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Question
On dissolution of a firm, its Balance Sheet revealed total creditors ₹ 50,000; Total Capital ₹ 48,000; Cash Balance ₹ 3,000. Its assets were realised at 12% less. Loss on realisation will be ______.
Options
₹ 6,000
₹ 11,760
₹ 11,400
₹ 3,600
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Solution
On dissolution of a firm, its Balance Sheet revealed total creditors ₹ 50,000; Total Capital ₹ 48,000; Cash Balance ₹ 3,000. Its assets were realised at 12% less. Loss on realisation will be ₹ 11,400.
Explanation:
Creditors = ₹ 50,000
Partners’ Capital = ₹ 48,000
Cash Balance = ₹ 3,000
Assets realized at 12% less (i.e., 88% of their book value)
Assets = Liabilities + Capital
= 50,000 + 48,000
= ₹ 98,000
So, total assets (including cash) = ₹ 98,000
Out of this, Cash Balance = ₹ 3,000
Therefore, Other Assets = ₹ 98,000 – ₹ 3,000
= ₹ 95,000
Realisation at 12% less → 88% of ₹ 95,000
= 95,000 × 88,100
= ₹ 83,600
Creditors = ₹ 50,000
After payment, balance cash = ₹ 86,600 – ₹ 50,000
= ₹ 36,600
Partner’s Capital = ₹ 48,000
Cash left = ₹ 36,600
So, Loss on Realisation = 48,000 – 36,600
= ₹ 11,400
