Prachi, Ritika and Ishita were partners in a firm sharing profits and losses in the ratio of 5:3:2. In spite of repeated reminders by the authorities, they kept dumping hazardous material into a nearby river. The court ordered for the dissolution of their partnership firm on 31st March 2012. Prachi was deputed to realise the assets and pay the liabilities. She was paid Rs 1,000 as commission for her services. The financial position of the firm was as follows:
Following was agreed upon:
Prachi took over investments for Rs 12,500. Stock and furniture realized Rs 41,500. There was old furniture which has been written off completely from the books. Ritika agreed to take away the same at the price of Rs 3,000. Compensation paid to the employees amounted to Rs 8,000. This liability was not provided in the above Balance Sheet. Realization expenses amounted to Rs 1,000. Prepare Realisation Account, Partner’s Capital Accounts and Cash A/c to close the books of the firm.
Also identify the value being conveyed in the question.
1. Respect for law- There should be respect for law for survival & growth of business.
2. Environmental protection – Business organisations should have a commitment to protect environment.
3. Social responsibility towards society.