When unrecorded liabilities are paid it should be shown in :

Debit of Realisation Account

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

Unrecorded liabilities are those liabilities which are not recorded in the books of account. The accounting treatment for unrecorded liability is:
When the unrecorded liability is paid off: Realisation A/c Dr. To Bank A/c

* When it is paid by the partner then Partner's Capital account is credited instead of bank account.