Question : Mohan and Kanwar are partners in a firm. Their firm was dissolved on 1.1.2013. Mohan was assigned the work of dissolution. For this work Mohan was to be paid Rs.500. Mohan paid dissolution expenses of Rs.400 from his own pocket. Choose the correct Journal entry
Option 1: Debited realization account by Rs 400 and credited bank account Rs 400
Option 2: Debited realization account by Rs 900 and credited mohan's capital account Rs 900
Option 3: Debited realization account Rs 500 credited Moahn's capital acccout Rs 400 and bank account Rs 100
Option 4: None of the above
Correct Answer: Debited realization account by Rs 900 and credited mohan's capital account Rs 900
Solution :
Answer =
Debited realization account by Rs 900 and credited Mohan's capital account Rs 900
Realisation A/C Dr 900
To Mohan's Capital A/C 900
[for Commission]
Realisation expenses were paid by the partner then no journal entry will be passed in the firm's book.
Hence, the correct option is 2.
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