Question

On the basis of the following data, final payment to a partner on firm's dissolution will be: Debit balance of Capital Account of the partner was ₹ 50,000. Share of profit on realisation was ₹ 1,00,000. Firm's liability taken over by him was for ₹ 8,000.

• A. ₹ 32,000
• B. ₹ 58,000
• C. ₹ 42,000
• D. ₹ 52,000

Hint:

Always treat a "Debit Balance" in a capital account as a negative number when calculating final payments. Conversely, "Profit" and "Liabilities Taken Over" act as additions to the partner's claim.

Answer 1

The Correct Option is B

Concept: During the dissolution of a partnership firm, the final payment to a partner is determined by adjusting their capital account balance with their share of realisation profit or loss and any liabilities of the firm they have personally taken over.

Step 1: Identify the starting balance and adjustments
According to the data provided:
• Opening Balance (Debit): ₹ 50,000 (A debit balance represents an amount the partner owes to the firm).
• Share of Realisation Profit: ₹ 1,00,000 (This increases the partner's capital).
• Liability Taken Over: ₹ 8,000 (When a partner takes over a firm's liability, their capital account is credited).

Step 2: Calculate the final settlement amount.
The final payment is calculated as follows: \[ \text{Final Payment} = (\text{Realisation Profit} + \text{Liability Taken Over}) - \text{Debit Balance of Capital} \] \[ \text{Final Payment} = (1,00,000 + 8,000) - 50,000 \] \[ \text{Final Payment} = 1,08,000 - 50,000 = ₹ 58,000 \]