Question:
Madhur and Neeraj were partners in a firm sharing profits and losses in the ratio of 3 : 2. The Balance Sheet as at 31st March, 2024 was as follows:
Balance Sheet of Madhur and Neeraj as at 31st March, 2024Liabilities Amount (₹) Assets Amount (₹) Capitals: Machinery 7,00,000 Madhur 9,00,000 Investments 4,00,000 Neeraj 8,00,000 Debtors 11,00,000 Creditors 6,00,000 Stock 2,00,000 Bills Payable 2,00,000 Cash at Bank 1,00,000 Total 25,00,000 Total 25,00,000
The firm was dissolved on the above date and the following transactions took place:
Machinery was taken over by creditors in full settlement of their account.
Investments were taken over by Neeraj at \u20b9 5,00,000.
One of the debtors of \u20b9 1,00,000 was untraceable. Remaining debtors were realised at 10% less.
Stock was taken over by Madhur at 50% discount.
Realisation expenses amounting to \u20b9 1,00,000 were paid by Madhur.
Prepare Realisation Account.
Madhur and Neeraj were partners in a firm sharing profits and losses in the ratio of 3 : 2. The Balance Sheet as at 31st March, 2024 was as follows:
Balance Sheet of Madhur and Neeraj as at 31st March, 2024
The firm was dissolved on the above date and the following transactions took place:
Machinery was taken over by creditors in full settlement of their account.
Investments were taken over by Neeraj at \u20b9 5,00,000.
One of the debtors of \u20b9 1,00,000 was untraceable. Remaining debtors were realised at 10% less.
Stock was taken over by Madhur at 50% discount.
Realisation expenses amounting to \u20b9 1,00,000 were paid by Madhur.
Prepare Realisation Account.
| Liabilities | Amount (₹) | Assets | Amount (₹) |
|---|---|---|---|
| Capitals: | Machinery | 7,00,000 | |
| Madhur | 9,00,000 | Investments | 4,00,000 |
| Neeraj | 8,00,000 | Debtors | 11,00,000 |
| Creditors | 6,00,000 | Stock | 2,00,000 |
| Bills Payable | 2,00,000 | Cash at Bank | 1,00,000 |
| Total | 25,00,000 | Total | 25,00,000 |
Machinery was taken over by creditors in full settlement of their account.
Investments were taken over by Neeraj at \u20b9 5,00,000.
One of the debtors of \u20b9 1,00,000 was untraceable. Remaining debtors were realised at 10% less.
Stock was taken over by Madhur at 50% discount.
Realisation expenses amounting to \u20b9 1,00,000 were paid by Madhur.
Prepare Realisation Account.
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For realisation accounts, always list asset values at book value on the debit side and realised/taken-over values on the credit side.
Updated On: Jul 7, 2025
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Solution and Explanation
Step 1: Calculate Realised Values
- Machinery taken over by creditors – No cash received or paid.
- Investments taken over by Neeraj – ₹5,00,000 (Dr. Realisation A/c, Cr. Neeraj's Capital A/c)
- Debtors:
- Total = ₹11,00,000
- Less: Untraceable = ₹1,00,000
- Remaining = ₹10,00,000 realised @ 90% = ₹9,00,000
- Stock: 50% of ₹2,00,000 = ₹1,00,000 (taken over by Madhur)
- Realisation Expenses = ₹1,00,000 (paid by Madhur, debited to Realisation A/c)
Step 2: Realisation Account
| Particulars | Amount (₹) | Particulars | Amount (₹) |
|---|---|---|---|
| To Machinery A/c | 7,00,000 | By Creditors (assets taken over) | 6,00,000 |
| To Investments A/c | 4,00,000 | By Neeraj's Capital A/c (Investments) | 5,00,000 |
| To Debtors A/c | 11,00,000 | By Bank A/c (Debtors realised) | 9,00,000 |
| To Stock A/c | 2,00,000 | By Madhur's Capital A/c (Stock) | 1,00,000 |
| To Bank A/c (Expenses) | 1,00,000 | ||
| Total | 25,00,000 | Total | 21,00,000 |
Loss on Realisation = ₹4,00,000
Distribution of Loss in 3:2 ratio:
- Madhur = (3/5) × ₹4,00,000 = ₹2,40,000
- Neeraj = (2/5) × ₹4,00,000 = ₹1,60,000
Final Answer: Realisation loss of ₹4,00,000 shared between Madhur (₹2,40,000) and Neeraj (₹1,60,000).
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