Journalise the following transactions regarding realisation expenses: [a] Realisation expenses amounted to Rs.2,500. [b] Realisation expenses amounting to Rs.3,000 were paid by Ashok, one of the partners. [c] Realisation expenses Rs.2,300 borne by Tarun, personally. [d] Amit, a partner was appointed to realise the assets, at a cost of Rs.4,000. The actual amount of realisation expenses amounted to Rs.3,000.
Realisation A/c Dr. 2,500 To Bank A/c 2,500 (Being realisation expenses paid by the firm)
Realisation A/c Dr. 3,000 To Ashok's Capital A/c 3,000 (Being realisation expenses paid by partner Ashok)
No Entry (Being realisation expenses borne personally by Tarun)
Realisation A/c Dr. 4,000 To Amit's Capital A/c 4,000 (Being remuneration given to Amit for realisation of assets)
Explanation
The treatment of realisation expenses depends on who pays them and the agreement terms. In case (a), the firm pays, so the Realisation Account is debited. In case (b), a partner pays, so the partner's capital account is credited. In case (c), the partner bears the expenses personally, requiring no entry in the firm's books. In case (d), the partner is appointed at a fixed cost (remuneration), which is debited to Realisation Account, while actual expenses are ignored as they are borne by the partner.