Question

On the dissolution of the firm, Partner Rex agreed to take over the responsibility of completing the dissolution work at an agreed remuneration of ₹ 1000 and to bear all realisation expenses. The actual realisation expenses amounted to ₹ 1,300 which were paid by the firm on Rex’s behalf.

What amount will be debited by the firm to the Realisation Account?

Options

• ₹ 1,000

• ₹ 2,300

• ₹ 1,300

• ₹ 300

Answer 1

₹ 1,000

Explanation:

Realisation A/c will be debited by ₹ 1,000 as it was given as remuneration to Rex, but the amount of ₹ 1,300 paid by firm on Rex’s behalf will be debited to Rex’s Capital A/c.