An unrecorded asset was valued at ₹20,000. On firm's dissolution, it was sold for 52%. Realisation account will be credited with:
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹10,400.
Asset value = 20,000
Realisation value = 52%
Realised amount = 20,000 x 52/100
= 10,400
Journal entry on realisation-
Bank A/c Dr. ₹10,400
To Realisation A/c ₹10,400
(Unrecorded asset realised)
The Bank account is debited as the bank balance is increased by 52% and realisation account is credited as it is a gain for the firm.