At the time of dissolution of partnership firm, information of the firm disclosed a footnote about the contingent liability of ₹6,500. What will be the journal entry for recording this?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- No entry passed.
Contingent liability has no balance. They are just showed as a footnote. There will be no treatment of contingent liability until they become liability for the firm. So, no entry is passed for this.