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
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!!
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!!