Question

Arushi, Vivaan and Mitali were partners in a firm. On 31st March 2024, the firm was dissolved. On that date, the firm had debtors of \( ₹ 60,000 \) and provision for doubtful debts of \( ₹ 3,000 \) were existing in the books. Debtors of \( ₹ 8,000 \) proved bad and full amount was realised from the remaining debtors. The amount realised from debtors was:

• A. \( ₹ 60,000 \)
• B. \( ₹ 55,000 \)
• C. \( ₹ 52,000 \)
• D. \( ₹ 49,000 \)

Hint:

While calculating realisable amount, subtract only actual bad debts from total debtors. Provision is non-cash and already adjusted.

Answer 1

The Correct Option is C

The problem involves calculating the amount realized from debtors after accounting for bad debts. Initially, the firm has debtors amounting to ₹60,000. However, there are debtors who proved irrecoverable, and a provision for doubtful debts already exists on the books.

Here are the steps to find the amount realized:

• Step 1: Identify bad debts. Out of ₹60,000 debtors, ₹8,000 are proved to be bad debts. This means these will not be recoverable.
• Step 2: Calculate the realizable amount. Deduct the bad debts from total debtors: \(₹60,000 - ₹8,000 = ₹52,000\).
• Step 3: Account for the provision. The presence of a provision for doubtful debts of ₹3,000 on the books does not affect the realizable amount in cash terms. It is merely an accounting entry to account for potential losses, which are now confirmed as ₹8,000 in actual bad debts.

Thus, the total amount realized from the debtors after accounting for the bad debts is ₹52,000, which is the correct answer.

Answer 2

Step 1: Given total debtors = \( ₹ 60,000 \)
Provision for doubtful debts = \( ₹ 3,000 \) (this is not actual loss, just an estimate)
Actual bad debts = \( ₹ 8,000 \) (this will be subtracted from total debtors) Step 2: Calculate realisable amount.
\[ \text{Realised amount} = 60,000 - 8,000 = ₹ 52,000 \] Note: The provision is already there in the books for accounting purposes but does not affect actual cash received. Final Answer:\ \( \boxed{₹ 52,000} \)