Which Journal Entry will be recorded for realization of unrecorded asset at the time of dissolution of a Partnership Firm?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Bank Account Debit & Realization Account Credit.
At the time of dissolution of a partnership firm, when an unrecorded asset (an asset not appearing in the books) is realized (sold) for cash:
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Cash (Bank) increases → Debit Bank Account
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The proceeds are considered a realization of firm’s asset → Credit Realisation Account