Question

A firm is dissolved, Pawan, a partner is to carry out dissolution. ₹ 50,000 is fixed as his remuneration excluding Realisation Expenses which were ₹ 25,000, and were paid by Pawan. Pawan’s Capital Account will be credited by ______.

Options

• ₹ 50,000

• ₹ 75,000

• ₹ 25,000

• ₹ 1,00,000

Answer 1

A firm is dissolved, Pawan, a partner is to carry out dissolution. ₹ 50,000 is fixed as his remuneration excluding Realisation Expenses which were ₹ 25,000, and were paid by Pawan. Pawan’s Capital Account will be credited by ₹ 75,000.

Explanation:

Since the remuneration excludes expenses, the realisation expenses are still the firm’s responsibility. Because Pawan paid the firm’s expenses out of his own pocket, the firm must reimburse him. Therefore, both amounts are credited to his account:

Total Credit to Pawan’s Capital Account = ₹ 50, 000 + ₹ 25,000

= ₹ 75,000