Which account will be debited and credited when the firm has agreed to pay the partner a fixed amount for realisation work irrespective of the actual amount spent at the time of dissolution of partnership firm?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Debit to Realisation Account, Credit to partner's Capital A/c.
For agreed remuneration to such partner who agrees to undertake the dissolution work-
Realisation A/c Dr.
To Partner’s Capital A/c
Realisation account is debited as these are expenses and partner's capital account is credited as the fixed amount due to partner will increase the capital balance of the partner.