Page 7 - LN DISSOLUTION OF FIRM

(Being liabilities taken over by a partner)

Note : If nothing is stated regarding the settlement of any outside

liability, then it should be assumen that the amount equal to book

value is paid.
E. For Realisation Expenses

a. When expenses are paid by firm and borne by firm:

Realisation A/c Dr.

To Cash/Bank A/c

(Being realization expenses paid in cash).

b. When expenses are paid by any partner and borne by firm :

Realisation A/c Dr.

To Partner’s Capital A/c

(Being realization expenses paid by a partner).

c. When expenses are paid by firm (on behalf of any partner) and born by

an partner.

Partner’s Capital A/c Dr.

To Cash/Bank A/c

(Being realization expenses paid on behalf of partner).

e. When a partner is paid a fixed amount for bearing realization expenses

then: Actual expenses are not be considered;

ii. Realization A/c Dr. (With Fixed Amount)

To Partner’s Capital A/c

(Being realization expenses paid by a partner)

f. When expenses are paid by one partner and borne by another partner;

Partner’s Capital A/c Dr. (Who borne the expenses)

To Partner’s Capital A/c (Who pays the expenses)