Accountancy Part ADissolution of Partnership Firm

In case of dissolution of firm creditors worth ₹80,000 were given sto…

In case of dissolution of firm creditors worth ₹80,000 were given stock of the value ₹75,000 in full settlement. The journal entry for the same is:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → No journal entry passed

On dissolution, stock is already transferred to the debit of Realisation Account and creditors to its credit. When creditors accept the stock in full settlement, both items leave the books through Realisation Account; no cash moves, so no journal entry is passed.

NCERT (2026-27 edition):
Journal Entries – “… 7. 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.”