Question

Match List-I with List-II

List-I (Cases for payment of realization expenses)	List-II (Journal entry)
(A) When realisation expenses are incurred and paid by the firm	(I) Realisation A/c Dr. To Partner's Capital A/c
(B) When realisation expenses are paid by a partner on behalf of the firm:	(II) No entry is required
(C) When a partner has agreed to bear the realisation expenses and the realisation expenses are paid by the firm	(III) Realisation A/c Dr. To Bank A/c
(D) When a partner has agreed to bear the realisation expenses and the partner himself pays the realisation expenses.	(IV) Partner's Capital A/c Dr. To Bank A/c

Choose the correct answer from the options given below:

• (A) - (I), (B) - (II), (C) - (III), (D) - (IV)
• (A) - (III), (B) - (I), (C) - (IV), (D) - (II)
• (A) - (I), (B) - (II), (C) - (IV), (D) - (III)
• (A) - (III), (B) - (IV), (C) - (I), (D) - (II)

Hint:

Firm pays for its own cost: Realisation A/c Dr. To Bank A/c. If a partner bears his own cost himself, no entry is needed.

Answer 1

The Correct Option is B

Step 1: Understanding the Question:
Realisation expenses are the costs of closing the firm, such as legal fees. Who pays them, and who agreed to bear them, decides the journal entry. We match each case with its entry.

Step 2: Case (A), the firm pays:
The firm pays the expense from its own bank account. The expense is a cost of the realisation process, so we debit Realisation A/c and credit Bank A/c. This matches (III).

Step 3: Case (B), a partner pays for the firm:
The partner paid from his own pocket. The firm now owes him this money. So we debit Realisation A/c and credit that Partner's Capital A/c. This matches (I).

Step 4: Case (C), a partner agreed to bear it but the firm paid:
The expense is the partner's own burden, but the firm's bank paid it. So the partner must return the money. We debit Partner's Capital A/c and credit Bank A/c. This matches (IV). Realisation A/c is not debited.

Step 5: Case (D), a partner agreed to bear it and paid it himself:
The partner bore his own expense from his own pocket. Nothing changes in the firm's books. So no entry is required. This matches (II).

Step 6: Check the options:
The matching is A-III, B-I, C-IV, D-II. Option 1 pairs A with I, which is wrong. Option 2 gives the correct pairing. Option 3 pairs A with I, which is wrong. Option 4 pairs B with IV, which is wrong.

Final Answer:
The correct matching is (A) - (III), (B) - (I), (C) - (IV), (D) - (II), which is option 2. \[\boxed{2}\]