Payment of credit balance of Partners’ Capital Accounts at the time of dissolution of a firm is made to:
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Partners.
For settlement of partners’ accounts-
* If the partner’s capital account shows a debit balance after everything. He brings in the necessary cash for which the entry will be:
Bank A/c Dr.
To Partner’s Capital A/c
* The balance is paid to partners whose capital accounts show a credit balance and the following entry is recorded:
Partners’ Capitals A/cs (individually) Dr.
To Bank A/c
It may be noted that the aggregate amount finally payable to the partners must equal to the amount available in bank and cash accounts. Thus, all accounts of a firm are closed in case of dissolution.