Question

Rohit a partner paid the realisation expenses of Rs 10,000 and he was to get a renumeration of Rs 12,000 for completing the dissolution process and realisation expenses were borne by Rohit. The amount transferred to his capital A/c will be :

• A. Rs 12,000
• B. Rs 10,000
• C. Rs 22,000
• D. Rs 2,000

Hint:

If a partner bears the expenses out of their own pocket, the actual payment of the expenses is not a consideration, only if they are getting paid for the same.

Answer 1

The Correct Option is A

Accounting for Dissolution Expenses and Partner's Remuneration
In this scenario, a partner is both incurring and bearing the expenses while also receiving a fixed remuneration for managing the dissolution process.
Step 1: Realization Expenses Borne By the Partner:
Realization Expenses Paid by Rohit = Rs10,000
Realization Expenses Borne by Rohit = Rs10,000 (Given)

Step 2: Accounting Treatment of Remuneration
Amount of Remuneration = Rs12,000
This renumeration will be added to Rohit's capital a/c

Step 3: Net Effect on Rohit’s Capital Account
Here, the actual payment of Rs 10,000 as realization expenses by Rohit is irrelevant because the amount is borne by himself. Hence, only Rs 12,000 will be credited to his capital A/c
Therefore:, the amount transferred to Rohit’s Capital A/c will be his fee of Rs12,000.