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Process of Realisation

On dissolutio...

Question

On dissolution of a firm, partner’s loan account is transferred to _________

A

Realisation account

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B

Partners' current account

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C

Partners' capital account

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D

Bank account

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Solution

The correct option is A
Realisation account

We do not transfer the loan by a partner to firm to Realisation account, it remains in its account itself. At the time of settlement, i.e., payment of liabilities, we pay partner’s loan after paying the outside liabilities but before payment of capital.

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Similar questions

Is the loan by a partner transferred to Realisation Account at the time of dissolution of a partnership firm? Why?

Q. Bale and Yale are equal partners of a firm. They decide to dissolve their partnership on 31st March,2018 at which date their Balance Sheet stood as:


Liabilities		₹	Assets	₹
Capital A/cs:			Building	45,000
Bale	50,000		Machinery	15,000
Yale	40,000	90,000	Furniture	12,000
General Reserve		8,000	Debtors	8,000
Bale's Loan A/c		3,000	Stock	24,000
Creditors		14,000	Bank	11,000

		1,15,000		1,15,000

(a) The assets realised were:
Stock ₹ 22,000; Debtors ₹ 7,500; Machinery ₹ 16,000; Building ₹ 35,000.
(b) Yale took over the Furniture at ₹ 9,000.
(c) Bale agreed to accept ₹ 2,500 in full settlement of his Loan Account .
(d) Dissolution Expenses amounted to ₹ 2,500.
Prepare the:
(i) Realisation Account; (ii) Capital Accounts of Partners;
(iii) Bale's Loan Account; (iv) Bank Account.

Q. On the dissolution of a firm, if a partner has a debit balance in his capital account then:

Q. Bale and Yale are equal partners of a firm. They decide to dissolve their partnership on 31st March, 2019 at which date their Balance Sheet stood as:


Liabilities		₹	Assets	₹
Capital A/cs:			Building	45,000
Bale	50,000		Machinery	15,000
Yale	40,000	90,000	Furniture	12,000
General Reserve		8,000	Debtors	8,000
Bale's Loan A/c		3,000	Stock	24,000
Creditors		14,000	Bank	11,000

		1,15,000		1,15,000

(a) The assets realised were:
Stock ₹ 22,000; Debtors ₹ 7,500; Machinery ₹ 16,000; Building ₹ 35,000.
(b) Yale took over the Furniture at ₹ 9,000.
(c) Bale agreed to accept ₹ 2,500 in full settlement of his Loan Account.
(d) Dissolution Expenses amounted to ₹ 2,500.
Prepare the:
(i) Realisation Account; (ii) Capital Accounts of Partners;
(iii) Bale's Loan Account; (iv) Bank Account.

Q. A, B and C were partners sharing profits int he ratio of 5 : 3 : 2 . On 31st March, 2018, A's Capital and B's Capital were ₹ 30,000 and ₹ 20,000 respectively but C owed ₹ 5,000 to the firm . the liabilities were ₹ 20,000 .The assets of the firm realised ₹ 50,000.
Prepare Realisation Account , Partner's Capital Accounts and Bank Account.

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