Comprehension Passage
A and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm. The position of Assets and Liabilities on the date of dissolution was:
| Balance Sheet | |||
| Liabilities | Rs. | Assets | Rs. |
| Loan by B | 20,000 | Goodwill | 30,000 |
| Capitals | Furniture | 40,000 | |
| A. 1,00,000 | Building | 90,000 | |
| B. 1,40,000 | 2,40,000 | Debtors | 50,000 |
| Cash | 50,000 | ||
| 2,60,000 | 2,60,000 | ||
It was agreed that following transactions will take place:
A. A wanted to start the business in sole proprietorship So he took Building and Furniture at 10% less than book value.
B. All the debtors proved good except a person C who did not pay Rs. 10,000.
The treatment of Goodwill appearing in the balance sheet will be:
1
Transferred to Debit of Realisation A/C
2
Written off among partners in old ratio
3
Transferred to credit of Realisation A/C
4
Raised and written off