Question

Creditors in Balance Sheet before dissolution were ₹ 2,50,000. Half of the creditors accepted furniture of ₹ 1,50,000 at 10% less than the bookvalue in full settlement oftheir claims. Remaining creditors were paid an availing discount of 5%. The amount that will be debited in the Realisation Account for payment to creditors will be ______.

Options

• ₹ 1,18,750

• ₹ 1,35,000

• ₹ 1,28,750

• ₹ 1,25,000

Answer 1

Creditors in Balance Sheet before dissolution were ₹ 2,50,000. Half of the creditors accepted furniture of ₹ 1,50,000 at 10% less than the bookvalue in full settlement oftheir claims. Remaining creditors were paid an availing discount of 5%. The amount that will be debited in the Realisation Account for payment to creditors will be ₹ 1,18,750.

Explanation:

Total Creditors = ₹ 2,50,000

First Half (Asset Takeover) = ₹ 1,25,000

Remaining Half (Cash Payment) = ₹ 1,25,000

Discount Allowed (5%) = `1,25,000 xx 5/100`

= ₹ 6,250

Actual Payment Outflow = 1,25,000 − 6,250

= ₹ 1,18,750