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Question : Jeev, a partner, agreed to do the work of dissolution for which he was allowed a commission of Rs. 10,000. He agreed to bear the dissolution expenses. Actual dissolution expenses paid by Jeev were Rs. 12,000.These expenses were paid by Jeev by drawing cash from the firm. The entry will be

Option 1: Partners capital account Debited and credited realisation account Rs 12,000

Option 2: Debited partners' capital account and credited bank account with Rs 12,000

Option 3: Realiation account debited with Rs 2000 and credited bank account with Rs 2000

Option 4: none of the above


Team Careers360 5th Jan, 2024
Answer (1)
Team Careers360 10th Jan, 2024

Correct Answer: Debited partners' capital account and credited bank account with Rs 12,000


Solution : Answer = Debited partners' capital account and credited bank account with Rs 12,000

When realisation Expenses were to be born by Partner but Expense was paid by the firm on Behalf of Partner. It should be treated as his Drawing.

Bearing Partner's capital A/c Dr 12,000
To Paying Partner's Capital A/c. 12,000
Hence, the correct option is 2.

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