Question

Dev, Santosh and Arti were partners in a firm sharing profits and losses in the ratio of 1 : 2 : 2. On 31st March, 2024, their Balance Sheet was as follows :

Hint:

Debtors taken over by creditors is treated as both sides being settled with no cash involved. Assets taken over by partners and profit/loss must be adjusted through capital accounts.

Answer 1

To prepare the Realisation Account, we must account for all assets and liabilities that are either settled, sold, or taken over.
(i) Debtors worth ₹~1,90,000 were taken over by creditors in full settlement of ₹~2,20,000 liabilities.
(ii) Mrs. Dev’s loan of ₹~4,00,000 is paid by Dev. This will not come in Realisation Account.
(iii) Stock: Half of ₹~4,40,000 = ₹~2,20,000 taken by Santosh at 10% less → 90% of ₹~2,20,000 = ₹~1,98,000
Remaining half sold at 20% profit: 120% of ₹~2,20,000 = ₹~2,64,000
(iv) Land & Building taken by Arti for ₹~10,00,000.
Plant & Machinery sold as scrap for ₹~1,70,000.
(v) Realisation expenses were ₹~40,000.

Realisation Account of Dev, Santosh and Arti 

 

Dr.		Cr.
To Plant and Machinery	₹~8,00,000	By Creditors (Debtors taken over)	₹~2,20,000
To Land and Building	₹~3,64,000	By Santosh (Stock taken over)	₹~1,98,000
To Debtors	₹~1,90,000	By Bank (Stock sold)	₹~2,64,000
To Stock	₹~4,40,000	By Arti (Land & Building)	₹~10,00,000
To Outstanding Salary	₹~34,000	By Bank (Plant & Machinery)	₹~1,70,000
To Realisation Expenses	₹~40,000
To Profit transferred to:
Dev	₹~48,000
Santosh	₹~96,000
Arti	₹~96,000
Total	₹~20,12,000	Total	₹~20,12,000