Question

Mr. Rinku and Mrs. Pinky were partners sharing profits in the ratio of 3 : 2. Their balance sheet was given. The firm was dissolved and various realisation transactions were given. Prepare Realisation Account.

Hint:

In dissolution: 1. Transfer all assets (except cash) to Realisation A/c. 2. Transfer liabilities to credit side. 3. Record partner asset takeover at agreed value. 4. Profit/loss transferred in old ratio.

Answer 1

Realisation Account

Dr.	₹	Cr.	₹
To Stock	20,000	By Creditors	81,000
To Debtors	50,000	By Building (Realised)	4,00,000
To Investments	30,000	By Debtors (Realised)	44,000
To Building	3,40,000	By Investments (Sold)	19,000
To Realisation Expenses	6,000	By Stock taken by Rinku	16,000
		By Investments taken by Pinky (10% less of 30,000)	27,000
		By Profit transferred to:
		Rinku (3/5)	37,200
		Pinky (2/5)	24,800
Total	4,46,000	Total	4,46,000

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Working Notes

1. Creditors Paid ₹5,000 Less

Creditors = 81,000 Paid = 81,000 − 5,000 = 76,000 Gain on settlement = 5,000 (credited to Realisation A/c)

2. Investments taken by Pinky at 10% less

30,000 − 10% = 30,000 − 3,000 = 27,000

3. Calculation of Profit on Realisation

Total Credit Side:

• Creditors = 81,000
• Building realised = 4,00,000
• Debtors realised = 44,000
• Investments sold = 19,000
• Stock taken by Rinku = 16,000
• Investments taken by Pinky = 27,000

Total = 5,87,000

Total Debit Side:

• Stock = 20,000
• Debtors = 50,000
• Investments = 30,000
• Building = 3,40,000
• Expenses = 6,000

Total = 4,46,000

Profit on Realisation = 62,000

Distribution in Profit-sharing Ratio (3:2)

• Rinku (3/5 of 62,000) = 37,200
• Pinky (2/5 of 62,000) = 24,800