Question

Madhur and Neeraj were partners in a firm sharing profits and losses in the ratio of 3 : 2.The Balance Sheet as at 31st March, 2024 was as under:

BALANCE SHEET OF MADHUR AND NEERAJ as at 31st March, 2024
Liabilities	₹	₹	Assets	₹
Capital A/cs:		17,00,000	Machinery	7,00,000
Madhur	9,00,000		Investments	4,00,000
Neeraj	8,00,000		Debtors	11,00,000
Creditors		6,00,000	Stock	2,00,000
Bills Payable		2,00,000	Cash at Bank	1,00,000
		25,00,000		25,00,000

The firm was dissolved on the above date, and the following transactions took place:

1. Machinery was taken over by creditors in full settlement of their account.
2. Investments were taken over by Neeraj at ₹ 5,00,000.
3. One of the debtors of ₹ 1,00,000 was untraceable. Remaining debtors were realised at 10% less.
4. Stock was taken over by Madhur at 50% discount.
5. Realisation expenses amounting to ₹ 1,00,000 were paid by Madhur.

Prepare Realisation Account.

Answer 1

Dr.	Realisation Account			Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
To Sundry Assets A/c - Transfer		By Sundry Liabilities A/c
Machinery	7,00,000	Creditors		6,00,000
Investments	4,00,000	Bills Payable		2,00,000
Debtors	11,00,000	By Neeraj’s Capital A/c (Investments)		5,00,000
Stock	2,00,000	By Bank A/c (Debtors realized)		9,00,000
To Madhur’s Capital A/c (Expenses)	1,00,000	By Madhur’s Capital A/c (Stock)		1,00,000
To Bank A/c (Bills Payable paid)	2,00,000	By Loss on Realisation transferred to:		4,00,000
		Madhur’s Capital A/c (3/5)	2,40,000
		Neeraj’s Capital A/c (2/5)	1,60,000
	27,00,000			27,00,000

Working Notes:

Debtors Realised:

Remaining Debtors = 11,00,000 − 1,00,000

= ₹ 10,00,000

Amount Realised (10% less) = 10,00,000 − 1,00,000

= ₹ 9,00,000

Stock Taken Over = `2,00,000 - (50/100)`

= 1,00,000

Bills Payable: Since no information is given regarding its payment, it is paid off in full at book value ₹ 2,00,000.