In case of dissolution of firm creditors worth ₹80,000 were given stock of the value ₹75,000 in full settlement. The journal entry for the same is:

No journal entry passed

The correct answer is Option (4) - No journal entry passed.

There can be 3 situations-

* If the creditor accepts an asset as full and final settlement, no journal entry is required.

* If the creditor accepts an asset as a partial payment, the entry is recorded for the cash payment portion only.

* If a creditor accepts an asset worth more than their outstanding debt, they will make a cash payment to the company for the remaining balance. In this case, the journal entry would be:
Debit: Bank or Cash A/c
Credit: Realisation A/c