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 will be __________ .

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

Answer 1

Answer: (D)

Profit 55,000

Realization Account

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