Sharan, Raman and Manan are partners sharing profit and losses in the ratio of 1:1:1. Due to heavy losses, they decide to close their business. At the time of dissolution, Sharan agreed to bear all realisation expenses. Realisation expenses were to be paid by the firm. For the service Sharan is paid Rs. 6,000. Actual expenses on realisation paid by the firm amounted to Rs. 9,000. Realisation A/c will be:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Debited by Rs. 6,000
Here two separate things happen. Sharan has agreed to bear the realisation expenses, so the expenses the firm pays are his burden and are charged to his capital account, not to the Realisation Account. He is also paid Rs. 6,000 for doing the dissolution work, and that remuneration is the only amount the Realisation Account carries.
Remuneration to Sharan: Realisation A/c Dr. Rs. 6,000, To Sharan’s Capital A/c Rs. 6,000
Actual expenses paid by the firm: Sharan’s Capital A/c Dr. Rs. 9,000, To Bank A/c Rs. 9,000
Realisation A/c is debited by Rs. 6,000
Sharan’s capital account is credited with Rs. 6,000 and debited with Rs. 9,000, so he bears the extra Rs. 3,000 himself.
NCERT (2026-27 edition):
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