Unrecorded liabilities at the time of dissolution when paid are shown in:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Debit of Realisation Account.
Unrecorded liabilities when paid are shown on the Debit side of Realisation Account.
For settlement of any unrecorded liability, the following journal entry is passed-
Realisation A/c Dr.
To Bank A/c
(Expenses paid)
Bank balance is reduced so it is credited. On the debit side, we put realisation account.
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