Question

K and A are partners in a firm. They share profits and losses in the ratio of $4:1$. They decide to dissolve the firm K Capital - Rs$1,60,000$, A Capital - Rs$1,00,000$, Total assets - Rs $3,95,000$, Total liabilities - Rs$1,35,000$. On dissolution assets realized Rs$4,25,000$ & liabilities settled at Rs$1,10,000$. Net profit or loss on realization = ?

• A. Profit $3,15,000$
• B. Loss $80,000$
• C. Loss $55,000$
• D. Profit $55,000$

Answer 1

Answer: (D)

Profit $55,000$

Realisation Account

Particulars	Amount	Particulars	Amount
To Sundry Assets	395000	By Sundry Liabilities	135000
To Bank A/c (Liabilities paid)	110000	By Bank A/c (Assets realised)	425000
To Profit (transferred to partner's capital a/c) K- 44000 A- 11000	55000
Total	560000	Total	560000