 (Gain)

• ₹ 2,00,000 (Loss)

• ₹ 1,50,000 (Loss)

Answer 1

At the time of dissolution of a firm, creditors are ₹ 3,50,000; Firm’s Capital is ₹ 6,00,000; Cash Balance is ₹ 50,000. Other assets realised ₹ 7,50,000. Gain/Loss in the Realisation Account will be ₹ 1,50,000 (Loss).

Explanation:

Total Liabilities = Capital + Creditors

= 36,00,000 + 33,50,000

= 9,50,000

Total Assets = 9,50,000

Book Value of Other Assets = Total Assets − Cash Balance

= 9,50,000 − 50,000

= 9,00,000

Loss on Assets = The other assets worth ₹ 9,00,000 were sold for only ₹ 7,50,000, resulting in a shortfall of ₹ 1,50,000.