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
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.
