Question

Mr. Rinku and Mrs. Pinky were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31^st March, 2025, their balance sheet was as follows:

Balance Sheet of Mr. Rinku and Mrs. Pinky as at 31st March, 2025
Liabilities	Amount (₹)	Amount (₹)	Assets	Amount (₹)	Amount (₹)
Creditors		86,000	Cash at Bank		43,000
Mrs. Rinku’s Loan		20,000	Stock		20,000
Pinky’s Husband’s Loan		30,000	Investments		30,000
Investment Fluctuation Fund		12,000	Debtors	50,000	45,000
General Reserve		30,000	Less: Provision for doubtful debts	5,000
Capitals:			Building		3,40,000
Mr. Rinku	1,00,000	3,00,000
Mrs. Pinky	2,00,000
		4,78,000			4,78,000

On the above date the firm was dissolved and the following transactions took place:

1. Mr. Rinku agreed to pay Mrs. Rinku’s loan and took away stock for ₹ 16,000.
2. Mrs. Pinky took half of the investments at 10% less. Debtors realised ₹ 44,000, Building realised ₹ 4,00,000, Creditors were paid ₹ 5,000 less and the remaining investments were sold for ₹ 19,000. An old furniture not recorded in the books of the firm was taken over by Mrs. Pinky for ₹ 18,000. Realisation expenses amounted to ₹ 6,000.

Prepare Realisation Account.

Answer 1

Realisation Account for the year ended 31st March, 2025
Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)
To Sundry Assets Transfer:			By Sundry Liabilities & Provisions:
Stock		20,000	Creditors	86,000
Investments		30,000	Mrs. Rinku’s Loan	20,000
Debtors (Gross)		50,000	Pinky’s Husband’s Loan	30,000
Building		3,40,000	Investment Fluctuation Fund	12,000
			Provision for Doubtful Debts	5,000
To Mr. Rinku’s Capital A/c			By Mr. Rinku’s Capital A/c
(Mrs. Rinku’s Loan settled)		20,000	(Stock taken over)	16,000
			By Mrs. Pinky’s Capital A/c:
To Bank A/c (Liabilities Paid):			Half Investments taken over	13,500
Creditors paid (86,000 - 5,000)		81,000	Unrecorded Furniture taken over	18,000
Pinky’s Husband’s Loan		30,000
Realisation Expenses		6,000	By Bank A/c (Assets Realised):
			Debtors realised	44,000
To Profit transferred to Partner’s Capital A/cs:			Building realised	4,00,000
Mr. Rinku (3/5)	51,900	86,500	Remaining Investments realised	19,000
Mrs. Pinky (2/5)	34,600
		6,63,500		6,63,500

Working Note:

1. Investments taken over by Mrs. Pinky:

Total Value of Investments = 30,000

Half Value of Investments = 15,000

taken over at 10% less = 15,000 − (10% of 15,000) = 13,500

2. Pinky’s Husband’s Loan:

Because no direction is specifically expressed regarding the settlement of Pinky’s Husband’s Loan, it represents an external liability and must be discharged totally at its full book value of 30,000.

3. Distribution of Realisation Profit (86,500 in the ratio 3 : 2):

Mr. Rinku’s Share = `86,000 xx 3/5 = 51,900`

Mr. Pinky’s Share = `86,000 xx 2/5 = 34,600`