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:

In dissolution, if a partner takes over an asset against their loan, only the remaining balance of the loan is paid in cash/bank. Payment *from* the Bank Account results in a credit to the Bank Account.

Answer 1

The Correct Option is D

Step 1: Determine the Unpaid Balance of Shaan's Loan:
Total Loan Amount from Shaan = Rs 1,00,000.
Value of Furniture taken over by Shaan in part settlement = Rs 90,000.
Balance Loan Amount Payable = Total Loan - Value of Asset Taken Over
Balance Loan Amount Payable = Rs 1,00,000 - Rs 90,000 = Rs 10,000.
Step 2: Record the Payment of the Balance Loan Amount:
The firm pays the remaining balance of Rs 10,000 to Shaan using its bank account.
The journal entry for this payment is:
Shaan's Loan A/c Dr. 10,000
\indent To Bank A/c Cr. 10,000
This entry reduces the liability (Shaan's Loan) and reduces the asset (Bank).
Step 3: Identify the Credit to Bank Account:
The question asks what the Bank Account will be *credited* with for the payment of the balance amount.
As shown in the journal entry, the Bank Account is credited with Rs 10,000.
Conclusion:
For the payment of the balance amount of Shaan's loan, the Bank Account will be credited with Rs 10,000.