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: Calculate Shaan's Outstanding Loan Balance:
Total Loan: Rs 1,00,000.
Value of Furniture Accepted by Shaan: Rs 90,000.
Remaining Loan Payable = Total Loan - Furniture Value
Remaining Loan Payable = Rs 1,00,000 - Rs 90,000 = Rs 10,000.
Step 2: Record Loan Balance Settlement:
The firm remits Rs 10,000 to Shaan from its bank account to clear the outstanding balance.
The corresponding journal entry is:
Shaan's Loan A/c Dr. 10,000
   To Bank A/c Cr. 10,000
This transaction reduces the firm's liability (Shaan's Loan) and decreases its asset (Bank balance).
Step 3: Identify Bank Account Credit:
The query specifically asks for the amount by which the Bank Account will be *credited* upon payment of the remaining loan amount.
As per the journal entry, the Bank Account is credited with Rs 10,000.
Conclusion:
Upon settlement of the balance of Shaan's loan, the Bank Account will be credited with Rs 10,000.