When realisation expenses are paid by the firm on behalf of a partner, which among the following will be debited:
- ARealisation Account
- BPartner's Capital Account
- CPartner's Loan Account
- DExpense Account
Solution & Step-by-step Explanation
When realization expenses are to be borne by a partner but are paid by the firm on their behalf, it means the firm is paying the partner's personal liability. Therefore, the concerned Partner's Capital Account is debited because it reduces their claim/equity in the firm, and the Cash/Bank Account is credited.The journal entry is: