Question

The entry to be made for paying the balance to partners whose capital accounts show a credit balance is:

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

Answer 1

The correct option is A Partner's Capital (Individually) A/c Dr.

To Bank A/c
Partner's Capital (Individually) A/c is debited and Bank A/c is credited when the balance paid to partners show a credit balance. The aggregate amount payable to the partners must equal to the amount available in bank and cash accounts. Thus, all accounts of a firm are closed in case of dissolution.