Question

If the partner's capital account shows a debit balance, the entry will be:

• A. Bank A/c Dr.
  To Partner's Capital A/c
• B. Partner's Capital A/c Dr.
  To Bank A/c
• C. Bank A/c Dr.
  To Fictitious Asset A/c
• D. Bank A/c Dr.
  To Partner's Loan A/c

Answer 1

The correct option is A Bank A/c Dr.

To Partner's Capital A/c
A partner brings in necessary cash, if the partners's capital account shows a debit balance. Bank A/c is debited and Partner's Capital A/c is credited in the above case. The aggregate amount finally payable to the partners must be equal to the amount available in bank and cash accounts. Thus, all accounts of a firm are closed in case of dissolution.