Arhan and Kanak were partners in a firm sharing profits and losses in the ratio of $\displaystyle 3$ : 2. Their Balance Sheet as at 31st March, $\displaystyle 2025$ was as follows : Balance Sheet of Arhan and Kanak as at 31st March, $\displaystyle 2025$ Liabilities Amount Assets Amount ( ) ( ) Capitals : Machinery $\displaystyle 12,00,000$ Arhan $\displaystyle 6,00,000$ Investments $\displaystyle 7,00,000$ Kanak ₹ $\displaystyle 8,00,000$ $\displaystyle 14,00,000$ Debtors $\displaystyle 10,00,000$ Bank Loan $\displaystyle 7,00,000$ Stock $\displaystyle 4,00,000$ Creditors $\displaystyle 13,00,000$ Cash $\displaystyle 1,00,000$ $\displaystyle 34,00,000$ $\displaystyle 34,00,000$ The firm was dissolved on the above date and the following transactions took place : (i) $\displaystyle 50$% of the creditors were given stock in full settlement of their dues. Remaining creditors were settled at $\displaystyle 20$% discount. (ii) Investments were taken over by Kanak at ₹ $\displaystyle 8,40$,000. (iii) Debtors realized ₹ $\displaystyle 8,50,000$ and machinery was sold at $\displaystyle 70$% of book value. (iv) Realisation expenses amounted to ₹ $\displaystyle 1,20,000$ which were paid by Arhan. Prepare Realisation Account.

Books of Arhan and Kanak Dr. Realisation A/c Cr. Particulars Amount Particulars Amount (₹) (₹) To Sundry Assets: By Sundry Liabilities: $\displaystyle 1$ $\displaystyle 1$/$\displaystyle 2$ Machinery $\displaystyle 12,00,000$ Bank loan $\displaystyle 7,00,000$ Investments $\displaystyle 7,00,000$ Creditors $\displaystyle 13,00,000$ $\displaystyle 20,00,000$ Debtors $\displaystyle 10,00,000$ By Bank/Cash A/c $\displaystyle 1$/$\displaystyle 2$ $\displaystyle 8,50,000$ Stock $\displaystyle 4,00,000$ $\displaystyle 33,00,000$ (Debtors) To Bank/Cash A/c $\displaystyle 5,20,000$ By Bank/Cash A/c $\displaystyle 8,40,000$ $\displaystyle 1$/$\displaystyle 2$ $\displaystyle 1$/$\displaystyle 2$ (Creditors) (Machinery) To Bank/ Cash A/c $\displaystyle 7,00,000$ By Kanak’s Capital A/c $\displaystyle 8,40,000$ $\displaystyle 1$/$\displaystyle 2$ $\displaystyle 1$ (Bank loan) (Investments) To Arhan’s Capital A/c $\displaystyle 1,20,000$ By Loss transferred to capital (Expenses) A/c: $\displaystyle 1$ Arhan $\displaystyle 66,000$ Kanak $\displaystyle 44,000$ $\displaystyle 1,10,000$ $\displaystyle 46,40,000$ $\displaystyle 46,40,000$ PART B OPTION $\displaystyle 1$ (Analysis of Financial Statements)