Question : Sundry creditors of Rs 2,50,000 and bills payable of Rs 35,000 have been transferred to the credit side of the realization account. Sundry creditors were paid at a discount of 10%. What would be the further treatment if nothing else is mentioned?
Option 1: Realization account debited by Rs 35,000
Option 2: Bank Account credited by Rs 35000
Option 3: Both 1 and 2
Option 4: None of the above
Correct Answer: Both 1 and 2
Solution :
Answer =
Both 1 and 2
The realization account was debited by Rs 35000, and the Bank account was credited by rs 35,000
After payment of the creditor, the firm has to pay the full amount of bills payable. (In the absence of any other information)
Realisation a/c......Dr 35,000
To Bank a/c 35,000.
Hence, the correct option is 3.
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