Unrecorded liabilities when paid are shown in:

Debit of Realisation Account

The correct answer is Option (1) : Debit of Realisation Account

On the dissolution of a firm, the payment of any liability—whether recorded in the books or unrecorded—is treated as a loss or expense of the realisation process. The Realisation Account is a nominal account created to ascertain the final profit or loss from winding up the firm. When an unrecorded liability is paid in cash:

1. The payment reduces the firm's cash/bank balance, so the Cash/Bank Account is credited.

2. The payment is an expense/loss on dissolution, so the Realisation Account is debited to reflect this cost.

Note: In the original NTA answer sheet, two options were marked correct for this question. To avoid ambiguity and ensure a single correct answer, one option has been suitably modified in this question.