Q.Amar and Bhushan were partners sharing profits and losses equally. Their Balance Sheet as on 31st March 2024, the date on which they decided to dissolve the firm, was as follows: Liabilities: Sundry Creditors Rs 40,000; Bank Loan Rs 20,000; Amar's Capital Rs 60,000; Bhushan's Capital Rs 50,000. Total Rs 1,70,000.
Assets: Cash at Bank Rs 10,000; Sundry Debtors Rs 30,000; Stock Rs 40,000; Machinery Rs 50,000; Building Rs 40,000. Total Rs 1,70,000. Assets were realised as follows: Debtors Rs 28,000; Stock Rs 36,000; Machinery Rs 45,000; Building Rs 48,000. Sundry Creditors were paid off at Rs 38,000 in full settlement. The Bank Loan was paid in full. Realisation expenses of Rs 2,000 were paid by the firm. Prepare

This is the complete dissolution routine in one problem: transfer everything to the Realisation Account, find the profit or loss, close the capital accounts, and use the Bank Account as the final check. …

Step 1 — Realisation Account.

Since the debit side (Rs 2,20,000) exceeds the credit side before the loss line (Rs 2,17,000), there is a loss on realisation of Rs 3,000, shared equally: Amar Rs 1,500, Bhushan Rs 1,500.

Step 2 — Partners' Capital Accounts.

Step 3 — Bank Account.

An alternative check: total assets realised (Rs 1,57,000) plus opening cash (Rs 10,000) = Rs 1,67,000 received; total liabilities paid (Rs 60,000) plus expenses (Rs 2,000) plus capital paid out (Rs 1,07,000) = Rs 1,69,000 — recompute carefully against the Bank Account above rather than this shor …

Transferring Sundry Creditors and Bank Loan to Realisation A/c at the amount PAID instead of at their BOOK VALUE (the payment is a separate, later entry); forgetting that Sundry Creditors being paid Rs 38,000 against a book value of Rs 40,000 already reflects the Rs 2,000 discou …