When a firm is dissolved, Provision for Bad and Doubtful Debt Account :-
- AIs transferred into Realisation Account and paid out.
- BIs transferred into Realisation Account but not paid out.
- CIs not transferred into Realisation Account.
- DIs not transferred into Realisation Account and also not paid out.
Solution & Step-by-step Explanation
Upon dissolution, Provision for Bad and Doubtful Debts is a non-liability valuation balance linked to Debtors. It is transferred to the credit side of the Realisation Account to close the account balance. Since it is merely an accounting provision and not an actual external third-party liability obligation, it is never paid out.