In case of dissolution, Machine costing ₹20,000, alongwith cash of ₹5,000 were given to creditors of ₹30,000 in full settlement of their claim.
In this case Realisation A/c will be Debited with..............
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Rs. 5,000
On dissolution, the machine has already been transferred to the debit of the Realisation Account and the creditors to its credit. When creditors accept an asset as part payment, only the cash actually paid needs an entry.
Machine given to creditors: already in the Realisation Account, no further entry
Cash paid to creditors = Rs. 5,000
Entry: Realisation A/c Dr. Rs. 5,000 To Cash A/c Rs. 5,000
Rs. 30,000 is the amount the creditors were owed, and Rs. 25,000 is the machine and cash together; neither is a fresh debit to the Realisation Account.
NCERT (2026-27 edition): |