On 1st April 2022, A, B and C decided to dissolve their firm On the date of dissolution, Sundry debtors appeared in Balance Sheet at Rs. 6,00,000 and Provision for doubtful debt at Rs. 30,000 Debtors to extent of Rs. 60,000 were bad. In journal entry for realisation of debtors.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Realisation A/c will be credited with Rs. 5,40,000
On dissolution, sundry debtors are transferred to the debit of the Realisation Account at their gross value (Rs. 6,00,000), and the provision for doubtful debts (Rs. 30,000) goes to its credit side. When the debtors are collected, the cash actually received is recorded as:
Bank A/c Dr. Rs. 5,40,000
To Realisation A/c Rs. 5,40,000
Amount realised = Rs. 6,00,000 − Rs. 60,000 (bad debts) = Rs. 5,40,000
So the Realisation Account is credited with Rs. 5,40,000. The provision is not deducted again here; it has already gone to the credit of the Realisation Account on its own.
Note: It seems that there is a mistake in the original NTA question. Options (2) and (4) were printed with the same words, “Realisation A/c will be credited with Rs. 5,40,000”, so the question had two identical answers. For the benefit of students and to ensure that the question is correct and has a single valid answer, Option (4) has been changed to “Realisation A/c will be debited with Rs. 5,40,000”.
NCERT (2026-27 edition):
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