Question

Amit, Ronald and Charan dissolved their partnership firm. Dissolution expenses were ₹ 10,000; out of the said expenses, ₹ 4,000 were to be borne by Ronald and the balance was to be paid by the firm. ₹ 8,000 was paid by Ronald and the balance by the firm.

What is the entry to record the above transaction?

Options

• Debit Realisation A/c ₹ 10,000; Credit Bank A/c ₹ 2,000; Credit Ronald A/c ₹ 8,000.

• Debit Realisation A/c ₹ 6,000; Debit Bank A/c ₹ 2,000; Credit Ronald A/c ₹ 8,000.

• Debit Realisation A/c ₹ 6,000; Credit Bank A/c ₹ 2,000; Credit Ronald A/c ₹ 4,000.

• Debit Realisation A/c ₹ 10,000; Credit Bank A/c ₹ 6,000; Credit Ronald A/c ₹ 4,000.

Answer 1

Debit Realisation A/c ₹ 6,000; Credit Bank A/c ₹ 2,000; Credit Ronald A/c ₹ 4,000.

Explanation:

Out of ₹ 10,000 dissolution expenses, ₹ 4,000 is borne by Ronald, so the firm bears only ₹ 6,000. The firm paid ₹ 2,000 directly, while Ronald paid ₹ 4,000 on behalf of the firm.