If total assets are Rs. 5,00,000; total liabilities are Rs. 1,00,000; amount realised on sale of assets is Rs. 4,20,000 and realisation expenses are Rs. 5,000, what will be the profit or loss on realisation?

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Solution

Profit or loss on realisation may be calculated by preparing a Realisation Account as follows:

$\begin{matrix} Dr. & REALISATION ACCOUNT & Cr. \end{matrix}$

$\begin{matrix} Particulars & Amount (Rs.) & Particulars & Amount (Rs.) Assets & 5, 00, 000 & Liabilities & 1, 00, 000 Bank (liabilities paid) & 1, 00, 000 & Bank (Assets realised) & 4, 20, 000 Bank (expenses of realisation) & 5, 000 & Capital A/cs (Loss on realisation) & 85, 000 ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 6, 05, 000 - -------- - - -------- - & ¯ ¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯¯ ¯ 6, 05, 000 - -------- - - -------- - \end{matrix}$

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Similar questions

Q. A, B and C are equal partners. After selling all assets , paying all liabilities and dividing profit on realisation, capital balance are A - Rs. 8,000 (Cr.), B - Rs. 5,000 (Dr.), and C - Rs. 1,000 (Dr.). What is the amount of cash in hand?

Give the necessary journal entries in each of the following alternative cases :

(i) Realisation expenses amounted to Rs. 500.

(ii) Realisation expenses paid by the firm amounted to Rs. 500 and the partner has to bear the realisation expenses.

(iii) 'A' one of the partners was to bear all the realisation expenses for which he was given a commission of 2% of net cash realised from dissolution. Cash realised from assets was Rs 25,000 and cash paid for liabilities amounted to Rs 5,000

S, T and V shared profit in the ratio of 3:2:1. On December 31, 2016 their Balance Sheet was as follows:

$\begin{matrix} Liabilities & Amount & Assets & Amount (Rs) & (Rs) Capitals: & Plant & 90, 000 S 1, 00, 000 & Debtors & 60, 000 T 1, 00, 000 & Furniture & 32, 000 V 70, 000 - ------ - & 2, 70, 000 & Stock & 60, 000 Creditors & 80, 000 & Investments & 70, 000 Bills Payable & 30, 000 & Bills Receivable & 36, 000 Cash in Hand & 32, 000 3, 80, 000 & 3, 80, 000 \end{matrix}$

On this date firm was dissolved. S was appointed to realise the assets. S was to receive 6% of the amount realised on sale of assets. He was also to bear the expenses. S realised the assets as follows:

Plant Rs 72,000; Debtors Rs 54,000; Furniture Rs 18,000; Stock 90% of the book value, Investments Rs 76,000 and Bills Receivable Rs 31,000. Expenses of Realisation amounted to Rs 4,500.

Prepare Realisation Account.

Journalise the following transactions regarding realisation expenses

(a) Realisation expenses amounted to Rs. 2,500.

(b) Realisation expenses amounted to Rs. 3,000 were paid by Ashok, one of the partners.

(d) Amit, a partner was appointed to realize the assets, at a cost of Rs. 4,000.

The actual amount of realisation amounted to Rs. 3,000.

Sanjay, Tarun and Vineet shared profit in the ratio of 3:2:1. On December 31,2017 their balance sheet was as follows:

Balance Sheet of Sanjay, Tarun and Vineet as on December 31, 2017
Liabilities		Amount Rs	Assets	Amount Rs
Capitals:			Plant	90,000
Sanjay	1,00,000		Debtors	60,000
Tarun	1,00,000		Furniture	32,000
Vineet	70,000	2,70,000	Stock	60,000
Creditors		80,000	Investments	70,000
Bills payable		30,000	Bills receivable	36,000
			Cash in hand	32,000
		3,80,000		3,80,000

On this date the firm was dissolved. Sanjay was appointed to realise the assets. Sanjay was to receive 6% commission on the sale of assets (except cash) and was to bear all expenses of Realisation.

Sanjay realised the assets as follows: Plant Rs 72,000, Debtors Rs 54,000, Furniture Rs 18,000, Stock 90% of the book value, Investments Rs 76,000 and Bills receivable Rs 31,000. Expenses of Realisation amounted to Rs 4,500.

Prepare Realisation Account, Capital Accounts and Cash Account

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