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.
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 : 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.
Question : A debtor of Rs 31,000 agreed to pay the dissolution expenses which were Rs 30,000 in full settlement of his debt. Choose the correct option.
Option 1: debited cash account Rs 31,000 and credited realization account Rs 31,000
Option 2: debited realization account rs 30,000 and credited bank account rs 30,000
Option 3: No entry required
Option 4: debited cash account Rs 1000 and credited realization account Rs 1000
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
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile