At the time of dissolution of a firm, the Bank Loan was Rs. 60,000 which was paid by Bhuvan (a partner) along with one-year interest at 6%, which journal entry will be passed in the books of the firm :-
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Realisation A/c Dr. 63,600 To Bhuvan's Capital A/c 63,600
When a partner pays a liability of the firm on dissolution, the firm owes that money to him. The payment is a cost of settling liabilities, so Realisation Account is debited and the partner's capital account is credited with the full amount he paid.
Bank loan = Rs. 60,000
Interest for one year = Rs. 60,000 x 6/100 = Rs. 3,600
Amount paid by Bhuvan = Rs. 60,000 + Rs. 3,600 = Rs. 63,600
Realisation A/c Dr. 63,600
To Bhuvan's Capital A/c 63,600
The interest is part of what is paid to clear the loan, so it goes through the Realisation Account with the loan; no separate interest account is opened on dissolution.
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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