Dissolution expenses of ₹7,800 were paid by partner Anu at the time of dissolution of partnership firm. Pass the journal entry for the recording of this.
Answer & explanation
Correct answer: option 3
The correct answer is option 3-
Realisation A/c Dr. ₹7,800
To Anu's Capital A/c ₹7,800
(Dissolution Expenses paid by Anu)
When realisation expenses are paid by a partner on behalf of the firm:
Realisation A/c Dr.
To Partner’s Capital A/c.
Partner's account is credited as Expenses are paid by a partner which have to be paid back by the firm to the partner. Crediting her account will increase their balance. So, the correct journal entry will be-
Realisation A/c Dr. ₹7,800 To Anu's Capital A/c ₹7,800.