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Realisation of Assets and Liabilities - Comprehensive

When a partne...

Question

When a partner discharges the liability of the firm, account is credited.

A

bank

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B

liability

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C

partner's capital

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D

revaluation

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Solution

The correct option is C partner's capital
When a partner discharges the liability of the firm, the realisation account is debited because the liability of the firm is decreasing and partner's capital account is credited.

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Q. What Journal entries would be passed for discharge of following unrecorded liabilities on the dissolution of a firm of partners A and B:
(a) There was a contingent liability in respect of bills discounted but not matured of ₹ 18,500. An acceptor of one bill of ₹ 2,500 became insolvent and fifty paise in a rupee was recovered. The liability of the firm on account of this bill discounted and dishonoured has not so far been recorded.
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(d) ₹ 5,000 for damages claimed by a customer has been disputed by the firm. It was settled at 70% by a compromise between the customer and the firm.

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Realisation of Assets and Liabilities - Comprehensive

Standard XII Accountancy

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