Question

At the time of dissolution of a firm, Creditors are ₹ 70,000; Partner’s capital is ₹ 1,20,000; Cash Balance is ₹ 10,000. Other assets realised ₹ 1,50,000. Profit/Loss in the realisation account will be:

Options

• ₹ 60,000 (Loss)

• ₹ 80,000 (Profit)

• ₹ 40,000 (Loss)

• ₹ 30,000 (Loss)

Answer 1

₹ 30,000 (Loss)

Explanation:

Total Assets Realized = Cash Balance + Other Assets Realized

= 10,000 + 1,50,000

= ₹ 1,60,000

Total Liabilities = Creditors (₹ 70,000)

Partner’s Capital = ₹ 1,20,000

Total Liabilities and Capital = ₹ 70,000 + ₹ 1,20,000 

= ₹ 1,90,000

Profit/Loss = Total Assets Realized – Total Liabilities and Capital

= ₹ 1,60,000 – ₹ 1,90,000 

= ₹ 30,000 (Loss)