For which of the following, situations "No entry" will be passed at the time of Dissolution of firm when all the assets and Liabilities were already transferred.
A) Creditors of ₹50,000 were settled by giving stock of ₹60,000 in full settlement.
B) Loan to B of 60,000 was settled at ₹55,000 (B is a partner).
C) Realisation expense amounted to ₹5,000. Debtor of ₹ 8,000 paid these expenses in full settlement
D) Realisation expenses amounted to ₹10,000 were to be borne by C, a partner and were paid by him personally.
E) A's Loan to firm of ₹25,000 was settled by giving him furniture of same amount
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is option 2- A, C and D only.
A) Creditors of ₹50,000 were settled by giving stock of ₹60,000 in full settlement - No entry is passed as creditor took over the asset.
B) Loan to B of ₹60,000 was settled at ₹55,000 (B is a partner) - Journal entry is passed for this. Bank A/c ₹55,000
To Loan to B ₹55,000
C) Realisation expense amounted to ₹5,000. Debtor of ₹ 8,000 paid these expenses in full settlement- No entry is passed as debtor paid these expenses.
D) Realisation expenses amounted to ₹10,000 were to be borne by C, a partner and were paid by him personally.- No journal entry is passed as partner paid expenses personally.
E) A's Loan to firm of ₹25,000 was settled by giving him furniture of same amount- A's loan A/c Dr. To realisation A/c