Match the following journal entries passed at the time of preparing Realisation A/c.
| LIST 1 | LIST 2 |
| A) When realisation expenses are incurred and paid by the firm |
I) Realisation A/c Dr. To Partner’s Capital A/c |
| B) When realisation expenses are paid by a partner on behalf of the firm |
II) No entry is required |
| C) When a partner has agreed to bear the realisation expenses and payment of realisation expenses is made by the firm |
III) Realisation A/c Dr. To Bank A/c |
| D) When a partner has agreed to bear the realisation expense and partner himself pays the realisation expenses |
IV) Partner’s Capital A/c Dr. To Bank A/c |
Choose the correct answer from the options given below.
Answer & explanation
Correct answer: option 2
The correct answer is option 2- A-III, B-I, C-IV, D-II.
| LIST 1 | LIST 2 |
| A) When realisation expenses are incurred and paid by the firm |
III) Realisation A/c Dr. To Bank A/c |
| B) When realisation expenses are paid by a partner on behalf of the firm |
I) Realisation A/c Dr. To Partner’s Capital A/c |
| C) When a partner has agreed to bear the realisation expenses and payment of realisation expenses is made by the firm |
IV) Partner’s Capital A/c Dr. To Bank A/c |
| D) When a partner has agreed to bear the realisation expense and partner himself pays the realisation expenses |
II) No entry is required |
For payment of realisation expenses, the following journal entries are made-
(1) When some expenses are incurred and paid by the firm in the process of realisation of assets and payment of liabilities: Realisation A/c Dr. To Bank A/c
(2) When realisation expenses are paid by a partner on behalf of the firm: Realisation A/c Dr. To Partner’s Capital A/c
(3) When a partner has agreed to bear the realisation expenses:
- (i) if payment of realisation expenses is made by the firm Partner’s Capital A/c Dr. To Bank A/c
- (ii) if the partner himself pays the realisation expenses, no entry is required
Note: In the absence of information about who is paying the expenses, it is implied that expenses are paid by the partner who has agreed to bear expenses.