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

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.

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