A partnership firm has the following at the time of dissolution: Cash Rs. 1,50,000; Debtors Rs. 2,00,000; Stock Rs. 1,00,000; Plant (book value) Rs. 3,00,000. Liabilities: Creditors Rs. 1,20,000; Bank loan Rs. 80,000. The plant has a revaluation surplus of Rs. 50,000. Partners A, B and C have profit‑sharing ratio 5:3:2 and capital balances Rs. 2,50,000; Rs. 1,50,000; Rs. 1,80,000 respectively. Partner C died and is entitled to a bonus of 10% on his capital. Prepare a Statement of Affairs and compute the cash each partner will receive on dissolution.

Step-by-step solution

1. Compute total assets: $1,50,000+2,00,000+1,00,000+3,00,000=7,50,000$.
2. Add revaluation surplus to plant: $7,50,000+50,000=8,00,000$.
3. Compute total liabilities: $1,20,000+80,000=2,00,000$.
4. Net assets available for distribution: $8,00,000-2,00,000=6,00,000$.
5. Calculate bonus for Partner C: $1,80,000\times 10$.
6. Increase C’s capital to $1,98,000$ (not affecting distribution).
7. Distribute net assets in ratio 5:3:2. Ratio sum = 10.
8. Cash per ratio unit = $6,00,000÷10=60,000$.
9. Partner A receives $5\times 60,000=3,00,000$.
10. Partner B receives $3\times 60,000=1,80,000$.
11. Partner C receives $2\times 60,000=1,20,000$.

Concept tested: Statement of Affairs with revaluation and bonus

Published 4 October 2026 · How this solution was prepared and checked