On dissolution of partnership firm, an investment of 30,000 was found to be unrecorded in the books. The same was accepted by a creditor in full settlement of his dues of 32,000. The accounting treatment of the transaction will be:

No entry is to be recorded for this

The correct answer is Option (2) → No entry is to be recorded for this.

For settlement with the creditor through transfer of assets when a creditor accepts an asset in full and final settlement of his account, no journal entry needs to be recorded. But, if the creditor accepts an asset only as part payment of his/her dues, the entry will be made for cash payment only.