the assets were realised as follows 15th apr stock 320000 15th may land and building 410000 15th june debtors 200000 15th july debtors 900000 15th aug other assets 3400000 note: there was a bill for rs.1o,ooo due on 15th aug under discount. MY DOUBT IS WHAT DOES THAT NOTE MEAN? WHAT TREATMENT MUST BE GIVEN CONSIDERING THAT NOTE?
First pay the outside liability and adjust the profit and loss account for loss or profit on realisation then transfer it to the capital account of the partners. Take the final balance as base and take the minimum amount balance for calculation of ratio. The excess capital of the partners should be refunded first and if there remains anything then the partners should be paid in their profit sharing ratio.