Pass the journal entry for the realisation expenses of ₹5000 which is paid by firm on behalf of a partner named Ajit.
Answer & explanation
Correct answer: option 2
The correct answer is option 2-
Ajit's capital A/c Dr. ₹5000
To Bank A/c ₹5000
(Realisation expenses paid by firm)
The expenses of dissolution are borne by partner but are paid by firm that's why Ajit's account is debited for showing the reduction in the capital balance of the partner. Bank account is also reduced on the payment of expenses.