Comprehension Passage
Following is the Balance Sheet of Supriya and Monika as on March 31, 2020:
Balance Sheet of Supriya and Monika as on March 31, 2020
| Liabilities | Amount (Rs.) |
|---|---|
| Supriya's Capital | 32,500 |
| Monika's Capital | 11,500 |
| Sundry Creditors | 48,000 |
| General Reserve | 13,500 |
| Total | 1,05,500 |
| Assets | Amount (Rs.) |
|---|---|
| Cash and Bank | 40,500 |
| Stock | 7,500 |
| Sundry Debtors | 21,500 |
| Less: Provision for doubtful debts | 500 |
| Fixed Assets | 36,500 |
| Total | 1,05,500 |
The firm was dissolved on March 31, 2020. Close the books of the firm with the following information:
(i) Debtors realised at a discount of 5%,
(ii) Stock realised at Rs.7,000,
(iii) Fixed assets realised at Rs.42,000,
(iv) Realisation expenses of Rs.1,500,
(v) Creditors are paid in full.
The firm incurred realisation expenses of Rs. 1,500. Which of the following is the most likely impact of these expenses on the dissolution process?
1
Realisation expenses reduce the cash balance available for distribution
2
Realisation expenses are recorded under liabilities
3
Realisation expenses are distributed equally between the partners
4
Realisation expenses increase the value of assets