Question : Goodwill of Rs. 75,000 and prepaid fire insurance of Rs. 10,000. (already transferred to realization account) What entry will be passed at the time of realization of assets?
Option 1: Bank account debited and credited realization account.
Option 2: Debited realization account and credited bank account.
Option 3: No Journal entry required.
Option 4: None of the above.
Correct Answer: No Journal entry required.
Solution : Answer = No Journal entry required Intangible assets like Goodwill, Patents, and Trade Marks are not Realised, then no journal Entry will Be Passed. Hence, the correct option is 3.
Question : Harsh's loan of Rs. 6,000 was settled by paying Rs. 5,500. Choose the correct journal entry
Option 1: Harsh's loan account debited Rs 6000 and credited bank account Rs 6000
Option 2: Harsh's loan account debited Rs 5500 and credited bank account Rs 5500
Option 3: Harsh's loan account debited Rs 6000 , credited bank account Rs 5500 and credited realization account Rs 500
Option 4: None of the above
Question : Realization expenses were to be borne by A for which he is to get a credit of Rs. 10,000. Actual realization expenses paid out of the firm Bank Account amounted to Rs. 12,000. Choose the correct Journal entry for the treatment of realization expenses.
Option 1: Realization account debit Rs 12,000 and credited Bank account Rs 12,000
Option 2: Debited realization account and credited partners capital account with Rs 12,000
Option 3: Debited A's capital account Rs 12,000 and credited bank account Rs 12,000
Option 4: None of these
Question : Book Value of assets (other than cash and bank) transferred to Realisation Account is Rs. 1,00,000. 50% of the assets are taken over by a partner Atul, at a discount of 20%; 40% of the remaining assets are sold at a profit of 30% on cost; 5% of the balance being obsolete, realised nothing and remaining assets are handed over to a Creditor, in full settlement of his claim. The entry will be
Option 1: Debited bank account Rs 52,000 and debited partner's capital account with Rs 40,000 credited realization account Rs 92,000
Option 2: Debited bank account Rs 40,000 and partners capital account Rs 52,000 credited realization account Rs 92,000
Option 3: Debited bank account Rs 50,000 and partner's capital account with Rs 50,000 credited realization account Rs 1,00,000
Question : Half of the Trade Creditors valued Rs 40,000 accepted Plant and Machinery at 10% less than the book value and Cash of Rs. 5,000 in full settlement of their claims. The remaining Trade Creditors were paid at a discount of 10%. The entry will be
Option 1: Realization account debited and Bank account credited by Rs 5,000
Option 2: Realization account debited and Bank account credited by Rs 36,000
Option 3: Realization account debited and Bank account credited by Rs 41,000
Option 4: Realization account debited and Bank account credited by Rs 80,000
Question : Mohan and Kanwar are partners in a firm. Their firm was dissolved on 1.1.2013. Mohan was assigned the work of dissolution. For this work Mohan was to be paid Rs.500. Mohan paid dissolution expenses of Rs.400 from his own pocket. Choose the correct Journal entry
Option 1: Debited realization account by Rs 400 and credited bank account Rs 400
Option 2: Debited realization account by Rs 900 and credited mohan's capital account Rs 900
Option 3: Debited realization account Rs 500 credited Moahn's capital acccout Rs 400 and bank account Rs 100
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