Question

P, Q and R were partners in a firm sharing profits in the ratio of 1 : 2 : 2. Their Balance Sheet as at 31st March 2024 was as follows:

Particulars	Amount (₹)	Amount (₹)	Particulars	Amount (₹)	Amount (₹)
Creditors		1,20,000	Land and Building		5,00,000
Outstanding Expenses		10,000	Office Equipment		30,000
Bank Overdraft		20,000	Stock		3,50,000
Q’s Loan		50,000	Investments		50,000
Capitals :			Debtors	2,00,000
P	2,00,000		Less : Provision for doubtful debts	8,000	1,92,000
Q	4,00,000		Computer Software		20,000
R	4,00,000	10,00,000	Prepaid Expenses		7,000
			Cash at Bank		51,000
		12,00,000			12,00,000

On the above date the firm was dissolved. You are given the following information:

1. Office Equipment was accepted by a Creditor of ₹ 25,000 in full settlement.
2. Q's loan was paid alongwith unrecorded interest of ₹ 6,000.
3. Land and Building were realised at ₹ 6,00,000; stock at 80% and debtors at 90%.

Prepare Realisation Account.

Hints: Computer Software and Prepaid Exp. will be realised at nil value.

Answer 1

Dr.	Realisation Account		Cr.
Particulars	₹	Particulars	₹
To Land and Building A/c	5,00,000	By Creditors A/c	1,20,000
To Office Equipment A/c	30,000	By Outstanding Expenses A/c	10,000
To Stock A/c	3,50,000	By Provision for Doubtful Debts A/c	8,000
To Investments A/c	50,000	By Bank A/c – Land and Building	6,00,000
To Debtors A/c	2,00,000	By Bank A/c – Stock	2,80,000
To Computer Software A/c	20,000	By Bank A/c – Debtors	1,80,000
To Prepaid Expenses A/c	7,000	By Bank A/c – Investments	50,000
To Bank A/c – Creditors	95,000	By P, Q and R’s Capital A/cs – Loss on Realisation	20,000
To Bank A/c – Outstanding Expenses	10,000
To Bank A/c – Interest on Q’s Loan	6,000
Total	12,68,000	Total	12,68,000