Question

Sandhya and Suman were partners in a firm sharing profits and losses in the ratio of 3 : 5. They decided to dissolve the firm on 31st March, 2024. On the date of dissolution, the Balance Sheet of the firm showed a balance of 80,000 in sundry debtors and a balance of 5,000 in provision for bad debts account. How much amount will be transferred to Realisation Account to close Sundry Debtors Account?

• A. 75,000
• B. 85,000
• C. 80,000
• D. 90,000

Hint:

While closing the books during dissolution, always transfer the full asset (gross) value to Realisation Account. Provisions are treated as separate liabilities or credits.

Answer 1

The Correct Option is C

Step 1: Sundry Debtors appear on the asset side of the Balance Sheet at 80,000. 
Step 2: Provision for Bad Debts of 5,000 appears on the liabilities side (or as a deduction from Sundry Debtors). 
Step 3: On dissolution, the full gross amount of debtors is transferred to the Realisation Account. 
Note: Provision for Bad Debts is not netted off while transferring assets. It is closed by crediting the Realisation A/c separately. 
Step 4: Therefore, Sundry Debtors to Realisation A/c = 80,000 
Provision for Bad Debts A/c will be transferred to the credit side of Realisation A/c separately.
Realisation A/c Dr. & 80,000 
To Sundry Debtors A/c & 80,000 
Provision for Bad Debts A/c Dr. & 5,000 
To Realisation A/c & 5,000