Book value of stock = Rs 50,000
Half of stock = Rs 50,000 ÷ 2 = Rs 25,000
First half - Sold in market:
Value = Rs 25,000
Discount = 20%
Amount received = Rs 25,000 - (20% of Rs 25,000)
Amount received = Rs 25,000 - Rs 5,000 = Rs 20,000 (Cash)
Second half - Taken over by partner:
Value = Rs 25,000
Discount = 10%
Amount = Rs 25,000 - (10% of Rs 25,000)
Amount = Rs 25,000 - Rs 2,500 = Rs 22,500 (Not in cash)
When a partner takes over an asset, the amount is debited to the partner's capital account. No cash is received.
Cash received from realization of stock = Rs 20,000
The correct answer is Option 2.