Journal entry for a liability taken over by a partner on dissolution of firm?

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Journal Entry for a Liability Taken Over by a Partner on Dissolution of Firm

Introduction: When a partnership firm is dissolved, the liabilities of the firm are settled and distributed among the partners. In some cases, a partner may take over a liability of the firm. In such a scenario, the journal entry for the liability taken over by a partner on dissolution of the firm is as follows:

Debit: The partner who takes over the liability must be debited in the books of the firm. The amount of the liability taken over should be entered in the debit side of the partner's account.

Credit: The liability account should be credited with the amount of the liability taken over by the partner. This will reduce the liability of the firm by the same amount.

Example: Let's assume that a partnership firm has a liability of $10,000 and one of the partners, John, takes over the liability. The journal entry for this transaction would be:

John's Account Debit $10,000

Liability Account Credit $10,000

In conclusion, when a partner takes over a liability on the dissolution of a partnership firm, the journal entry should reflect this transaction. The partner's account should be debited and the liability account should be credited with the same amount. This will reduce the liability of the firm and reflect the transfer of responsibility to the partner who has taken over the liability.

Answer

Liabilities account dr. to realisation account . realisation    account dr. to partner account

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