What journal entry will be passed on dissolution of partnership firm, when creditors of ₹40,000 accepted investment of ₹50,000(Book Value)?
Answer & explanation
Correct answer: option 4
For settlement with the creditor through transfer of assets when a creditor accepts an asset in full and final settlement of his account, no journal entry needs to be recorded. But, if the creditor accepts an asset only as part payment of his/her dues, the entry will be made for cash payment only.