Question : A debtor of Rs 31,000 agreed to pay the dissolution expenses which were Rs 30,000 in full settlement of his debt. Choose the correct option.
Option 1: debited cash account Rs 31,000 and credited realization account Rs 31,000
Option 2: debited realization account rs 30,000 and credited bank account rs 30,000
Option 3: No entry required
Option 4: debited cash account Rs 1000 and credited realization account Rs 1000
Correct Answer: No entry required
Solution :
Answer =
No entry required
Reason:- When realisation expenses of Rs 30,000 were paid through transferring assets(Debtor) then no entry is passed.
Realisation a/c Dr(Realisation expenses)
To Realisation(Debtors)
(OR)
No entry
Hence, the correct option is 3.
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