Rahul a partner decided to pay off creditor of ₹50,000. Entry to be passed will be :

Realisation A/c Dr.    ₹50,000
       To Rahul's Capital A/c   ₹50,000

The correct answer is option 2-
Realisation A/c Dr.    ₹50,000
       To Rahul's Capital A/c   ₹50,000

* Creditors are transferred to the realisation account. At that time entry was passed for it- Creditors Dr. To realisation A/c.

* Now Rahul agreed to settle creditors, so realisation account is debited and capital account of the partner is credited. So, the correct journal entry is -
Realisation A/c Dr. ₹50,000
       To Rahul's Capital A/c ₹50,000

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