Pradeep and Rajesh were partners in a firm sharing profits and losses in the ratio of 3:2. They decided to dissolve their partnership firm on 31st March, 2018. Pradeep was deputed to realize the assets and to pay off the liabilities. He was paid ₹ 1,000 as commission for his services. The financial position of the firm on 31st March, 2018 was as follows:
As at March 31, 2018
Mrs Pradeep’s Loan
Investment Fluctuation Fund
Less: Provision for
Doubtful Debts 4,000
Profit and Loss A/c (Dr.)
Following terms and conditions were agreed upon:
- Pradeep agreed to pay off his wife’s loan.
- Half of the debtor’s realized ₹ 12,000 and remaining debtors were used to pay off 25% of the creditors.
- Investment sold to Rajesh for ₹ 27,000.
- Building realized ₹ 1,52,000
- Remaining creditors were to be paid after two months, they were paid immediately at 10% p.a. discount
- Bill receivables were settled at a loss of ₹ 1,400
- Realization expenses amounted to ₹ 2,500
Prepare Realization Account.