The correct answer is option 1- (A)-(IV), (B)-(III), (C)-(II), (D)-(I).
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List - I
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List - II
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(A) Payment of loans due to partners
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(IV) Partner's Loan A/c Dr.
To Bank A/c
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(B) For settlement of partners' accounts, in case
their capital account shows a debit balance
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(III) Bank A/c Dr
To partners capital A/c
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(C) For settlement of loan by a firm to a partner
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(II) Bank A/c Dr
To Loan to partners A/c
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(D) For settlement of any unrecorded liability
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(I) Realisation A/c Dr
To Bank A/c
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(A) Payment of loans due to partners- (IV) Partner's Loan A/c Dr. To Bank A/c.
Partner's loan is not transferred to realisation account but a separate account named partner's loan account is made and this loan is paid separately because it is not outsider liability. Journal entry for this-
Partner's loan A/c Dr.
To Bank A/c
(B) For settlement of partners' accounts, in case their capital account shows a debit balance- (III) Bank A/c Dr. To partners capital A/c.
A debit balance in a partner's capital account means the partner owes money to the firm. So, Correct Journal Entry is Bank A/c Dr. To Partner’s Capital A/c. This entry implies that the partner has brought in cash to settle their debit balance.
(C) For settlement of loan by a firm to a partner- (II) Bank A/c Dr. To Loan to partners A/c.
If the firm had earlier given a loan to a partner, and now during dissolution, the partner is repaying it. So, Correct Journal Entry is Bank A/c Dr. To Loan to Partners A/c. This shows cash is received from the partner, clearing the loan.
(D) For settlement of any unrecorded liability- (I) Realisation A/c Dr. To Bank A/c .
For settlement of any unrecorded liability, the following journal entry is passed-
Realisation A/c Dr.
To Bank A/c
(Expenses paid)
Bank balance is reduced so it is credited. On the debit side, we put realisation account. | 
