Sharing dissolution deficit in P/L ratio Steps:

• Final capital balances show L at $60,000 credit and N at$20,000 credit (other figures settled or irrelevant).
• Remaining cash at bank is $60,000.
• Total due to partners: $60,000 +$20,000 = $80,000.
• Overall deficit: $80,000 -$60,000 = $20,000, shared 3:1 (N's portion 1/4).
• N's deficit: $20,000 × (1/4) =$5,000.

Why A is correct:

• Per partnership law, realisation deficits are allocated via the profit/loss sharing ratio (1/4 for N on $20,000 total).

Why the others are wrong:

• B. $7,000: Overstates N's share; ignores 3:1 ratio correctly applied to$20,000 deficit.

Final answer: A