Question

Wayne, Shaan and Bryan were partners in a firm. Shaan had advanced a loan of Rs 1,00,000 to the firm. On 31st March, 2024 the firm was dissolved. After transferring various assets (other than cash & bank) and outside liabilities to Realisation Account, Shaan took over furniture of book value of Rs 90,000 in part settlement of his loan amount. For the payment of balance amount of Shaan's loan Bank Account will be credited with:

• A. Rs 1,00,000
• B. Rs 90,000
• C. Rs 1,90,000
• D. Rs 10,000

Hint:

Partner's loan to the firm is paid off separately during dissolution, after external liabilities. It's not transferred to the Realisation Account. If a partner takes over an asset in settlement (part or full) of their loan, the loan account is debited, and the asset (if already in Realisation A/c) or Realisation A/c (if asset not transferred earlier, which is less common for loan settlement) or directly the asset if outside Realisation is credited. Any remaining balance is paid via Bank A/c (crediting Bank).

Answer 1

The Correct Option is D

To solve the problem, we need to determine the amount credited to the Bank Account for the balance payment of Shaan's loan after he took over furniture in part settlement, given that Shaan had advanced a loan of Rs 1,00,000 to the firm, and the firm was dissolved on 31st March 2024.

1. Understanding the Loan and Part Settlement:
Shaan advanced a loan of Rs 1,00,000 to the firm. During dissolution, assets and liabilities are transferred to the Realisation Account. Shaan took over furniture with a book value of Rs 90,000 in part settlement of his loan. This means Rs 90,000 of his loan is settled by taking the furniture, leaving a balance to be paid in cash through the Bank Account.

2. Calculating the Balance Amount of Shaan's Loan:
The total loan amount is Rs 1,00,000. The part settled by taking furniture is Rs 90,000. Therefore, the balance amount of the loan to be paid in cash is:

\( 1,00,000 - 90,000 = 10,000 \, \text{Rs} \)

3. Determining the Bank Account Credit:
To settle the remaining loan amount, the firm will pay Shaan Rs 10,000 in cash. In accounting, when a loan is repaid, the Bank Account is credited (as cash is paid out). Therefore, the Bank Account will be credited with Rs 10,000 to settle the balance of Shaan's loan.

Final Answer:
For the payment of the balance amount of Shaan's loan, the Bank Account will be credited with Rs 10,000.