Question

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

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

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.

Answer 1

REALISATION ACCOUNT
Dr. Cr.
$\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ & \left(\text{Rs}\right)& & \left(\text{Rs}\right)\\ \text{To Plant}& 90,000& \text{By Creditors}& 80,000\\ \text{To Debtors}& 60,000& \text{By Bills Payable}& 30,000\\ \text{To Furniture}& 32,000& \text{By Cash A/c}& \\ \text{To Stock}& 60,000& \text{Plant}72,000& \\ \text{To Investments}& 70,000& \text{Debtors}54,000& \\ \text{To Bills Receivable}& 36,000& \text{Furniture}18,000& \\ \text{To Cash A/c}& & \text{Stock}54,000& \\ \text{Realisation Expenses}4,500& & \text{Investment}76,000& \\ \text{Creditors}80,000& & \text{Bills Receivable}\underset{–}{31,000}& 3,05,000\\ \text{Bills Payable}\underset{–}{30,000}& 1,14,500& \text{By Loss A/c:}& \\ \text{To S's Capital A/c}& & S32,900& \\ (6/100\times 3,05,000)& 18,300& T21,933& \\ & & V10,967& 65,800\\ \text{Total}& 4,80,800& \text{Total}& 4,80,800\end{array}$