If a creditor accepts an asset whose value is more than the amount due to him.

A. He will pay excess amount
B. He will not pay anything
C. The excess amount will be credited to Realisation Account
D. The excess amount is debited to Realisation account
E. The excess amount is debited to Bank account

Choose the correct answer from the options given below:

A, C and E only

The correct answer is Option (1) → A, C and E only

* If the creditor accepts an asset as full and final settlement, no journal entry is required. However, * If the creditor accepts an asset as a partial payment, the entry is recorded for the cash payment portion only.
* If a creditor accepts an asset worth more than their outstanding debt, they will make a cash payment to the company for the remaining balance. In this case, the journal entry would be:
Debit: Bank A/c
Credit: Realisation A/c