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Q.Ekam and Akash were partners in a firm sharing profits in the ratio of 3 : 2. On 31st March, 2024 the Balance Sheet of the firm was as follows:
Liabilities — Capital: Ekam 6,00,000, Akash 4,00,000 = 10,00,000; Sundry Creditors 1,94,000; Ekam's Loan 40,000; Total 12,34,000.
Assets — Land and Building 4,80,000; Furniture 3,50,000; Debtors 1,60,000; Bills Receivable 1,50,000; Cash at Bank 94,000; Total 12,34,000.
The firm was dissolved on above date and the assets and liabilities were settled as follows:
(a) Land and Building was taken over by the creditors as their full and final payment.
(b) Ekam accepted an unrecorded asset of ₹ 50,000 in full settlement of his loan.
(c) Furniture was taken over by Akash for cash payment at 5% less than the book value.
(d) Debtors were collected by a debt collection agency at a cost of ₹ 10,000.
(e) Bills Receivable realised ₹ 1,41,000.
(f) Akash agreed to bear all realization expenses. For this service Akash is to be allowed ₹ 1,000. Actual expenses on realization ₹ 2,000 was paid by Akash.
Prepare Realisation Account.
Prepare Realisation Account.
Punjab PsebPSEB Punjab Class 12 (Commerce) 2025Subjective· 4mImportance★★★★★est
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Start your 14-day free trial to unlock the full solution →Realisation Account totals Rs 11,51,000 each side; loss on realisation = Rs 2,83,500 (Ekam 1,70,100, Akash 1,13,400).
Profit-sharing ratio Ekam:Akash = 3:2.
Assets transferred to DEBIT (book value): Land & Building 4,80,000, Furniture 3,50,000, Debtors 1,60,000, Bills Receivable 1,50,000. (Cash at Bank stays as cash; Ekam's Loan is a partner's loan - settled separately.)
Outside liability transferred to CREDIT: Sundry Creditors 1,94,000.
Settlement:
- Land & Building (book 4,80,000) given to the creditors (1,94,000) in full and final settlement - no cash paid; both appear in the account at book value, the difference being a realisation loss.
- Ekam accepted an unrecorded asset in full settlement of his loan of 40,000 - recorded as By Ekam's Loan A/c 40,000 (the unrecorded asset, with no book value, is realised by discharging his 40,000 loan).
- Furniture taken over by Akash at 5% less than book value = 3,50,000 x 95% = 3,32,500 (debited to Akash's Capital).
- Debtors collected by an agency: debtors realised at book value 1,60,000 (Bank), and the agency's collection charge of 10,000 is a realisation expense (To Bank 10,000).
- Bills Receivable realised 1,41,000 (Bank).
- Akash is to bear all realisation expenses and is allowed Rs 1,000 for it; only this Rs 1,000 is recorded (To Akash's Capital 1,000); the actual Rs 2,000 Akash paid is his own and is not recorded by the firm. …
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