A partner was paid Rs15,000 to bear the Realisation expenses, while actual expenses were of Rs10,000 for dissolution of firm. How and by how much amount, realisation account would be treated?
Answer & explanation
Correct answer: option 1
The correct answer is option 1- Debited by Rs 15,000.
Firm paid 15,000 to partner for realisation, so Realisation will be debited by Rs 15,000 only despite actual expenses. The fixed amount of expenses is given to the partner whether the actual expenses are more or less. The following journal entry is passed for this-
Realisation A/c Dr. 15,000
To Partner's Capital A/c 15,000