Question

X, Y and Z are partners in a firm in the ratio of 4 : 3 : 2. On firm’s dissolution, firm’s total assets are ₹ 70,000, creditors are ₹ 15,000. realisation expenses are ₹ 2,100. Assets realised 15% more than the book-value. Creditors were paid 2% more. For profit/loss on realisation, Y’s capital account will be debited/credited with how much amount?

Answer 1

₹ 2,700 credited to Y’s Capital A/c.

Working Note:

Assets realised = ₹ 70,000 × 1.15 = ₹ 80,500

Extra paid to creditors = ₹ 15,000 × 2% = ₹ 300

Realisation expenses = ₹ 2,100

Profit on realisation = (₹ 80,500 − ₹ 70,000) − ₹ 300 − ₹ 2,100

= ₹ 10,500 − ₹ 300 − ₹ 2,100

= ₹ 8,100

Y’s share (ratio 4 : 3 : 2 → Y = 3/9)

= ₹ `8,100xx 3/9`

= ₹ 2,700 (credit)