On dissolution of a firm, a partner paid Rs.1,000 for the firm's realisation expenses on behalf of the firm. Which account will be debited on passing journal entry regarding this?
Answer & explanation
Correct answer: option 1
The correct answer is option 1- Realisation Account.
When realisation expenses are paid by a partner on behalf of the firm:
Realisation A/c Dr. 1,000
To Partner’s Capital A/c 1,000
(Expenses paid by the partner)
So, realisation account is debited if on the dissolution of a firm, a partner paid Rs.1,000 for firm's realisation expenses on behalf of the firm.