Multiple Choice Questions on On dissolution of a firm partners rsquo capital accounts balance was Rs63 000 creditors balance was ........... for Commerce 12th Preparation

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Multiple Choice Questions

On dissolution of a firm partners rsquo capital accounts balance was Rs63 000 creditors balance was ...........

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    On dissolution of a firm, partners’ capital accounts balance was Rs63,000; creditors balance was Rs12,000 and profit & loss account debit balance was Rs6,000. Profit on realisation of assets was Rs7,800. Total amount realised from assets was:

    Rs81,000

    Incorrect Answer

    Rs76,800

    Correct Answer

    Rs70,800

    Incorrect Answer

    Rs None

    Incorrect Answer
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    Explanation:

    - On dissolution, cash realised from assets is used to pay creditors, partners, and the deficit as shown by the loss in Profit & Loss account.

    - Capitals = Rs63,000

    - Creditors = Rs12,000 (need to pay)

    - Profit & Loss A/c Debit Balance = Rs6,000 (past losses, reduces partners’ capital)

    - Profit on Realisation = Rs7,800 (added to capital)

    - Let total realisation be X.

    Calculation:

    - Add: Cash required to pay creditors = Rs12,000

    - Net capital balance after adjusting P&L and adding realisation profit = 63,000 - 6,000 + 7,800 = Rs64,800

    - Total cash distributed: Rs12,000 + Rs64,800 = Rs76,800

    Option 2: Rs76,800 is correct.

    Option 2: Rs76,800 is correct.

    By: santosh
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