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Home Questions X2EGSQKUQD
Target Exam

CUET

Subject

Accountancy

Chapter

Reconstitution of Partnership Firm: Retirement and Death

Question:

What will be the journal entry when a retiring partner is paid the full amount in cash?

Options:

Retiring Partners' Capital A/c Dr.
      To Cash/Bank A/c
(Amount paid)

Retiring Partners' Capital A/c Dr.
   To Retiring Partners' Loan A/c
(Amount paid)

Retiring Partners' Loan A/c Dr.
     To Retiring Partners' Capital A/c
(Amount paid)

Cash/Bank A/c Dr.
    To Retiring Partners' Capital A/c
(Amount paid)

Correct Answer:

Retiring Partners' Capital A/c Dr.
      To Cash/Bank A/c
(Amount paid)

Explanation:

When a retiring partner is paid the full amount in cash, It involves debiting the Retiring Partners' Capital Account and crediting the Cash/Bank Account. This entry acknowledges the payment made to the retiring partner in cash, settling their account in full.

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