Question

Loss on realization of 84,000 was to be distributed between Sam and Shafiq (partners) in the ratio of 4:3 at the time of the dissolution of the partnership firm. Calculate the amount to be transferred to Shafiq’s capital account.

• A. 36,000 to be credited
• B. 36,000 to be debited
• C. 48,000 to be credited
• D. 48,000 to be debited

Answer 1

The Correct Option is B

1. Total Loss: The total loss incurred is 84,000.
2. Distribution Ratio: Sam and Shafiq will share this loss in a 4:3 ratio. The total parts in this ratio are $4 + 3 = 7$.
3. Loss Allocated to Shafiq: Shafiq's portion of the loss is calculated as: \[ \text{Shafiq's loss} = \left(\frac{3}{7}\right) \times 84,000 = \frac{252,000}{7} = 36,000 \].
4. Impact on Shafiq's Capital Account: As this represents a loss, Shafiq's capital account will be reduced. Consequently, 36,000 will be debited to Shafiq's capital account.