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Question

A a creditor ( already transferred to realisation a/c ) for 25,000 accepted furniture ( already transferred to realisation a/c ) at 36,000 in full settlement of his claim
D a creditor of 20,000 ( unrecorded in the books) agreed to accept computer ( unrecorded in the books) at 15,000 plus 2,000 in full settlement of his claim. pass journal entries and also explain it

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Solution

Case 1: No entry will be passed

Reason: Cash is neither coming in (for sale of asset) nor going out (for paying-off the liability). Moreover, an asset is given to a liability thus both of them gets cancelled from both the sides.

Case 2: Realisation A/c Dr. 2,000
To Cash A/c 2,000

Reason: Being an unrecorded computer is accepted by an unrecorded creditor at Rs 15,000 and balance of Rs 2,000 paid in cash. Thus, Rs 2,000 will be a loss for the business, thus debited to the Realisation A/c

Hope this clarifies your doubt!!

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