Question

P and Q were partners in a firm sharing profits and losses equally. On 15th March, 2014 the form was dissolved. The dissolution resulted in a loss of 60000 on that that the capital. Accounts of P and Q showed credit balances of 70,000 in 50,000 respectively. There was a bank balance of 60,000. Pass the necessary Journal entries for (i) the transfer of loss to the capital accounts of the partners, and (ii) making final payments to the partners

Answer 1

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Realisation loss is transferred to Capital Account. 2. The cash available in the firm and received from private estate of the partners is paid to Creditors, after meeting the realisation expenses, if any. The unpaid balance will be transferred to Deficiency Account.