Ram, a partner, has been assigned the responsibility for realization of assets and settlement of liability for which he will be given remuneration of ₹10,000. He has to bear all the realization expenses. Actual realization expenses are ₹12,000. Journal Entry will be-
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Realisation A/c Dr. Rs. 10,000 To Ram’s Capital A/c Rs. 10,000
Two things happen here, and only one of them is recorded.
Ram is to get a remuneration of Rs. 10,000 for the dissolution work. This is a realisation expense of the firm owed to Ram, so Realisation A/c is debited and Ram’s Capital A/c credited with Rs. 10,000.
Ram has to bear all realisation expenses. Since he pays the actual expenses of Rs. 12,000 himself, no entry is passed for them in the firm’s books; the Rs. 12,000 is his own cost, met out of his remuneration and his own pocket.
Entry:
Realisation A/c Dr. Rs. 10,000
To Ram’s Capital A/c Rs. 10,000
NCERT (2026-27 edition):
NCERT (2026-27 edition):
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