At the time of dissolution of a firm, the Bank Loan was ₹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.
Loan amount = 60,000
Interest = 6%
Total amount paid = (Loan amount + Interest)
= [60,000 + (60,000 x 6/100)]
= (60,000 + 3,600)
= 63,600
Bank loan is a outside liability which was transferred to realisation account and it is paid by partner so his capital account is credited. So, the correct journal entry is as follows-
Realisation A/c Dr. 63,600
To Bhuvan's Capital A/c 63,600