Question

Aman and Mohan, partners of a firm decided to dissolve the business on 31-03-22. The firm decided to pay realisation expenses of ₹ 1,000 on behalf of Mohan. ₹1000 will be debited to

• A. Realisation A/C
• B. Mohan's capital A/C
• C. Bank A/C
• D. Aman's capital A/C

Answer 1

The Correct Option is B

In the scenario where Aman and Mohan have decided to dissolve their business on 31-03-22, the firm has agreed to cover realisation expenses of ₹ 1,000 on behalf of Mohan. Understanding how these expenses are recorded requires a basic grasp of partnership accounting.

When a partnership is dissolved, any expenses incurred for realisation are typically considered the responsibility of the partners. In this case, since the firm pays these expenses on behalf of Mohan, the amount will be charged against Mohan's capital account, thus decreasing his capital in the partnership. Here are the steps:

Step	Action	Explanation
1	Determine Nature of Expense	The realisation expense of ₹ 1,000 is considered a partner's expense paid by the firm for Mohan.
2	Identify Debit Entry	Expenses paid on behalf of a partner should be debited to that partner's capital account.
3	Record Transaction	The entry for this transaction will be: Debit Mohan's Capital A/C ₹ 1,000.

Therefore, ₹ 1,000 will be debited to Mohan's capital account.