Ashish and Kanav were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2026 their Balance Sheet was as follows:
BALANCE SHEET OF ASHISH AND KANAV as at 31st March, 2026
| Liabilities | ₹ | Assets | ₹ | |
|---|---|---|---|---|
| Sundry Creditors | 42,000 | Bank | 35,000 | |
| Employees’ Provident Fund | 60,000 | Stock | 24,000 | |
| Mrs. Ashish’s Loan | 9,000 | Sundry Debtors | 19,000 | |
| Kanav’s Loan | 35,000 | Furniture | 40,000 | |
| Workmen’s Compensation Fund | 20,000 | Plant | 2,10,000 | |
| Investment Fluctuation Reserve | 4,000 | Investments | 32,000 | |
| Capitals: | Profit & Loss A/c | 10,000 | ||
| Ashish – 1,20,000 | ||||
| Kanav – 80,000 | 2,00,000 | |||
| 3,70,000 | 3,70,000 | |||
On the above date, they decided to dissolve the firm. (a) Ashish agreed to take over furniture at ₹ 38,000 and pay Mrs. Ashish’s loan.
(b) Sundry Debtors realised ₹ 18,500 and plant realised 10% more.
(c) Kanav took over 40% of the stock at 20% less than the book value. Remaining stock was sold at a gain of 10%.
(d) Sundry Creditors took over investments in full settlement.
(e) Kanav agreed to take over the responsibility of completing dissolution at an agreed remuneration of ₹ 12,000 and to bear realisation expenses. Actual expenses of realisation amounted to ₹ 8,000.
Solution: