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P, a partner, is to bear all expenses of realisation for which he is to be paid Rs2,000. P had to pay realisation expenses of Rs2,500. How much amount will be debited to Realisation Account?
Rs500
Rs2,500
Rs4,500
Rs2,000
- In this scenario, P is responsible for all realisation expenses.
- He is set to receive Rs2,000 for covering these costs.
- P actually incurred expenses of Rs2,500.
- Generally, the realisation account is debited with the agreed amount to be paid to the partner for realisation expenses, which is Rs2,000 in this case.
- P's actual spending does not alter the amount debited since the contract specifies a Rs2,000 payment to P.
- Option 4: Rs2,000 is correct.
- Option 1 (Rs500) is incorrect because Rs500 is the excess amount P had to pay, not the debit amount.
- Option 2 (Rs2,500) is incorrect as it represents P's actual expenses, not the agreed payment.
- Option 3 (Rs4,500) is incorrect; this sum combines payment and expenses but isn't the correct accounting entry.
By: santosh ProfileResourcesReport error
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