Question

Stock at the time of dissolution was appearing in books at Rs 50,000. Half of the stock was sold at a discount of 20% and the remaining was taken over by one of the partners at a 10% discount. What amount was received in cash at the time of realization of stock?

• A. Rs. 25,000
• B. Rs. 42,500
• C. Rs. 20,000
• D. Rs. 45,000

Hint:

In dissolution questions, always separate cash realization from partner's takeover values. Only actual sales generate cash.

Answer 1

The Correct Option is B

Step 1: Calculate total stock value.
Book value of stock = Rs 50,000.

Step 2: Value of half stock sold with 20% discount.
Half stock = Rs 50,000 ÷ 2 = Rs 25,000.
Discount = 20% of 25,000 = Rs 5,000.
Cash realized = 25,000 – 5,000 = Rs 20,000.

Step 3: Value of remaining half taken over at 10% discount.
Remaining stock = Rs 25,000.
Discount = 10% of 25,000 = Rs 2,500.
Value taken over = 25,000 – 2,500 = Rs 22,500.

Step 4: Cash received in realization.
Cash portion = Rs 20,000.
Partner's takeover (not cash) = Rs 22,500.
Total cash realized = Rs 20,000 + Rs 22,500 = Rs 42,500.

Final Answer: \[ \boxed{\text{Rs. 42,500}} \]