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Question : Realization expenses were to be borne by A for which he is to get a credit of Rs. 10,000. Actual realization expenses paid out of the firm Bank Account amounted to Rs. 12,000. Choose the correct Journal entry for the treatment of realization expenses.

Option 1: Realization account debit Rs 12,000 and credited Bank account Rs 12,000

Option 2: Debited realization account and credited partners capital account with Rs 12,000

Option 3: Debited A's capital account Rs 12,000 and credited bank account Rs 12,000

Option 4: None of these


Team Careers360 23rd Jan, 2024
Answer (1)
Team Careers360 24th Jan, 2024

Correct Answer: Debited A's capital account Rs 12,000 and credited bank account Rs 12,000


Solution : Answer = Debited A's capital account Rs 12,000 and credited bank account Rs 12,000.

When Partner agrees to Bear Realisation Expenses But Exp. were to Be paid by the firm, on the Behalf of Partner.

Then the following Journal Entry will Be made.
Partners capital A/c Dr. 12000
To Bank - 12000
Hence, the correct option is 3.

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