Question

Pawan, a partner, was appointed to look after the process of dissolution of the firm for which he was allowed a remuneration of rupee 75,000. Pawan agreed to bear the dissolution expenses. Actual dissolution expenses rupee 60,000 were paid by Pawan. Pawan’s capital account will be credited by:

• A. rupee 75,000
• B. rupee 60,000
• C. rupee 15,000
• D. rupee 10,000

Hint:

If a partner is given a fixed remuneration for handling dissolution, their capital account is credited with the full agreed amount, regardless of actual expenses incurred.

Answer 1

The Correct Option is A

1. Pawan was allowed remuneration = rupee 75,000 
2. Pawan agreed to bear the dissolution expenses. 
3. Actual dissolution expenses paid by Pawan = rupee 60,000 
4. Effect on Pawan's Capital Account: 
- Since Pawan was allowed a fixed remuneration of rupee 75,000 for handling the dissolution, this amount must be credited to his capital account, irrespective of the actual expenses incurred. 
- The actual expenses (rupee 60,000) were borne by him, but this does not affect the remuneration credited. 

Thus, Pawan's capital account will be credited with rupee75,000 (Option A).