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.
After the dissolution, the stock was realised at Rs. 7,000, which is lower than its book value. This scenario suggests:
1
The stock was undervalued in the books
2
The stock was sold at a loss compared to its book value
3
The stock was transferred to the partners without any cash payment
4
The stock was adjusted against the capital accounts