Investments with book value of ₹1,00,000 were given to the creditors in full settlement of their account. The remaining investments were taken over by X, a partner, at an agreed value of ₹45,000, which he paid in cash. Record the journal entry for the above transactions.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Bank A/C Dr 45,000 To Realisation 45,000
Investments given to creditors in full settlement: no journal entry (both have already been transferred to the Realisation Account).
Remaining investments taken by X for cash = a sale of assets:
Bank A/c Dr ₹45,000
To Realisation A/c ₹45,000
Had X not paid cash, his capital account would have been debited instead.
NCERT (2026-27 edition):
NCERT (2026-27 edition): NCERT (2026-27 edition):
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